Coinsurance is your share of the cost when you receive medical services. It is shown as a percentage – for example, 80 percent for a doctor's office visit or 70 percent for outpatient surgery. If you have 80 percent coinsurance for a certain service, this means your plan pays 80 percent of covered costs, and you pay the remaining 20 percent. Coinsurance is typically paid after the deductible is satisfied.
You may pay coinsurance when you:
Coinsurance can vary depending on the service and the type of provider you use. With most types of plans, you pay less when you use participating providers. In addition, when you use participating providers, your percentage is calculated based on the negotiated rate - the discounted amount the provider has agreed to charge for health plan members.
A flat amount you pay when you receive health care services. A co-payment can range from a few dollars to a few hundred dollars, depending on the services you need. Co-payments generally do not reduce the annual deductible or out-of-pocket maximums.
You may have to pay a co-payment when you:
Most individual health insurance plans have co-payments for doctor visit (some limited to a certain amount of visits, and prescription plan.
The amount of covered expenses you have to pay before the health plan pays for any services. A plan's deductible can apply to one person, all covered family members, or some combination. It's shown as an annual number, meaning your expenses accumulate during a plan year. When the new plan year starts, you start fresh with a new deductible to meet. With some types of plans, you have a spending account to help you pay for health care before you meet the deductible.
You may have to pay toward a deductible when you:
· Go to a doctor or dentist
· Fill a prescription
· Use an emergency room, urgent care center, or outpatient facility
· Have an inpatient hospital stay
A doctor who is trained to give basic care, such as a general practitioner, family practitioner, internist, or pediatrician. Another name for a family doctor is Primary Care Physician, or "PCP." Your insurance company determines who is considered a PCP according to your plan.
Flexible Spending Account (FSA)
FSAs allow you to set aside part of your paycheck before federal taxes are taken out (some states require you to pay taxes on FSA contributions). Then you can use the money to pay for either dependent care or health care, depending on which type of account your FSA is.
A health care FSA can be used for your expenses or another family member's - even if he or she is not covered by your health plan. You can spend health care FSA money on expenses not covered by your health plan, like deductibles, co-payments, and coinsurance. You may be able to use the FSA for dental and vision care expenses, also. Your employer chooses which items are eligible for FSA payment, within Internal Revenue Service regulations. If you do not use all your FSA money by the end of the plan year, you have to forfeit what is left.
Generic Prescription Drugs
A generic drug is the same as its brand-name counterpart in dosage, safety, strength, quality, performance, intended use, and how it is taken. According to the Food and Drug Administration:
· Generics work the same way and in the same amount of time as brand-name drugs.
· The differences between brand name and generic drugs are appearance, flavor, and certain inactive ingredients.
· Both brand name and generic drug manufacturers must meet the same government standards and good manufacturing practices.
· Generics usually cost less because their prices don't include the cost of new product research, development, and advertising.
Health Maintenance Organization (HMO) Plan
An HMO plan usually covers only services you receive from participating providers - unless your health care need is urgent or an emergency. With most HMO plans, you select a primary care physician (PCP) who tends to the majority of your health needs and refers you to a specialist if necessary.
Health plan is another name for health insurance or health benefits. A health plan provides certain benefits, as spelled out in a "Certificate of Coverage" or similar document. You and/or your employer pay a premium that entitles you to the benefits. Then, when you have a health care expense, you share the cost with your health plan as specified in your Certificate. A health plan pays benefits only for the covered services listed in your Certificate.
Health Reimbursement Arrangement (HRA)
An employer-funded account you can use for health expenses not covered by your plan, like deductibles, co-payments, and coinsurance. Your employer chooses which items are eligible, within Internal Revenue Service regulations. If you do not use all of your HRA funds during the plan year, you may be able to carry them over to the next year. This account is sometimes called a Personal Care Account (PCA).
