Taking care of our health can seem affordable, as long as we stick to healthy lifestyles and only need to go for a medical checkup every now and then. But then life happens, and the medical checkup turns into a full course of treatment, appointments, follow-ups, and a plethora of examinations and tests. If you’ve got nothing to back you up, your out-of-the-pocket expenses will quickly be legendary.

On the other hand, enrolling in a health insurance plan may feel overwhelming. There are way too many options to choose from. We’ll try to simplify your choices in this article, we’ll explain everything you need to know about different types of health insurance plans and how they work.

Common Terms to Get Familiar With

If you’re new to health insurance, you might very well feel overwhelmed with all of its terms. Here’s a glossary to get you started:

Premium: the monthly payment you make to get insurance, it kind of works like a membership subscription. Deductible: the amount you pay out-of-pocket in a year before the insurance benefits kick in. Coinsurance: once you’ve reached your deductible limits, your insurance plan kicks in. They cover a percentage, and the percentage you’re paying is called “coinsurance”. Copayment: the amount you’ll pay every time you visit a physician, with specialists costing more than primary care physicians. Out-Of-Pocket Maximum: the amount of money you pay on your own before your insurance kicks in, and it’s the sum of both deductibles and copayments. Waiting Period: the time you wait after enrolling in a plan before you start benefiting from the insurance. Enrollment/Disenrollment Period: there’s an open window that differs according to the plan you want to enroll in. If you miss this window, you won’t be able to enroll/disenroll in a plan until the next window.

Ways to get a Health Insurance Plan

You can get health insurance from multiple sources; it all depends on your situation. You may get your insurance through your employer or educational institute, enroll in a plan as an individual to cover your own and your family’s insurance or get Medicare of Medicaid.

Group Insurance Through Work or Union

If you’re an employee, then there are high chances that your work offers medical and health insurance in your compensation package. The same goes if you’re a member of a union or a syndicate. This kind of insurance is commonly known as group insurance, and it comes with its own advantages. In a group health insurance, the employer or the union purchases an insurance plan that covers their employees or members and their families. They choose from a variety of insurance plans offered by the insurers and, depending on their choice, they can offer one plan to their beneficiaries or let them choose from different plans. Instead of paying full premiums on their own, the employees or members split the cost of the monthly premium with their insurance provider, reducing their healthcare costs significantly. The employers also benefit from offering health insurance to their employees, and it can come as tax benefits.

Health Insurance as a Student

Some educational institutes offer health insurance to their students. If you’re studying in one of those institutes, then you’ll be eligible for getting the benefits of their student health plans, which can provide sufficient health coverage. You can also enroll in a Health Insurance Marketplace, whether or not you have student healthcare privileges. There are a variety of health insurance in the marketplace for students, each requiring their own paperwork. But generally speaking, you can enroll in your own plan whether you’re independent, dependent on your parents, living with them or not, over or under 26 years of age. You’ll find plans to suit your own situation.

Individual Insurance Directly from Insurers

If you’re an adult and you don’t have workplace benefits; for instance, you work as a freelancer or your work doesn’t offer health insurance, then you can get your insurance directly from private insurers. This kind of insurance will cover you and your family members, but you’ll pay for its monthly premium fully on your own.

The monthly premium you pay will depend on the plan structure you choose and the kind of membership, which can be divided into 5 categories as follows:

Bronze: you pay 40% coinsurance, and your insurer pays 60%

Silver: you pay 30% coinsurance, and your insurer pays 70%

Gold: you pay 20% coinsurance, and your insurer pays 80%

Platinum: you pay 10% coinsurance, and the insurer pays 90%

Catastrophic: you pay 40% or more coinsurance, and your insurer pays 60% or less. Catastrophic coverage is only available to men and women younger than 30, or for individuals who qualify for a hardship exemption.

Generally speaking, individual insurance is much more expensive than joining group insurance. However, if your income is 400% of the federal poverty level or less, you can be eligible for reduced premiums, minimize out-of-pocket expenses, and even tax breaks. In this case, individual insurance can become pretty affordable.

Individual insurance plans will cover all essential health benefits, which include the following services:

The medical expenses of outpatient care

Emergency care

Hospitalization and inpatient care

Pregnancy and newborn care

Mental health and substance abuse

Prescription drug costs

Rehabilitation

Lab tests

Preventive and wellness services

Dental and vision care for children

Medicare

Medicare plans are available for seniors ages 65 and above, but its plans can be available for people under 65 years through some insurers. There are 4 parts in the Medicare plan:

Part A provides hospital insurance and inpatient coverage.

Part B provides medical insurance and outpatient coverage.

Part C offers alternative plans to benefit from Medicare benefits

Part D provides drug prescription coverage.

There are different plans when it comes to Medicare, and they can be summed up as follows:

Original Medicare Plan

The original Medicare plans offer Part A and Part B benefits only. By enrolling in an Original Medicare plan, also known as Fee-For-Service Medicare, you receive healthcare services that the government pays directly for. You’ll be required to pay a monthly premium for Part B services in most plans and some plans require a monthly premium for Part A as well. Medicare offers an easy and comprehensive way to get healthcare benefits. You’ll go to your physician of choice and get your benefits as long as they accept Medicare, and most physicians do. You won’t need to get any authorization beforehand from your Medicare insurer to get the benefits.

