Health Insurance 101

Doing a little planning and homework goes a long way toward choosing the best insurance option for your situation. By understanding how health insurance works, you will have more confidence when buying insurance.

Health Insurance Provides Financial Protection

You may be asking yourself, “Why do I need health insurance?”

The answer is simple – to protect your finances if you get sick or in an accident. Healthcare is expensive. It is easy to rack up hundreds of thousands of dollars of costs for surgeries, hospital stays, doctor bills, drugs and treatments.

When you have insurance, the cost of care is usually lower than what you would pay on your own. This is because in-network providers usually agree to lower prices with insurers.

In addition, starting in 2014, it is the law to have insurance. You may have to pay a penalty when filing your taxes if you did not have insurance.

New health insurance plans focus on preventive care and screenings to help you stay healthy. Taking better care of yourself and finding health problems early saves you money in the long run.

One of the advantages of buying a new health insurance plan is you’ll receive preventive tests and services at no cost to you. That means you don’t have to pay anything for screenings and tests like:

• Blood pressure, diabetes and cholesterol tests
• Many cancer screenings, including mammograms and colonoscopies
• Counseling on such topics as quitting smoking, losing weight, eating healthy, treating depression, reducing alcohol use
• Regular well-baby and well-child visits, from birth to age 21
• Routine vaccinations against diseases, such as measles, polio or meningitis
• Counseling, screening and vaccines to ensure healthy pregnancies
• Flu and pneumonia shots

The cost of the plan — also known as your monthly premium — is one factor to look at when choosing a health insurance plan.

Typically, the lower the monthly premium, the higher your out-of-pocket costs. Some people prefer a higher premium for lower out-of-pocket costs. Other people, who don’t expect to need a lot of healthcare services, may prefer a plan with a lower monthly premium and take the risk of higher out-of-pocket costs.

Other factors to look at:

• What you pay for office visits, drugs and other services (coinsurance or copayment)
  • Coinsurance is a percent of the costs, such as 20 percent
  • Copayment is a flat amount, such as $20 for a doctor’s visit or $10 for a prescription
• How much you pay out-of-pocket before you have coverage (deductible)
• The most you’ll pay each year (out-of-pocket maximum)
• What doctors or hospitals are in the health insurer’s network; typically, the bigger the network, the more expensive the premium because you have more choices

All health insurance plans certified to be sold on the new Health Insurance Marketplace will be required to offer the same basic benefits. These basic benefits are called essential health benefits and cover 10 basic categories such as:

• Office visits
• Hospital care
• Prescription drugs

Plans will be grouped in tiers based on how much financial protection the health insurance policy will cover. The plans are called metal plans because they are grouped based on four precious metals:

Type of Plan	What It Covers	Your Pay	Premium Cost
Bronze	60 percent of the medical costs	40 percent of the medical costs	Lowest
Silver	70 percent of the medical costs	30 percent of the medical costs	Medium
Gold	80 percent of the medical costs	20 percent of the medical costs	High
Platinum	90 percent of the medical costs	10 percent of the medical costs	Highest

Learn more about the new Health Insurance Marketplace.