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Health Insurance Basics 

 

Before you make an informed decision about your health insurance, make sure you understand the basics. At BlueCross BlueShield of Western New York, we're here to guide you and understand your health insurance coverage, the options, costs, and any issues that may impact you and your family.

 

What is health insurance?

Health insurance is designed to help individuals pay for medical expenses. Having insurance provides you an affordable way to get the care you need, and not just when you're sick or injured; it also covers preventive care such as annual checkups, screenings, and other tests. 

 

Do I need health insurance?

Health care is an expensive cost to bear. Most people cannot afford to pay the high cost of health care on their own. That's what health insurance is for - to help pay for medical expenses. As a member, you pay a premium each month, and your insurer pays for a portion of your covered medical costs. Instead of paying hundreds, even thousands of dollars out-of-pocket for medical visits and procedures, you pay a lesser amount based on the plan you select. 

 

Health insurance is not just for times of sickness or injury. You can take advantage of the many preventive services offered by your plan to keep you healthy.  When you stay on top of regular doctor visits and get the recommended screenings and tests, you are more likely to prevent and detect any serious conditions that may arise. 

 

Lastly, most health plans offer members wellness programs and discounts, such as our wellness debit card

 

How health insurance works

Essentially, all health insurance works in the same manner. The insurance company collects premiums and pays out benefits. Members pay premiums and collect benefits. Payments vary based on the member's policy and specific coverage. Some plans offer comprehensive coverage, meaning that many different services and covered, while other plans are designed to fill a specific gap in coverage. Before choosing a plan, it is important to assess your medical needs. You should also verify that your doctors are included in the plan's network before you make a coverage decision.

 

Common health insurance terms

Health insurance terms are confusing to understand. Learning commonly used terms and how they apply to your coverage can help you make an informed decision about your coverage. 

 

Policies do vary, however, there are essential features included in all plans that you should be familiar with when looking at health coverage and its costs. 

Benefit year

The 12-month period for which health insurance benefits are received by the plan member, not necessarily following the calendar year. 

Claim

A request by a health plan member, or the member's doctor for the insurance company to pay for medical services. 

Copayment (copay)

Copays are specifically set prices for medical services or supplies at the time of service. You many be charged a copay for doctor visits and prescriptions. 

Coinsurance

The shared costs between you and your health plan coverage. It is the percent of covered medical expenses that you are required to pay after your deductible is met. 

Deductible

The amount you are responsible for paying out-of-pocket for covered medical services before your health insurance company begins to pay for your medical expenses each year. Once you hit your deductible, your health insurance company will use copayments and coinsurance to split costs with you (up to the out-of-pocket maximum, after which the insurance company pays for 100% of medical services). Typically, plans with lower premiums have higher deductibles. 

Explanation of Benefits (EOB)

The health insurance company's written explanation of how a medical claim was paid. It contains detailed information about what the company paid and costs the member paid. An EOB is not a bill. Learn more.

Flexible Spending Account (FSA)

This is an account that you put money into to pay for certain out-of-pocket health care costs. You do not pay tax on this money. 

Health Savings Account (HSA)

A personal savings account that allows participants to pay for medical expenses with pre-taxed dollars. You must be enrolled in a high deductible plan to be eligible for a HSA account.

In-Network

The physicians, hospitals, pharmacies and other health care providers that are contracted with your insurance company to provide you with medical services and supplies at discounted rates. You will generally pay less for services received by providers in the network. 

 

How this impacts you - It is important to verify that your doctors, both primary and any specialists are in-network. Bills for services from an 'out-of-network' provider are typically much higher. 

Network

A network is the group of physicians, hospitals, pharmacies and other health care providers that your health insurance company has contracted with to provide health care services to its members. 

Open enrollment period

Refers to the period of time (usually once per calendar year) when you can sign up for a health care plan or make your benefit selections. 

Out-of-pocket maximum

The highest amount of money you will pay during a year for coverage. This includes your deductible, copayments, and coinsurance, and it is in addition to your premiums. Beyond this amount, the insurance company will pay for all expenses on behalf of the member for the remainder of the coverage year. 

Out-of-network

Physicians, hospitals, pharmacies and other health care providers that are not part of your health insurance company's network of preferred providers.

 

How this impacts you - You will generally pay more for any services received from an 'out-of-network' provider.  

Premium

A premium is the amount a member pays for health coverage for a specific coverage period, typically one calendar year. To continue receiving health coverage from year to year, you must enroll once per year. 

For more health insurance terminology, visit our glossary

 

Next section: Keeping health insurance affordable