Health Savings Account (HSA)
A special kind of account that allows you to set aside money for health care expenses before federal taxes are taken out (some states require you to pay taxes on HSA contributions. Colorado does not require you to pay taxes). An employee, employer, or both can put money in the account. You can spend HSA money for your health care expenses or another family member's - even if he or she is not covered by your health plan.
Money you do not use during the plan year stays in your account. Like a savings account at your bank, money in your account can earn interest - and you do not have to pay taxes on your earnings. HSAs are subject to several Internal Revenue Service regulations; for instance, you can only put money in an HSA if your only health insurance coverage is with a special kind of plan called a High Deductible Health Plan.
High Deductible Health Plan (HDHP)
(HDHP) is an IRS term to describe a kind of medical plan. Key features of a High Deductible Health Plan:
· Its annual deductible is higher than typical health plans. In 2005, the minimum deductible is $1,000 for an individual plan and $2,000 for a family plan. These amounts may be adjusted for inflation every year.
· It has one deductible for both medical and prescription expenses. That means money you spend on prescriptions helps you meet the deductible - but it also means your pharmacy benefits begin only after you've met the deductible. However, you may still get a discount price because insurance companies negotiate rates with pharmacies.
· Preventive care coverage may differ from other coverage. For example, you may have preventive care benefits before you meet the deductible.
· The plan has an out-of-pocket maximum. The maximum is a pre-set "cap" on how much you pay for covered services from participating providers during a plan year.
Maximum HSA Contribution
The IRS limit on how much can be deposited in your Health Savings Account within a calendar year. Generally, total contributions to the HSA from any source - you, your employer, or anyone else - cannot exceed your health plan deductible. If the deductible is higher than the IRS maximum, the IRS maximum is the limit.
Your coverage level (single or family) affects your limit. So does your age, since people over age 55 may be eligible for additional catch-up contributions. Your previous health plan can also affect your limit; if you had another High Deductible Health Plan in the same calendar year as the one you are enrolling for, you also have to take into consideration:
· Previous contributions
· Previous deductible
· Number of months covered by a High Deductible Plan
A group of doctors, hospitals, dentists, and other health care professionals who have agreed to charge a set rate for members of a health benefits plan. Network providers are also called participating providers. With most plan types - including Preferred Provider Organization (PPO) plans - your plan pays higher benefits when you use providers in the plan's network. Some plan types - including Health Maintenance Organizations (HMOs) - pay benefits ONLY when you use network providers (unless the care is for urgent or emergency health issues).
A nonparticipating provider is a health care professional or facility that is not under contract with a health plan or insurer to provide care to its members. If you use a nonparticipating provider:
· The provider can bill you for any balance not covered by your insurance plan.
· You may pay a much larger share of the total cost of your care.
· You pay toward a separate deductible.
The amounts you pay when you receive health care services. Out-of-pocket costs include co-payments for doctor's office visits and prescriptions, your deductible, and the coinsurance percentage you are responsible for. Your premium (the amount you pay for coverage) is not considered an out-of-pocket cost.
The limit, or ceiling, on your costs for medical care within the plan year. As you use health care services, much of what you pay counts toward your maximum out-of-pocket amount. Once you meet the maximum out-of-pocket amount, your plan provides 100 percent coverage. (You may still need to pay co-payments when you receive care.) Your plan might have a separate out-of-pocket maximum for benefits (such as transplant services or prescription drugs) in addition to the medical plan’s maximum.
A participating provider is a health care professional or facility that is under contract with a health plan or insurer to provide care to its members. Participating providers are members of your plan's network.
Using participating providers saves you money three ways:
· Generally, you pay a smaller percentage of the costs (coinsurance) when you stay in the network. Say, for example, you choose a plan with 100 percent coinsurance for participating providers and 70 percent coinsurance for nonparticipating providers. When you go to participating providers, the plan pays 100 percent of charges, and you pay nothing; if you use nonparticipating providers, the plan pays only 70 percent of the costs, and you pay the remainder.
