Health Insurance Jargon You Need to Know

The health care system can be intimidating. Words like deductibles, out-of-pocket, and premiums can sound like a foreign language. Below, we’ve crafted a blog that explains exactly what words you need to know when navigating the health insurance market.

What are premiums, deductibles, coinsurance and copays?

These insurance terms refer to different kinds of payments that consumers are responsible for. The amount you’ll pay varies from plan to plan: For instance, higher premiums often mean lower deductibles.

PREMIUM

The price of an insurance policy, typically charged annually or semiannually

DEDUCTIBLE

The amount of loss paid by the policyholder. Either a specified dollar amount, a percentage of the claim amount, or a specified amount of time that must elapse before benefits are paid. The bigger the deductible, the lower the premium charged for the same coverage.

COINSURANCE

In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20 percent health insurance coinsurance clause, the policyholder pays for the deductible plus 20 percent of his covered losses. After paying 80 percent of losses up to a specified ceiling, the insurer starts paying 100 percent of losses.

COPAYS

A payment made by a beneficiary (especially for health services) in addition to that made by an insurer.

FSA vs. HSA: How do health care accounts work?

If you like saving money, you’ll want to know more about Flexible Savings Accounts and Health Savings Accounts. Both let you deposit pre-tax dollars to cover health care expenses, saving you about 30 cents on the dollar.

Flexible Savings Account (FSA)

An FSA is similar to an HRA in that benefits are nominally-funded and paid from the general assets of the employer. There are also no requirements for what insurance the employee is enrolled in, though the employer must offer qualified coverage.

However, there are several differences between the two. Contributions to an FSA need to be fixed on an annual basis, regardless of how many expenses are incurred that year. Also, the funds can be deducted from an employee’s pre-tax payroll, making for greater tax savings. Additionally, employees may contribute the money too, though there is a $2,250 annual limit for that.

All unused FSA funds can be carried over to the following year for a grace period of two and a half months. After that, only $500 of the funds remain available. If employment is terminated, funds must be made available to the employee under COBRA guidelines.

Health Savings Account (HSA):

HSAs are both for contributions by the insured individuals themselves or from employers, but can only be used if you are enrolled in qualified HSA high deductible insurance plan. The funds in this account can be used to cover any qualified medical expense. Whatever funds in the account remain unused are fully carried over for use during the following year.

You or your employer contributes a set amount per year (up to $3,350 a person or $6,750 a family) to the HSA. These funds can be deposited directly from your pre-tax payroll, so you will not pay any taxes on this portion of your income or you can put them in with post-tax dollars and take a deduction when you file your tax return. Employer contributions qualify as a valid business expense. Funds in HSA accounts can also be invested and accrue interest on a tax free basis.

What perks can I get through my health insurance?

Your health plan may offer benefits you don’t know about…but should. Some will subsidize your gym membership; others have a medical hotline you can call 24/7. Read about other perks you might have access to, so you can make the most of your health insurance.

Is vision insurance worth it?

Most medical plans don’t cover prescription glasses and contacts. For that, you’ll need to supplement your plan with vision insurance. Even if you have great vision, an annual eye exam can catch early signs of general health problems.

Cosmo Insurance Agency is an independent insurance agency serving surrounding communities in New Jersey. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating the latest in technology-based tools and laws on healthcare, employee benefits, life insurance and finance, we keep our clients up-to-date with the plans that encompass all of their needs, whether it is individual or group insurance.


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https://www.aetna.com/health-guide/health-insurance-ultimate-guide.html
Posted 3:00 PM

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