Insurance Lingo 101
By Andrea Zlatkus
If you’re going through a divorce, you may be considering if, when and how to change your health insurance. Selecting insurance for you and your family can be a very daunting task… this would be an ideal time to quip about the fact that even Congress can’t figure it out, but finding insurance to fit your post-breakup life is deadly serious, and seriously overwhelming.
While it’s not a 100% fix for breaking down the complexity of the process, understanding the lingo is a good first step. Here are some terms to help you navigate the world of insurance:
ACA (ObamaCare) – Affordable Health Care/Exchange
The ACA provides essential health benefits that every plan must cover. These include doctor’s services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services and more. These are the minimum requirements; however, many plans offer more services. Depending on your needs, these marketplace plans come in Bronze, Silver, Gold and Platinum levels. To shop for the insurance within the ACA you will go to your state’s Marketplace. Depending on your income you may qualify for governmental assistance for these plans. To review the list of complete up-to-date services go to:
Children’s Health Insurance Program (CHIP)
Medicaid and the Children’s Health Insurance Program (CHIP) provide no-cost or low-cost health coverage for eligible children in Maryland. These programs provide health coverage for children so that they can get routine check-ups, immunizations and dental care to keep them healthy. For information about your state, go to:
District of Columbia:
Consolidated Omnibus Budget Reconciliation Act (COBRA)
This is a federal law that may allow you to temporarily keep health coverage after your employment ends, you lose coverage as a dependent of the covered employee, or another qualifying event. If you select COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, you pay 100% of the premiums, including the share the employer used to pay, plus a small administrative fee.
This is the percentage of costs of a covered health care service you pay after you’ve paid your deductible. Let’s say your health insurance plan’s allowed amount for an office visit is $100 and your coinsurance is 20%. You would pay $20 if your deductible has been met.
Copayment or Copay
A fixed amount ($25, for example) you pay for a covered health care service after you’ve paid your deductible. Let’s say your health insurance plan’s allowable cost for a doctor’s office visit is $100. Your copayment for a doctor visit is $25. Copayments (sometimes called “copays”) can vary for different services within the same plan, like drugs, lab tests, and visits to specialists. Generally plans with lower monthly premiums have higher copayments. Plans with higher monthly premiums usually have lower copayments.
If you are employed, you may be able to join your company’s insurance plan since you have a Life Changing Event with your divorce.
A deductible is the total amount that you must pay before your insurance company begins contributing. After you pay your deductible, you usually pay only a copayment or coinsurance for covered services. According to Investopedia, “If you get into an accident and your medical expenses are $2,000 and your deductible is $300, then you would have to pay the $300 out of pocket first before the insurance company paid the remaining $1,700. However, if your accident only resulted in $300 in medical expenses, then you would pay the $300 deductible and the insurance company would pay nothing.” As soon as you pay the total amount of your deductible, your health plan will start paying its portion of the cost.
Health Savings Account (HSA)
An HSA is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account to pay for deductibles, copayments, coinsurance, and some other expenses, you can lower your overall health care costs.
An HSA can be used only if you have a High Deductible Health Plan (HDHP) — generally any health plan (including a Marketplace plan) with a deductible of at least $1,350 for an individual or $2,700 for a family. When you view plans in the Marketplace, you can see if they’re “HSA-eligible.”
For 2018, you can contribute up to $3,450 for self-only HDHP coverage and up to $6,900 for family HDHP coverage. HSA funds roll over year to year if you don’t spend them. An HSA may earn interest, which is not taxable.
Some health insurance companies offer HSAs for their high deductible plans. Check with your company. You can also open an HSA through some banks and other financial institutions.
High Deductible Health Plan (HDHP)
A High Deductible Health Plan is an insurance plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes.
The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family. (This limit doesn’t apply to out-of-network services.)