· Your percentage is calculated based on the negotiated rate - the discounted amount the provider has agreed to charge for health plan members.
· The provider cannot bill you for charges above the negotiated rate.
Over-the-counter drugs per year: For this step in Build a Budget, enter the number of over-the-counter medications you, your spouse, and your dependents purchase in a typical 12-month period. This category includes drugs available without a prescription like cold medicines, heartburn relief, and pain relievers. Do not include vitamins or supplements – you will enter your spending for those items later.
Typically the 12-month period that an insurance policy is in effect (for example: January 2007 - December 2007 or July 2006 - June 2007). If you happen to be choosing your benefits at a time other than the beginning of your enrollment period, your benefits will be in effect until the end of the current plan year.
Paying a premium entitles you to insurance benefits. You pay the premium whether or not you use health care services. If you receive coverage through an employer, money may be taken out of your regular paycheck to cover your share of the premium. (Your employer pays the rest of the premium, if any.) For some retirees, COBRA participants, and other eligible employees, you pay the premium by check or some other means.
Preventive care is health care, such as tests and examinations, to keep you healthy or to prevent illness. Examples include annual physical exams, Pap tests, pelvic exams, yearly mammograms, and flu shots. Mammograms; Prostrate Screening and Children Immunizations and well-child exams are mandatory benefits in the state of Colorado.
Preferred Provider Organization (PPO) plan
With a PPO plan, you can choose any health care provider. However, when you go to a participating provider, the plan covers more of the cost. For example, the plan may pay 80 percent of charges when you go to participating providers and only 50 percent when you go to nonparticipating providers.
Prescriptions per year: For this step in Build a Budget, enter the number of prescription medications you, your spouse, and your dependents purchase in a typical 12-month period. For example, if you have one prescription that is refilled monthly, enter “12.” For two fills of three different medications, enter “6.” If you get prescriptions by mail order, think about how often you would fill the prescription if you went to the pharmacy instead; with most prescription-by-mail services, you receive a three-month supply each time, so this would count as three fills/refills.
Primary Care Physician (PCP)
PCP is a doctor who is trained to give basic care, like a general practitioner, family doctor, or pediatrician. Your insurance company determines who is considered a PCP according to your plan. In many managed care plans, like HMO plans, the primary care physician is a participating provider who coordinates your care - which means you have to see your primary care physician before you see a specialist.
Any doctor whose practice is in areas other than general medicine, family medicine, or pediatrics is considered a specialist. Specialists usually have advanced training and education related to a specific condition or part of the body. For example, a cardiologist specializes in heart and blood vessel care. Surgeons are also considered specialist. Specialists usually charge higher fees than doctors who provide primary care - so your health benefits plan may require you to pick up more of the cost. For example, your plan might specify a $30 co-payment for a family doctor and $45 for a specialist.
An "expense account" you can use to pay for certain health care items and services. The key benefit of these accounts is that you do not pay federal taxes on money you set aside. However, you may have to pay state taxes, depending on where you live.
The Internal Revenue Service (IRS) sets rules about how these accounts work, and expenses eligible for payment must be on an IRS-approved list. The following expenses are usually eligible for payment from a spending account:
· Health care costs like doctor’s office visits, lab tests, x-rays, and outpatient and inpatient hospital charges
· Dental services like cleanings and orthodontics
· Vision care like glasses, contacts and laser surgery
· Prescription drugs and some over-the-counter items
Three common account types:
· Flexible Spending Account - you put money in the account; unused money is lost at the end of the year.
· Health Reimbursement Arrangement - your employer puts money in the account; unused money can carry over, if you meet certain requirements.
· Health Savings Account - anyone can contribute to your account; unused money carries over automatically at the end of the year
A facility equipped to provide medical care for minor illnesses or injuries. Most are walk-in clinics that do not require an appointment. They are usually open longer hours than doctors' offices and have shorter wait times than hospital emergency rooms. For health situations that are not life threatening, you can save money by choosing an urgent care center instead of an emergency room.