Explaining “healthcare lingo” in “lay” terms is essential to facilitating the medical insurance conversation with your young adult. Analogies are even better but this can be challenging when there are few other industries or business products that equate to the complexity of health insurance.
With auto insurance, your rates are based on your age, gender, specs for your car, driving record and whether you are grouping your auto insurance with your homeowners and umbrella policy. Rather cut and dry compared to health insurance. In addition, with all of the payment levels of copays, deductibles, out of pocket and co-insurance, it’s easy to envision an unending stream of money flowing out of your checking account if you don’t understand the process.
There are so many products and packaging to meet a variety of consumer needs. As reimbursement strategies, benefit plans and consumer contributions to coverage have evolved over time, the consumer must stay abreast of these changes in order to purchase the best coverage. As a baby boomer, I can only equate understanding insurance to attending an all-day social media class with no baseline computer skills or knowledge of LinkedIn, Facebook, YouTube or Twitter.
Some process things to remember:
Medical providers (physicians and healthcare institutions) determine their own charge for services.
Medicare and Medicaid determine what they will pay medical provider for services.
Insurance companies negotiate with medical providers to determine allowable amounts and allowable charges based on “group” or contracted rates. That’s one reason why it is even more important to have insurance so you are not paying the “regular” charge for services.
There are dozens of terms to understand for healthcare insurance. It can be overwhelming. If you have no insurance or healthcare knowledge, start small.
Below are some standard definitions.
Current Types of Plans and Services – non Medicare/Medicaid information
Fee for Service (FFS) or indemnity plans – plans that allow the consumer the choice to go to any doctor or healthcare facility. Generally, these plans are more expensive but do offer choice.
PPO – A health plan that is designed to encourage consumers to use a network of selected healthcare providers. Your expenses should be lower if you use a physician or hospital in the network than if you go to providers outside of the network.
Open Access – plans that allow you to self-refer to physicians, particularly specialists without obtaining prior approval from a primary care provider.
Health Savings Account – A tax-advantaged savings account that individuals and employees in group policies can open to pay for qualified medical expenses. HSAs may only be created in conjunction with a high deductible health plan.
High Deductible Health Plan – A plan with higher deductible than a regular plan. The plan description will define the plan as a high deductible plan. The U.S. Department of the Treasurer specifies the annual deductible requirements.
Medical Exchange – State marketplaces designed to improve the access and selection process of insurance for the consumer. MEs will calculate premium subsidies, enrollment, quality oversight, certification of qualified health plans that can be sold in the exchange. Available in select markets and expected roll-out nationally: 2014.
There are many websites to help with more detailed information and instructions. Some of my favorites are:
Medical Cost – Definitions and Processes