Frequently Asked Health Insurance Questions

Health Insurance Basics

Q. What is a deductible?
A. A deductible is the amount you pay each calendar year before health insurance benefits are paid for covered medical expenses.

Q. When does my deductible start over?
A. Usually, your deductible starts over each year on January 1.

Q. What is coinsurance?
A. Coinsurance is the percentage of covered expenses you are responsible for after you meet your deductible. For example, you might 20% coinsurance of $5,000. That means you'll pay 20% and your insurance company pays 80% of the first $5,000 of covered expenses. After that, the insurance company pays all covered charges for the remainder of the year, up to the policy maximum.

Q. What is a copayment?
A. A copayment is a set amount that you pay for a specific service, such as $25 for an office visit. You are usually responsible for payment at the time of service.

Q. What is individual out-of-pocket expense?
A. It's the maximum amount in covered charges you'll pay -- per person, per calendar year. The amount is determined by adding your deductible and coinsurance together. For instance, if you have a $1,000 deductible and 20% coinsurance of the next $5,000, the most you'll pay is $2,000.

Q. What is family out-of-pocket expense?
A. Like individual out-of-pocket expense described above, it's the combined total of your deductible and coinsurance, but for your whole family -- the maximum amount in covered charges you'll pay no matter how many members of your family collect insurance benefits.

Q. What is the difference between a network and non-network (or out-of-network) medical provider?
A. A network provider is a doctor or hospital who's made an arrangement with an insurance company to provide services at a discounted rate. Non-network providers haven't arranged to provide services at a discounted rate for that insurance company's customers. Simply put, you'll typically pay less for services from a network provider than a non-network provider.

Q. What is a Preferred Provider Organization (PPO)?
A. A PPO is a large group of doctors and hospitals who've agreed to provide their services to customers of a certain insurance company at a discounted rate. Buy a PPO plan to reduce your premium and out-of-pocket costs.

Q. What is an indemnity plan?
A. An indemnity plan, also called a traditional health insurance plan, gives you the freedom to choose any doctor or hospital for your care. And since an indemnity plan isn't associated with any network, you won't pay any penalty for choosing a particular doctor or hospital. Premiums for an indemnity plan are higher than PPO plans.

Plan Differences - Things to Consider

Q. Different plans have different lifetime benefit maximums. What does that mean?
A. The lifetime benefit maximum is the total amount a plan will pay out for as long as you own it.

Q. Does ambulance coverage include air ambulance?
A. Not all insurance plans include air ambulance service. Read the exclusions section of a policy carefully to make sure you won't be faced with an air ambulance bill, which can easily be $5,000.

Cost Options

Q. How can I help reduce the costs of my insurance coverage?
A. The easiest way to reduce your costs is to buy a plan with a higher deductible. With a higher deductible, you share more of the cost of your care. But, if you don't have a need for care, you're not spending money for benefits you won't use.

In addition to choosing the right plan design, a Health Savings Account (HSA) is a terrific way to offset costs. This special type of account offers tax benefits on money put aside for future medical expenses. You enjoy tax-deductible contributions, tax-deferred interest, and tax-advantaged withdrawals for qualified medical expenses.

Q. What is the difference in plans with higher or lower premiums?
A. It's really about choice and trade-offs.

• Typically, you'd choose a higher premium plan if you want your health insurance plan to pay mainly for routine needs, like a doctor visit or a prescription. It feels affordable to pay only a $25 copay at the time of visit, but you'll pay more for the convenience of knowing what you'll spend every time you visit the doctor or need a prescription.
• You'd choose a lower premium plan if you want your health insurance to protect you against a serious illness or injury. You'll pay more out of your pocket for the costs associated with everyday health care needs, but you'll pay less overall in premium.

Q. What is a Health Savings Account (HSA)?
A. A Health Savings Account (HSA) is an account that works like an Individual Retirement Account (IRA), except the money saved is earmarked for future health care costs.

• Anyone who buys a qualified high deductible health plan (one that meets the requirements the government has determined) can open an HSA.
• The money you deposit into your Health Savings Account, as well as the earnings, is tax-sheltered. You can withdraw money at any time to pay for qualified medical expenses, without being penalized.
• You can even roll over unused balances from year to year.

• Gain greater control over your health care dollars. You can withdraw your funds for qualified medical expenses as you need them. Your withdrawals are tax sheltered and penalty-free when you use them for qualified medical expenses.
• Broaden your range of health care services. While you can use funds from your HSA to pay for covered expenses that apply toward your deductible, you also can use those dollars to pay for qualified medical expenses that your plan doesn't cover -- things like contact lenses, dental services, non-prescription drugs, acupuncture, and even long term care premiums.
• Gain tax advantages. Contributions and earnings are tax sheltered. Distributions are also tax sheltered, if used for qualified medical expenses.
• Supplement your income when you retire. At age 65, your accumulated funds can be withdrawn for medical expenses not covered by Medicare. Funds used for non-qualified expenses may be subject to penalties and income tax.

Q: What should I consider when looking at a health plan and the company that offers it?
A: It's about more than just the premium. When comparing health plans, assess the standard benefits that each company has to offer.

• Evaluate limits on important things, like prescription drugs and hospitalization.
• Look at the available lifetime benefit maximum and how the company pays for ambulance service, which can be very expensive.
• Beyond what a plan offers, look at a company's experience and focus -- since it takes a long time to become an expert at health insurance.
• You'll also want to look at the company's strength and stability, so you can rest assured that the company is financially stable and will be there when you need it.

This is summary information. Assurant Health and its legal entities are not engaged in rendering tax advice. Please contact a qualified tax professional for tax advice. Learn more about Assurant Health's products.