However, Medicare has some shortcomings. This plan can be satisfactory if your medical needs are minimal, but it can get quite expensive with recurrent checkups, tests, and medications. That’s because it comes with deductibles, you’ll be required to make a lot of copayments, and there’s a limit to the annual coverage it provides. It also doesn’t cover Part D, which means that you’ll pay for medications on your own. Other healthcare services such as dental or vision aren’t covered either.

Medigap Plans

As their name indicates, Medigap plans were created to fill the gaps in coverage found in the Original Medicare Plan. Medigap provides 10 different kinds of plans, each with its own coverage structure. The most remarkable thing about Medigap is that most plans cover the costs of copayments, deductibles, and healthcare travel; none of which are covered in the original Medicare plan. To get Medigap benefits, you’ll have to be enrolled in an original Medicare plan first. Then you’ll choose one of the 10 available plans according to your healthcare needs and pay a monthly premium to get the benefits. Out of the 10 Medigap plans, Plan F is the most popular, despite having the highest premium, due to the fact that it’s the most comprehensive plan. Plan G and Plan N are also quite popular, but it comes down to your own medical needs. On the other hand, just like the original Medicare plan, Medigap doesn’t cover dental or vision care, neither does it cover prescription drugs.

Medicare Advantage

Medicare Advantage offers an alternative way to get Medicare benefits, without enrolling in a Medicare plan. It serves in providing an all-in-one solution instead of having to supplement a Medicare plan with Medigap. Medicare Advantage plans also come in various structures, but most of them have the advantage of covering prescription drugs. Some plans also offer limited dental and vision care to provide basic healthcare services. You’ll still be required to pay a monthly premium for Part B, and depending on the plan, you might have to pay a monthly premium for Medicare Advantage as well. Unlike the Original Medicare plan, Medicare Advantage has a limit for your own out-of-pocket expenses. Once you reach its limit, the plan will kick in to cover part of your expenses.

Prescription Drug Plans

While enrolling in a Medicare Advantage plan will provide drug prescription coverage, seniors still have other options to get Part D insurance. Prescription Drug Plans (PDP) or Part D plans are offered on their own by private insurers. They also offer a variety of plan structures and costs, so you can compare Medicare Part D plans here to find out which plan best suits your medical needs. Part D plans consist of 4 stages: Annual Deductibles, Initial Coverage, Coverage Gap, and Catastrophic Coverage. 2020 plans come with standard annual deductibles of $435, but it can be fully or partially covered according to the plan you enroll in.

The types of medications and how much drug prescription are covered also vary according to the plan. Part D plans offer medication coverage by dividing the medications into tiers, each tier including a group of drugs based on their cost, doctor recommendation, and their type (generic name or brand name).

Medicaid and Children’s Health Insurance Plan

There are other programs offered by the government to provide healthcare coverage for eligible individuals, and these programs include Medicaid and Children’s Health Insurance Plans (CHIPs). The two programs are aimed at low-income individuals, seniors and children included. If you’re eligible for either plan, you can apply and get its benefits right away.

Types of Health Plans

When it comes to the details of the health plans offered by your insurance, they can vary greatly. There are different structures for each plan, dictating how you can get your healthcare benefits and how much you’ll spend on copayments, deductibles, and out-of-pocket expenses. Here’s an overview of the most common health plans.

Health Maintenance Organizations (HMOs) – HMOs offer a limited network of physicians for you to choose from, except in case you’re facing an emergency. You’ll only get the benefits of the plan if you seek physicians, specialists, or hospitals included in the network, otherwise, you’re on your own. They offer comprehensive services that focus on preventative care and wellness, usually, requiring that you live or work in its service area. On the other hand, this plan offers the easiest way of getting your services, as it requires little paperwork and authorization, compared to other plans.

Preferred Provider Organizations (PPOs) – You’ll pay less when you seek in-network services in this plan, giving you access to the healthcare benefits you need. You won’t need any doctor referrals or authorizations to get the benefits, and you can seek out-of-network services for extra fees.

Exclusive Provider Organizations (EPOs) – This plan offers exclusive benefits to its network of healthcare services only. Unless it’s a medical emergency, you’ll pay the full expenses if you seek out-of-network services.

Point-of-service (POS) Plans – You’ll need to get a referral from your primary care physician to get POS benefits. This plan provides partial coverage when you seek physicians, specialists, and hospitals of its own network. You can still seek out-of-network services, but you’ll pay more.

Looking into the options you have to get a health insurance plan can seem overwhelming. To make it simple, you can get different kinds of insurance depending on your situation. These options include getting group insurance benefits through your employer or union, getting student health plan benefits, purchasing individual insurance for you and your family, enrolling in Medicare as a senior, or getting Medicaid and other government-funded programs if you’re eligible. Health plans vary in structure, cost, and coverage, so make sure to compare the plans you have and then choose the one that best suits you.