7 Crucial Terms to Know Before Buying a Policy

7 Crucial Terms to Know Before Buying a Policy

Navigating the world of health insurance can be overwhelming, especially for those new to the process. Understanding the key terms and concepts is essential to making informed decisions about your coverage. With this knowledge, you’ll be able to better choose a health insurance policy that best fits your needs and your budget.

1. Premium

Your premium is the amount you pay for your health insurance coverage. Most commonly, you pay your health insurance premium each month, but you can also pay it quarterly, semiannually, or annually (depending on what payment frequencies your chosen insurance company allows). Your health insurance premium can be based on several different factors including your age, the number of people on your policy and their ages, your zip code, plan benefits, and your income (if you choose to apply through your state’s health insurance Exchange).

Your health insurance premium changes each January 1st as each insurance company updates their rates at the start of the year. During the calendar year, your premium will be the same each month until the start of the next year. If you are enrolled on your state’s health insurance Exchange, your premium can change throughout the year if you need to change your income on your application as these are income-based programs.

2. Deductible

A deductible is the initial amount you must pay out of pocket before your insurance kicks in. For example, if your deductible is $1,000, and you have medical expenses totaling $2,000, then you would need to pay the first $1,000. After you pay the first $1,000, then the benefits of your health insurance policy would kick in. Your insurance policy might not pay the remaining $1,000 of your medical claim in full, so it’s important to understand your policy’s benefits to find out what your remaining responsibility would be.  Your deductible is a calendar year-based amount that resets every January 1st.

3. Copays vs. Coinsurance

A copay is a fixed amount you pay for a specific medical service or prescription drug. For example, if your plan says you have a copay of $20 when you go to see your primary care doctor, then you would go to the doctor and only pay $20. The insurance policy would cover the rest of the cost.

A coinsurance is a percentage of the cost of a medical service that you are responsible for paying. For example, if your plan has a 20% coinsurance for a certain service, then you would pay 20%, and the insurance company would pay the remaining 80%.

4. Out-of-Pocket Maximum

The out-of-pocket maximum is the most you’ll pay for covered medical expenses within a calendar year. Once you reach this maximum, your insurance company would pay 100% of all eligible expenses for the rest of that calendar year. Your out-of-pocket maximum is a calendar year-based amount that resets every January 1st. The out-of-pocket maximum varies from plan to plan, so it’s important to know what your plan’s benefit is.

5. In-Network vs. Out-of-Network

In-Network providers are those that have agreements with your insurance company to provide services at discounted rates. It is better to stay in-network when possible because this will be at a lower cost to you rather than going out-of-network.

Out-of-Network providers do not have agreements with your insurance company. You will normally pay higher costs from services or providers that are considered out-of-network.

When deciding a health insurance plan, it’s necessary to find out if your doctors are in-network with the plan you want to purchase. Taking the time to check if your doctors are in-network could significantly lower your costs throughout the year.

6. Eligible Medical Expenses

Eligible expenses are expenses that are either medically necessary or contribute to the well-being and treatment of an individual’s health condition. They can be things such as doctor visits, hospital visits, medications, diagnostic tests, preventative care, dental or vision care, medical equipment, etc. Things that are eligible medical expenses can be paid for by a Health Savings Account (HSA). There are also several ineligible expenses, such as expenses for cosmetic treatments.

7. Enrollment Period

An enrollment period is a window of time that you are allowed to enroll in a health insurance policy. There are two main types of enrollment periods: Open Enrollment Period and Special Enrollment Periods.

The Open Enrollment Period is always in the Fall and is available to use between November 1st and December 15th. Any plan you choose to enroll in during the Open Enrollment Period, is effective for the following January 1st. The Open Enrollment Period is a time when everyone can either choose a new plan or enroll in the same plan they have.

Special Enrollment Periods are time periods where those with special circumstances can enroll outside of the Open Enrollment Period. In general, if you are not eligible for a Special Enrollment Period, then you must enroll during the Open Enrollment Period in the Fall. Some examples of special circumstances which would qualify you to a Special Enrollment Period would include getting married, moving into the state, losing your employer coverage, etc.

What’s Next?

Buying a health insurance policy is a very important decision and understanding the above terms can help you to make a more informed decision and find a plan that really suits your needs.

If you need some complimentary advice and someone to go over your individual situation, we here at Vontell Insurance would love to talk with you and discuss your needs. We can help you look up your doctors, medications, certain services you need to be covered, and go over all the plan benefits with you so that you get enrolled in the plan that makes the most sense for you. As licensed brokers, we have decades of experience and contacts at each insurance company where we can quickly get answers to your questions. Give us a call today at (203) 375-7511 or send us an email at vontellinsurance@gmail.com to talk about getting a policy started.


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