Yeah, we know—believe us, we know—that you’ve heard about the word insurance before, and that you know the basic gist of it. After all, insurance means, well, insurance, which, in a nutshell, consisted of a provider covering some specified set of expenses. But we have to tell you that it’s much more complicated than that!
Even researchers in the University of Pennsylvania found through a study that college-level adults, who would otherwise find no difficulty navigating their way in an increasingly tech-oriented environment (not easy for boomers, we’ll say that much!) have had a difficult time understanding all the healthcare nuances as listed in Healthcare.gov, the official site of the Affordable Care Act (ACA).
The study followed 30 adults, between the ages of 19-30, who went on to sign up for health insurance. Two interviews were conducted for each participant; they were done before they signed up and a month after.
The results, as you might not expect, were quite depressing. 50% of the participants couldn’t define the word ‘deductible,’ and 25% don’t know the meaning of the word ‘coinsurance.’
The fact of the matter is that many are wont to confuse the terms and concepts involved in the world of healthcare insurance that it opens them up to financial risk down the road. Indeed, one participant thought that a high deductible plan would pay $6,000 towards his medical expenses only to find out later that the $6,000 is what he needed to pay upfront.
“Anyone who doesn’t understand the health insurance terms is going to have a difficult time making the best decisions for themselves when they shop for health insurance,” Dr. Wong, the University of Pennsylvania pediatrician who led the study, said.
To that end, we’ve listed, below, a few terms and concepts that you, as a young millennial, ought to be familiar with in the context of healthcare insurance.
1. Deductibles
A deductible is what you pay out of your pocket to your insurance provider before it starts covering your medical expenses. It is essentially the money you give to self-insure, before you can claim any medical coverage.
2. Coinsurance
This is the share that you pay for a medical expense after you’ve met your deductible. So if your insurance plan’s coverage is only 80% of a particular medical procedure, then your coinsurance will be 20%.
3. Premiums
These are the regular payments you make to keep your insurance policy.
4. Copay
This is the flat fee that some insurance providers require policy holders to pay per doctor’s visit. A plan might require its holder to pay, say, $20 per doctor’s visit. Not all insurance plans, of course, require their policy holders to copay.
5. Would I Need to Buy Health Insurance from an Insurance Marketplace?
Let’s put it this way. There are many ways to access health insurance, including through your parents, your employer, or from the government (if you’re eligible). If, for whatever reason, you don’t fall into the aforementioned categories, then you can still acquire health insurance from a government run marketplace or a private health insurance provider.
Remember that health insurance plans from private health providers are required to offer the same minimum benefits as those in a government run marketplace. In some cases, health insurance plans from private health providers might even provide more benefits at lower costs, depending on your specific circumstance. So do the wise thing and always take a look at both markets to get the best out of your money.
6. If I’m Older than 26?
Under the Affordable Care Act, family coverage should include children until 26 years of age (which makes them no longer children at that point, actually, but we digress). So if you’re older than 26, well you’ll need to enroll yourself in a new, individual plan. Of course, the company you work for (if you had work, that is) can provide you with one.
7. Can I be Insured with both my Parents’ plan and my Employer’s Plan?
This is what will essentially happen, when one is being covered by two insurance plans: one will be primary while the other will be secondary. In the case described, the primary plan will be your employer’s plan. Basically, the health providers of both your plans will coordinate with each other when it comes to your health coverage, but what’s certain is that no two plans will cover the same medical expenses.
8. Should I Get a Catastrophic Plan?
That depends on your situation. This plan covers what one might consider ‘worst case scenarios’ where an accident occurs, say, and the concomitant costs are exorbitant. You have to remember, though, that coverage under these kinds of plans kick in only after you’ve paid quite a lot of money towards medical care on your own.