Countdown to Coverage: Health Insurance 101

///Countdown to Coverage: Health Insurance 101
Working for a Better Texas

By Megan Randall

Starting October 1, 2013, Texans will have the opportunity to sign up for new health care coverage options through the Health Insurance Marketplace.  Coverage for new enrollees will begin as early as January, 2014, and will include a number of new consumer protections.

We know navigating health insurance plans can be daunting and the terms used can be confusing at times, so we thought it’d be helpful to review some of them before open enrollment begins in a few weeks.  Let’s get started with four important “Insurance 101” concepts.

1.      Premium – A premium is the fee that you pay to participate in your health insurance “plan” or “policy.” You or your employer may pay it on a monthly, quarterly, or yearly basis. Starting in 2014, the federal government will offer premium discounts (through tax credits) to qualifying low- and middle- income consumers shopping in the individual Health Insurance Marketplace to help make insurance more affordable.

2.      Deductible – A deductible is the amount you pay out of your own pocket for health care services before your insurance company will begin to pay its share of your health care claims.  Each year, a consumer must typically pay some kinds of health care bills up to the amount of his or her health plan’s deductible before the insurance company will begin to contribute.  Most preventive services, like check-ups and many screening tests, are the exception: they are paid for in full by the insurance company regardless of whether the enrollee has met the yearly deductible.  Deductibles are a form of “cost-sharing” between the enrollee and the insurance company.  Starting in 2014, the federal government will offer cost-sharing reductions to qualifying low-income consumers to help reduce out-of-pocket costs such as deductibles.

3.      Copayment – A copayment is the amount you must pay out-of-pocket at the time you receive a medical service or a prescription drug.  This is another form of “cost-sharing,” and may be reduced in size by federal cost-sharing reductions for qualifying low-income consumers in 2014.

4.      Pre-existing Condition – A pre-existing condition is any medical problem or illness that you had before applying for health care coverage.  Starting this October, applicants can no longer be denied coverage or charged more based on their medical history, and insurance companies can no longer impose pre-existing condition exclusion periods (in which treatment for pre-existing conditions is not covered for a number of months following enrollment).

Have additional questions about insurance jargon?  Check out these helpful resources:

Healthcare.gov Health Insurance Glossary

Texas Health Options Health Insurance Glossary

And be sure to visit www.healthcare.gov to learn more about the Health Insurance Marketplace and to prepare for October open enrollment!

At the Center for Public Policy Priorities, we believe in a Texas that offers everyone the chance to compete and succeed in life. We envision a Texas where everyone is healthy, well-educated, and financially secure. We want the best Texas - a proud state that sets the bar nationally by expanding opportunity for all. CPPP is an independent public policy organization that uses data and analysis to advocate for solutions that enable Texans of all backgrounds to reach their full potential. We dare Texas to be the best state for hard-working people and their families.

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