Health Insurance 101

Health insurance is coverage that helps pay for service/benefits, both preventative, as well as, for sickness or injury. 

Premium:  the monthly dollar amount paid to the insurance company to have a plan in force
Copayments:  the fixed dollar amount paid for a service/benefit
Coinsurance:  a percentage amount (of the approved rate) paid for a service/benefit
Deductible:  the dollar amount that needs to be paid first, before an insurance plan will start paying.  The deductible must be met for certain services before the member can pay the copayment/coinsurance.
Out-Of-Pocket Max:  the maximum dollar amount (total copays/coinsurance) a member would pay in a calendar year.  This is the maximum risk that a member would have to pay, worst-case scenario.  

Health Maintenance Organizations (HMOs)

• HMOs use a Medical Groups (CA) or network (other states) to direct members on who and what is in-network.  A Medical Group is a list of doctors, hospitals, testing facilities, and other health care providers that are contracted with the group.  If a member uses a doctor or facility that isn’t in their Medical Group/network & without approval, they may have to pay the full cost of the services provided.
• HMO members usually have to assign a primary care doctor and must get a referral to see specialists within the Medical Group/network that was chosen.  A member's assigned primary care doctor and Medical Group/network can be found on the member's ID card.
• Primary care doctors and Medical Groups can be changed once a month by requesting the insurance company.
• Insurance companies contract with Medical Groups/networks and are in charge of benefits that are covered.  They also dictate the financial copay/coinsurance per service/benefit.  If a plan requires choosing a Medical Group, the Medical Group is in charge of the specific locations/facilities/vendors members can go.  Medical Groups are also in charge of approving/denying referrals, authorizations & services such as surgeries, physical therapy, medical equipment, etc.
• Examples of Medical Groups in LA & OC include Kaiser, St. Joseph's, Greater Newport Physicians, MemorialCare, Hoag, Mission Heritage, PIH, HealthCare LA, Prospect, ADOC, AMVI, UC Irvine Health, Caremore, Regal, Lakeside Community, Alamitos/FountainValley/Lakewood/St. Mary IPA, AppleCare, HealthCare Partners, & Monarch (merging under Optum), etc.

Exclusive Provider Organizations (EPOs)

• EPOs are a hybrid between HMOs and PPOs.  EPOs allow its members to see any doctor/specialist that is in-network without assigning a primary care doctor or getting a referral (in most cases);  limited to providers inside their networks.  An EPO's network is a list of doctors, hospitals, testing facilities, and other health care providers that are contracted with the EPO plan.  If a member uses a doctor or facility that isn’t in the EPO’s network, they may have to pay the full cost of the services provided.

Preferred Provider Organizations (PPOs)

• PPO plans have the biggest network with the most flexibility.  These plans give you a choice of getting care within or outside of a plan's network.  Members can go within the network for the standard copays/coinsurance.  They can also go out-of-network but would pay a higher deductible, copay/coinsurance (usually 50%), and out-of-pocket max.  On a PPO plan, members do not have to assign a primary care doctor and can self refer themselves to specialists.

Point-of-Service plans (POS)

• POS plans are a hybrid between HMO and PPO.  Members do have to choose and assign a primary care doctor.  They have the capability to go out-of-network but in doing so, would pay higher copays/coinsurance/deductible/out-of-pocket max. 

High Deductible Health Plan (HDHP)

• High Deductible Health Plans typically have lower plan premiums but higher deductibles than traditional insurance plans. 
• On an HDHP, members can use a health savings account or a health reimbursement arrangement to pay for qualified out-of-pocket medical costs. Additionally, this can lower the amount of federal tax members may owe.

Catastrophic Health Insurance Plan

• A catastrophic health insurance plan covers essential health benefits but has a very high deductible. This means it provides a kind of “safety net” coverage in case members have emergencies like unpredicted accidents or serious illnesses with high medical costs.
• Catastrophic plans usually do not provide coverage for services like prescription drugs or shots. 
• Premiums for catastrophic plans may be lower than traditional health insurance plans, but deductibles are usually much higher.

There are multiple types of Health Insurance Plans available:  

1. Short-Term: high-cost plans for short-term coverage under 12 months.  Generally only purchased by those who do not have coverage and are outside of the Annual Enrollment Period.   Some examples include those in between jobs, waiting for other coverage to begin, waiting to be eligible for Medicare coverage, etc.  These plans cover services and treatments related to unexpected illness and injury, such as doctor visits, emergency room visits, hospital stays, surgeries, and related x-rays and lab services.
2. Medicaid and the Children’s Health Insurance Program (CHIP):  federal-state plans for those who are considered low-income by each state's eligibility.
3. Medicare: federal health plan for those who are 65 or older, those with disabilities receiving SSDI, and those with end-stage renal disease.
4. Students: students have the option of getting a school-sponsored health plan. They may lose coverage if they become a part-time student or transfer schools.  Those who are under 26 also have the option to stay on their parent’s health plan till they come of age.
5. COBRA: offered by employers for the continuation of health insurance coverage for up to 18 months after an employee leaves employment.  Generally, these plans have high premiums.
6. Covered CA Plans:  also known as "The Marketplace Exchange," is the middle man between the insurance companies and the member.  Based on the adjusted gross income of tax household size, Covered CA may offer premium assistance to help pay a portion of the health insurance plan. 
7. Individual & Family Plans (direct/off-exchange):  Those who do not qualify for Covered CA or would not like to receive any premium assistance would buy directly from the insurance companies, also known as "off-exchange."  Members would be paying the full monthly premium of the health insurance plan.  

Having the right coverage is very important in every family. It can literally be a life or death situation.  We’ll make sure your family is properly covered with health insurance premiums you can afford.