Mysteries of health insurance, explained | CNN

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Whether you’re getting kicked out of your parents’ health insurance plan, or you’ve been doing open enrollment for years, navigating health insurance jargon can be overwhelming.

Information about a plan’s coverage is not always transparent. There’s also no right answer, because the best plan for you may depend on your health status and needs, said Dr. Renuka Tipirneni, assistant professor of internal medicine at the University of Michigan Medical School.

“It’s confusing for me, and I’m someone who focuses on health insurance,” Tipirneni said. “But I also received an unexpected bill. So I think it’s very important to be informed and then accept that we’re all going to make these simple, honest mistakes, and to ask for help when that happens.”

Not understanding your health insurance can have consequences, including the possibility of facing unexpected or unaffordable costs, Tipirneni said. You can also avoid getting care if you’re not sure how much you’ll have to pay.

Here are some common mysteries about health insurance, and what you need to know to get care.

Why can’t you sign up for health insurance when you want?

“Insurance companies don’t want to sign people up when they get sick,” said John Holahan, a fellow at the Urban Institute’s Center for Health Policy in Washington, DC.

“Open enrollment is to protect insurance companies against so-called adverse selection — in other words, people choosing insurance when they need care, like buying homeowners insurance when your house is on fire,” Holahan said.

Open enrollment periods are usually between fall and early winter, Tipirneni said. You can also usually sign up for certain life events, such as losing insurance, moving, getting married, having a baby, adopting a child, or if your household income drops below a certain amount.

Tipirneni said you can sign up for Medicaid – insurance funded by the United States government – at any time.

Some people get confused about the differences between premiums and claims. Premiums are the monthly fee you must pay to have health insurance, even if you never take advantage of your plan by getting a doctor. care or medication, said Tipirneni.

The claim is the bill that the health care provider sends to the insurance company, Tipirneni said, that the company will cover the portion of the health care service. Sometimes the provider will ask you to file a claim with the insurance company.

The deduction looks like a discount, but it’s not. It’s the amount you have to pay out-of-pocket for health care before your insurance coverage starts, Tipirneni said.

Deductibles usually start in January. If you have a $1,000 annual deductible, you must pay the full cost of any medical care until you reach $1,000. A doctor’s visit may not cost that much, so it may take months to get your deductible. If you see doctors infrequently, your deductible may not be due before the end of the year.

High deductible plans are popular because they are often associated with low monthly premiums. They can be very attractive because they appear to have the lowest upfront cost, but they might he actually ends up paying more, Tipirneni said. For example, if you have a $3,000 deductible plan but do not meet your deductible by the end of the year, you will pay the full cost of all health care received and monthly premiums.

“Sometimes the total out-of-pocket costs for you would be more than if you were to get a slightly higher premium and a lower deductible,” Tipirneni said.

If you’re young and healthy and don’t have any medical conditions or prescriptions, a plan with a higher deductible may make sense for you, Tipirneni said. If you have one or more health conditions, expect multiple doctor visits, or are prescribed medications, a plan with a lower deductible might be better.

There is no universal rule for how many medications and scheduled appointments would be necessary to get a lower deductible plan – especially since healthy people can have unexpected health needs, such as car accidents or sports injuries.

“All you can do is figure out how much health care you’re going to use in the next year,” Tipirneni said.

After you’ve met your deductible, you’ll usually pay a copayment at each doctor’s visit – a flat fee determined by the type of insurance you buy. The rest of the bill is usually covered by insurance.

Different services, such as doctor visits and therapy appointments, may have different copays because insurance plans cover different parts of each service, Tipirneni said.

Out-of-pocket costs are the general term for everything you pay in addition to the premium, Tipirneni said, so copays, deductibles, coinsurance and maybe more.

Some insurance companies may also require you to pay co-insurance, a percentage of the bill you pay even after your deductible is met, while the insurer handles the rest.

Some policies have out-of-pocket maximums, which limit your total expenses, Holahan said.

Knowing what services a plan covers can be confusing because it can change every year, Tipirneni said.

All plans have a list of covered benefits included in a handbook or other information provided at enrollment, Tipirneni said.

Sometimes plans don’t cover some of the conditions or problems you think, Holahan said. For example, a plan may cover a hearing exam, but not hearing aids.

“If you’re not sure, call the number on your health insurance card to talk to your health plan and ask how much it will be or if it’s covered,” Tipirneni said.

An in-network health care provider has predetermined agreements with your insurance company about what they can charge for their services, while an out-of-network provider does not have such a contract.

“If there are doctors and hospitals that are really important to you, you may want to choose a plan that has those in network,” Holahan said.

Online provider directories or networks published by insurance companies can help you see if your current doctor is in network.

If you have an important prescription drug, check your plan’s drug formulary, which is a list of drugs partially or fully covered by insurance. The extent to which a plan covers certain services or medications can change, so check each year, Tipirneni said.

Insurance plans may cover out-of-network providers to some extent, but typically much less than what they’ll cover for in-network providers, he added.

This can be a problem if you need to see a specific specialist or if you are away from home. If you have time before you travel, ask your health insurance provider if there are in-network providers or hospitals at your destination so you can pay less for unexpected care, Tipirneni said.

If you get an “Explanation of Benefits” statement and aren’t sure what that is, don’t worry, it’s not a bill. This is just an overview of what parties pay.

If you receive an unexpected bill, such as a surgery that involved multiple providers, some of whom you didn’t know were out-of-network, Tipirneni recommends appealing that bill to your insurance company or hospital.

“Usually with those conversations, you can negotiate the amount,” he said. “Some legislation has been passed – and I think more will come, hopefully – to try to make this happen less often and to make it more transparent, so that people can make more informed decisions about where to go for their care.”

If you need more help, health insurance navigators can help you determine which plan is right for you. Health insurance agents can do the same, but some plans may have an incentive to offer others, Tipirneni said.

If you’re signing up for government health insurance, you can first talk to staff who can help you find out if you’re eligible. The Affordable Care Act website has search features for local help.

If you’re enrolling in workplace health insurance, a human resources staff member may be able to explain the plans or provide materials, Holahan said.

“The more you can try to do your homework when choosing a plan, and if you need care, the better informed you will be and not pay more than you need to,” Tipirneni said.