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Health insurance plans can differ in terms of their coverage of consumers and services, their costs to the consumers (and consumers’ dependents or employers, if relevant), special features, and generosity, among other properties.
The consumer may buy a health insurance plan covering one person, a family, or other groupings. Under self-only coverage, the consumer is the only person insured. Family coverage applies to the consumer and any spouse and/or dependents. Other possibilities include self plus one and self plus children.15
If their parent’s health insurance plan covers children, children can be added to their parent’s plan until they turn 26 years of age. Those children under the age of 26 can join or remain on their parent’s plan even if they are married, not living with a parent, attending school, not financially dependent on a parent, or eligible to enroll in their own employer’s plan. Many consumers with ESI obtain and renew their employer’s plan during open enrollment season. During open season, consumers can change health insurance policies. Outside of open season, consumers cannot change their health insurance plan unless they experience a qualifying life event. Qualifying life events include marriage, moving to a new state, divorce, and childbirth. Open season in the exchanges is similar to open season in ESI.
Covered Services
A consumer might use a variety of health care services over the course of the year. Office visits to a health care provider may include routine well-adult exams, nonroutine flu care, and urgent treatment for bone breaks.16 The consumer might require X-rays and laboratory tests at some visits. More serious matters may require treatment at a hospital. Some consumers may need medical equipment, others may need a recovery program for substance abuse, and still others may find a single prescription treatment sufficient. Given the breadth of possible health care, a consumer probably will not find a health insurance plan that covers all possible care. For example, almost no policies cover health care that is not deemed medically necessary by the insurer. Medically necessary care is “needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms and that meet accepted standards of medicine.”17 For example, reconstructive breast surgery following a mastectomy performed as part of breast cancer treatment is medically necessary (as well as required by law).18 In addition, health insurance generally covers breast augmentation to correct a congenital defect in breast development. However, it generally does not cover breast augmentation for cosmetic purposes. Not all insurers consider the same medical goods and services to be medically necessary. Even among services widely agreed to be medically necessary among insurers, consumers will find that not all health insurance plans cover the same health services. In addition, the specifics of the covered service may differ across plans. For example, plans may differ across coverage of the number of routine maternal visits and the conditions under which a caesarean section is a covered service. Similarly, the consumer may choose among plans that cover eating disorder treatments differently.
Consumers pay premiums, which are the prices of private health insurance plan coverage for a given period of time. Premiums are owed whether or not the consumer actually seeks health care during the time covered by the plan. Consumers who purchase insurance policies directly from insurers or through the exchanges (for individuals) almost always pay the entire amount of the premium themselves. Many consumers who purchase ESI share the premium cost with their employers. In other words, the consumer pays for part of the premium (generally through payroll deductions) and the employer pays for part of the premium (using funds that are not part of an individual’s hourly wages or annual salary).19
Certain consumers who purchase health insurance through the exchanges may be eligible for premium tax credits. These credits reduce the price of the premium by returning part of its dollar value as a portion of the consumer’s income tax refund. Eligibility for the tax credits depends on whether the consumer is eligible for various types of health insurance plans and on family income.20
Cost Sharing
Cost sharing refers to the part of the costs for health services covered by the insurance plan that is paid by the consumer (or the person responsible for the consumer’s bills). Deductibles, coinsurance, and co-payments are examples of cost sharing. A deductible is the amount of money an insured consumer may be required to pay the medical care providers OOP (over the term of the insurance policy) before receiving any benefits from the health insurance policy. In other words, the consumer must spend up to the deductible OOP on covered services before the health insurance plan will begin to pay its part of health costs for most covered health services. A consumer is therefore required to meet the deductible before the insurance plan contributes to the costs of his or her health care. Preventive medical services are certain covered services not subject to deductibles (or any other form of cost sharing) when received from in-network providers.21 In addition, not all health insurance plans have a deductible, and plans may have different deductibles for different types of services. The consumer may pay coinsurance, which is a percentage of the total amount billed to the consumer. For example, consider a consumer whose chest X-ray is billed at $150. A 20% coinsurance rate means that the consumer pays $30 and the insurer pays $120 (both to the provider) for the X-ray. These calculations assume that the consumer has met the deductible. If the deductible has not been met, the consumer must pay his or her bill in full until the deductible is met. Alternatively, the consumer may pay a flat-rate co-payment. For example, a $20 co-payment for that chest X-ray would mean that the recipient must pay $20 to the provider OOP for the same Xray, assuming the consumer’s deductible has been met. The insurer would then pay $130 to the provider. Once again, if the deductible has not been met, the recipient must pay the amount remaining until the deductible is met
By Coverage
Covered IndividualsThe consumer may buy a health insurance plan covering one person, a family, or other groupings. Under self-only coverage, the consumer is the only person insured. Family coverage applies to the consumer and any spouse and/or dependents. Other possibilities include self plus one and self plus children.15
If their parent’s health insurance plan covers children, children can be added to their parent’s plan until they turn 26 years of age. Those children under the age of 26 can join or remain on their parent’s plan even if they are married, not living with a parent, attending school, not financially dependent on a parent, or eligible to enroll in their own employer’s plan. Many consumers with ESI obtain and renew their employer’s plan during open enrollment season. During open season, consumers can change health insurance policies. Outside of open season, consumers cannot change their health insurance plan unless they experience a qualifying life event. Qualifying life events include marriage, moving to a new state, divorce, and childbirth. Open season in the exchanges is similar to open season in ESI.
