INSURRANCE

A Guide to American Health Insurance Terminology

Introduction

Hello! I’m Syed Ahtasham Shah Bukhari , and recently, my COBRA insurance ran out, so I used that QLE to look up some HDHPs and PPOs but ended up going with an average premium HMO health insurance policy. Every word in that sentence burned as it came out of my mouth. That’s right kinfolk , I ’m talking about the beautiful American custom of secret healthcare. Something embedded so deeply in the heart of the American people that only a surgeon could excise it, and it would cost at least 60 thousand dollars.

My Journey to Finding Health Insurance

As an adult who left a job with benefits at the end of 2020, I had planned to find my own health insurance much earlier. But I had my own doctors and therapists that I already liked. And every time I faced the marketplace’s heinous user interface and jargon-filled summaries, my mind would shrivel up like a deflating parade balloon. So when I was forced to find a new health insurance provider in June of this year, I decided to learn everything there was to know about the FSAs and the HSAs and the CHIPs and the dips and a one two three!

I do, finally, have new health insurance, although it was a long and difficult road to get there. And although I am definitely not the best person to explain the intricacies of the marketplace, I’ve made this video to help ease you into the terminology in case you need to purchase health insurance and don’t want to spend a year and a half doing what I did.

What is Health Insurance?

Look we gotta start with a strong foundation. Insurance is a way to manage risk. Say I’ve got a figurine that I really love and would be heartbroken if *SOMETHING TERRIBLE* ever happened to it. An insurance company can quantify that emotional attachment and say “Hey, if *SOMETHING TERRIBLE* happens to your figurine, we’ll pay you $100. All you gotta do is pay us $1 every month.” So if I sign that contract and pay them $1 every month, and *SOMETHING TERRIBLE* does happen to it, they’ll pay me $100 so I can replace it. But I could never really replace it. Health insurance is like that, *CRASHING NOISE* but for your health! And considering your health is defined as the mental and physical condition of your body, then health insurance should pay for you to get better in the event of an illness or bone break or *SOMETHING TERRIBLE.* You know, let’s go ahead and get rid of the Mental part of that. Can you make it “Specific parts of the…” Throw an extremely on top of tha—

Dental and Vision Insurance

Here in the United States of America, scientists have researched for dozens of years in order to prove one inimitable truth: your teeth and your eyes are not a part of your body. And although we’ve gotten closer to understanding what those little wet balls are doing inside your skull, 9 out of 10 dentists agree that your teeth should not be trusted.

Premiums and Deductibles

Ooh! A fancy word! Except it actually just means the fee you pay to your provider, usually monthly, in order to keep up your health insurance. It’s essentially the same thing as a subscription fee to Netflix, except in this case, you lose your health insurance if you stop paying it.

What are Copays and Coinsurance?

So you pay your premium every month! That’s great. It allows you to carry around a little card that says you’re insured and you can go to doctor and they’ll give you the bill and you have to pay all of it until you’ve filled up your deductible. For the sake of this example, let’s say that your deductible is $100. If you go to get a medical test that costs $100 dollars, you will have to pay $100 dollars. But after that, you’ve fully paid up your deductible, and that means the next time you go get a $100 medical test, your insurance will pay for it. Or part of it, because there’s also copays and coinsurance.

In-Network vs. Out-of-Network

Most insurances have a list of providers that are considered “in-network,” which just means that they work with the insurance company, and the procedures you get with them will be covered. At least in part. Anyone who isn’t in-network is, surprise, out-of-network, and doesn’t get coverage. Now, if this seems simple, that’s because it is one of the easiest things to grasp about health insurance.

HMO, PPO, EPO, and POS Plans

So you’ve got a basic understanding of the things that make up a health insurance plan, and you’re ready to dive into the dark depths of acronym hell. These are all different types of health insurance policies, and they stand for Health Maintenance Organization, Preferred Provider Organization, Exclusive Provider Organization, and Point of Service.

HSA, MSA, FSA, and MRA

Ho boy! Let’s split these acronyms up so that way you can tell if you even need to worry about them in the first place. A Health Savings Account and a Medical Savings Account are only available to you if you have an HDHP, which is a High Deductible Health Plan. And a Flexible Spending Account and Health Reimbursement Arrangement is only available to you via an employer. So if you don’t have an HDHP, you don’t gotta worry about these two, and if you don’t have a job that has health benefits, you don’t need to worry about these two.

Medicare and Medicaid

These two words mean VERY different things. But they’re both government-funded programs related to healthcare, so a lot of people, myself included, will use one word when they mean the other. Heck, if you Google either of them, the top result is gonna be Medicaid vs. Medicare, the lesser-known sequel to Alien vs. Predator. One of the main differences between the two is your eligibility. For Medicaid, eligibility is based on your Modified Adjusted Gross Income, or Magi. This means it’s predominantly for low-income individuals and families. Medicare is purely federal, and it’s predominantly for people over the age of 65.

Conclusion

I really wish I had a good way to wrap up this video with, like, a cool, quick tip on how to get the good health insurance and avoid the bad and also to dismantle the whole private health insurance system, but I don’t because there isn’t. And I sincerely doubt that there will be anytime soon.

If you take a look at lobbying money, health insurance is always one of the top spenders. Blue Cross/Blue Shield, a conglomerate that is responsible for insuring nearly one third of all Americans, consistently spends about 25 million on lobbying a year. And though I can’t say for certain what that money gets used for, I can promise you it hasn’t made this insurance system any easier to grasp.

So much of health insurance—something that is designed to help you navigate the medical system—leaves you entirely on your own. And that’s why I think it’s important to have even a little grasp on what these terms mean. And although this video is predominantly useless, I hope that I’ve at least made these terms feel a little less overwhelming to you. And if I’ve accidentally made them feel more overwhelming, just know that there are so so many more terms and there is so much more detail and explanations and caveats and this is just the tip of the iceberg.

For real though, it’s normal to be overwhelmed. The system sucks. And as much as I’d like to be able to talk to someone about this overwhelmed feeling I have, um, my therapist of the past four years actually isn’t covered by my new health insurance so… Oopsie daisy! I made this video instead.

But hey, we’re working through it together, and there are plenty of healthcare reform advocacy groups that you can join or support if you, like me, would prefer our system to work a little better for the people it’s supposed to help.


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FAQ

What is a premium?

  • A premium is the amount you pay for your health insurance coverage, typically on a monthly basis. It’s like a subscription fee for your health plan.

What is a deductible?

  • A deductible is the amount you must pay out of your own pocket before your insurance starts covering costs. For example, if your deductible is $1,000, you pay the first $1,000 of covered expenses, and then your insurance kicks in.

What is a copayment?

  • A copayment (or copay) is a fixed amount you pay for covered services, such as doctor visits or prescriptions, at the time of service. It’s a way to share costs with your insurance company.

What is coinsurance?

  • Coinsurance is the percentage of costs you pay for covered services after you’ve met your deductible. For instance, if your coinsurance is 20%, you pay 20% of covered expenses, and your insurance pays the remaining 80%.

What is an out-of-pocket maximum?

  • An out-of-pocket maximum is the most you’ll have to pay for covered services in a plan year. Once you reach this limit, your insurance company pays 100% of covered expenses for the rest of the year, excluding premiums.

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