Health Insurance Marketplace/Exchange
According to the IRS, the Health Insurance Marketplace — also known as the Health Insurance Exchange — is the place where people without healthcare insurance can find information about health insurance options and also purchase health care insurance. Information can also be found regarding eligibility for help with paying premiums and reducing out-of-pocket costs. Each year the Marketplace has an open enrollment period. All plans in the Individual Marketplace cover the same categories of essential health benefits and are prohibited from excluding treatment based on pre-existing conditions. You can also choose between plans with lower premiums and higher cost sharing when you need care, or higher monthly payments and lower cost sharing when you need care.
You can only enroll in Marketplace coverage during the annual Open Enrollment Period, unless you have a qualifying life event during the year.
Open Enrollment Period
This is the yearly period during which people can enroll in a health insurance plan. Open Enrollment for 2019 is over, but you may still be able to enroll in a Marketplace health insurance plan for 2019 if you qualify for a Special Enrollment Period.
Your deductible, coinsurance, and copay are considered out-of-pocket costs. In other words, they are health care expenses that you are responsible for.
This is the most you have to pay for covered services in a year. After you spend this amount on deductibles, copayments, and coinsurance, your health plan pays 100% of the costs of covered benefits. However, the out-of-pocket limit does not include your monthly premiums. It also doesn’t include anything you spend for services your plan doesn’t cover.
For the 2019 plan year: The out-of-pocket limit for a Marketplace plan is $7,900 for an individual plan and $15,800 for a family plan.
Out of Network
The percentage you pay of the allowed amount for covered health care services to providers who don’t contract with your health insurance or plan. Out-of-network coinsurance usually costs you more than in-network coinsurance. TIP: Always check to see if your current doctors are part of the plan you are considering. In-network coinsurance usually cost less.
The amount you pay for your health insurance every month.
Qualifying Life Event
Divorce or being legally separated and losing your insurance is a Qualifying Life Event change that allows you to apply for insurance outside of the annual open enrollment period. This Life Event Change will allow you to purchase health insurance through an exchange program.
Qualifying for Marketplace Savings
To get a premium tax credit or reduction of your out-of-pocket costs, you’ll need to provide an estimate of your household income to the Marketplace for the year you’re getting coverage. This can be challenging for business owners whose income may vary. You should provide your best estimate. Talk to your tax professional for advice on how to estimate your household income.
If you qualify for a premium tax credit or reduction of your out-of-pocket costs and your household income changes during the year, you should return to the Marketplace and update your estimated income as soon as possible. At the end of the year, if you make more than what you reported to the Marketplace, you may have to pay back some or all of the premium tax credits. If you make less, you could get additional premium tax credits when you file your taxes.
Short Term Health Insurance
According to Agile Health Insurance, Short Term Health Insurance provides coverage in case of accidents and illness for a defined period of time, often with a much lower monthly premium than other forms of major medical health insurance. There are two advantages of Short Term Health Insurance. First, you can use your Short Term Health Insurance plan to pay for services from any doctor or hospital (any willing provider). Yes, you can keep your doctor! Second, Short Term Health Insurance plans have no Open Enrollment restrictions, so you can apply for one any time of the year. You will be notified within minutes if your application is approved, and you can use your coverage as early as the next day.
Additional Health Insurance Products and Services
There are other products and services that may be available to people who run their own businesses, such as association health plans or short-term, limited duration insurance.
These products are not considered Marketplace coverage and they may not be available in all states. They may cover different benefits than Marketplace plans and you won’t be able to qualify for premium tax credits. They also do not follow the essential health benefits and the Short-term, limited duration plans may not cover pre-existing diagnoses. These plans are meant to bridge the gap until you can purchase insurance through a new job or the health exchange programs.
Health insurance terms can be confusing (and how!) but the primer above is a great starting point for understanding some of the terms that are frequently used by healthcare professionals. Once you’ve got a bit of a foothold for understanding these terms, reaching out to your attorney for a referral to a great insurance broker can help you keep the ball rolling. We know that this is a super overwhelming process. Hang in there. Prioritizing your health will help you keep your emotional equilibrium throughout your Court case. You got this!