Covered Services
A consumer might use a variety of health care services over the course of the year. Office visits to a health care provider may include routine well-adult exams, nonroutine flu care, and urgent treatment for bone breaks.16 The consumer might require X-rays and laboratory tests at some visits. More serious matters may require treatment at a hospital. Some consumers may need medical equipment, others may need a recovery program for substance abuse, and still others may find a single prescription treatment sufficient. Given the breadth of possible health care, a consumer probably will not find a health insurance plan that covers all possible care. For example, almost no policies cover health care that is not deemed medically necessary by the insurer. Medically necessary care is “needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms and that meet accepted standards of medicine.”17 For example, reconstructive breast surgery following a mastectomy performed as part of breast cancer treatment is medically necessary (as well as required by law).18 In addition, health insurance generally covers breast augmentation to correct a congenital defect in breast development. However, it generally does not cover breast augmentation for cosmetic purposes. Not all insurers consider the same medical goods and services to be medically necessary. Even among services widely agreed to be medically necessary among insurers, consumers will find that not all health insurance plans cover the same health services. In addition, the specifics of the covered service may differ across plans. For example, plans may differ across coverage of the number of routine maternal visits and the conditions under which a caesarean section is a covered service. Similarly, the consumer may choose among plans that cover eating disorder treatments differently.
By Costs
PremiumsConsumers pay premiums, which are the prices of private health insurance plan coverage for a given period of time. Premiums are owed whether or not the consumer actually seeks health care during the time covered by the plan. Consumers who purchase insurance policies directly from insurers or through the exchanges (for individuals) almost always pay the entire amount of the premium themselves. Many consumers who purchase ESI share the premium cost with their employers. In other words, the consumer pays for part of the premium (generally through payroll deductions) and the employer pays for part of the premium (using funds that are not part of an individual’s hourly wages or annual salary).19
Certain consumers who purchase health insurance through the exchanges may be eligible for premium tax credits. These credits reduce the price of the premium by returning part of its dollar value as a portion of the consumer’s income tax refund. Eligibility for the tax credits depends on whether the consumer is eligible for various types of health insurance plans and on family income.20
Cost Sharing
Cost sharing refers to the part of the costs for health services covered by the insurance plan that is paid by the consumer (or the person responsible for the consumer’s bills). Deductibles, coinsurance, and co-payments are examples of cost sharing. A deductible is the amount of money an insured consumer may be required to pay the medical care providers OOP (over the term of the insurance policy) before receiving any benefits from the health insurance policy. In other words, the consumer must spend up to the deductible OOP on covered services before the health insurance plan will begin to pay its part of health costs for most covered health services. A consumer is therefore required to meet the deductible before the insurance plan contributes to the costs of his or her health care. Preventive medical services are certain covered services not subject to deductibles (or any other form of cost sharing) when received from in-network providers.21 In addition, not all health insurance plans have a deductible, and plans may have different deductibles for different types of services. The consumer may pay coinsurance, which is a percentage of the total amount billed to the consumer. For example, consider a consumer whose chest X-ray is billed at $150. A 20% coinsurance rate means that the consumer pays $30 and the insurer pays $120 (both to the provider) for the X-ray. These calculations assume that the consumer has met the deductible. If the deductible has not been met, the consumer must pay his or her bill in full until the deductible is met. Alternatively, the consumer may pay a flat-rate co-payment. For example, a $20 co-payment for that chest X-ray would mean that the recipient must pay $20 to the provider OOP for the same Xray, assuming the consumer’s deductible has been met. The insurer would then pay $130 to the provider. Once again, if the deductible has not been met, the recipient must pay the amount remaining until the deductible is met
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