Understanding U.S. Health Insurance

One of the key differences I’ve had to get to grips with since moving from Britain to the United States was how health care and health insurance works. To try and help anyone else figure it all out, or if you’re just curious, I’ve broken down key information into bite-sized chunks to make it clearer.

It is almost impossible to explain all the variable ways health insurance operates here, as every company, or employer that offers it, covers different things in different ways for different dollar amounts. So understanding what you need to have access to is vital before you take on any policy. There is no point, for example, in signing up for coverage that does not provide the birth control method you need or cover anything related to a condition you have.

The best way I can help with unpicking how it all works is to break down some key terms that you will encounter when reading about health insurance:

Health Insurance Provider

This is where you get your health insurance from. It can be through your employer, a private company, or via the Affordable Care Act, Medicaid, or Medicare. To be able to sign up for insurance you will have to pay a premium to your provider.

Premium

A fee you have to pay every month whether you access any health services or not, and basically, works like a monthly membership to your health insurance provider.

via Gallup

If you do access any health services, how much you pay for the care you receive will depend on what you have in your policy. You may have one, or more of the following in your plan:

Deductible

This is an amount of money you agree to pay before your insurance will kick in and manage the rest of the costs. How much that amount is will depend on what your policy offers but, for example, your deductible could be $1000 – which means you pay all costs up to that amount, and then your insurance covers the rest. It resets each year.

Out-of-Pocket Maximum

This is the maximum amount of cost you will have to pay for medical care in a year and is not the same as a deductible.

Copay

This a set fee that you pay when you access health care services. For example, you may have a copay of $20 for doctor visits, $15 for prescriptions, $40 for dental visits and $200 for ER treatment etc. Costs will differ depending on what care you are accessing and what your provider offers – and, important to note, copays do not go towards your deductible costs.

Coinsurance

This is a percentage cost of medical charges that is split between you and your insurance provider. It could be an 80/20 plan which means 80% is paid for by insurance and 20% is paid for by you.

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Here is an Example of How It May Work

Every month, whether you use any health care services or not, you pay your premium. When you do use medical services, you pay the total amount up to your deductible for the year. After you have reached that amount your insurance will start to pay the costs you incurred as outlined in your coinsurance plan until you reach your out-of-pocket maximum for the year.

So, if you have a deductible of $1000, and a coinsurance of 80/20, and your medical bill is $3000, you pay the deductible (-$1000 leaving $2000) then your insurance will cover 80% of the $2000 that is left (so they pay $1600) and you pay $400 (your 20% coinsurance share). You then continue to pay your copays and coinsurance up to the amount of your out-of-pocket maximum, and if you reach that, the insurance will then cover 100% of your medical costs until the end of the policy year and it resets again.

This only applies if you receive medical care within your network (your insurance provider has a set group of doctors, hospitals, clinics etc that they work with). If you go out-of-network, you could be liable for extra, or all costs.

When I lived in the UK, the highest cost I ever incurred was £12 (about $16) for a one off prescription. I went to my doctor to get a prescription for contraceptives (100% free) and also received some of the best hospital care, also for free, that would have gone into the tens of thousands of dollars in cost over here. So to get my head around how health insurance works it has taken a complete cultural reload. I am still learning, so if I have made any mistakes in my article, or you can point me to further research, then feel free to contact me. I hope I have helped explain some of how it all works!

Coming Soon: Key Information About Accessing Health Care Without Insurance

 

To see Zcypher’s original post, click here

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2 thoughts on “Understanding U.S. Health Insurance

  1. Susan says:

    Excellent explanation! Some people with employer-paid insurance have part of their paycheck withheld pre-tax and put in a fund called a flexible spending account or FSA. The money can be used for glasses, co-pays, contact lenses, and more. It’s a “use it or lose it” type of thing, so people try to get/rush to have medical apps around the end of the year when they realize they still have money in their account. I don’t have an FSA because we try not to go to the doctor very much. My co-pays are $40/60 for GP/Specialist and then I have an 80/20 co-pay. We also have to do wellness activities and do a physical and blood work or the premium is higher. The premium is also higher for smokers. Years ago my insurance was much better with lower co-pays. Prescription costs and co-pays are equally scary!
    Susan

    Like

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