Throughout my life, I’ve had the good fortune to stay on my parents’ health insurance plan. But this year I turned 26. So, when my company kicked off its open enrollment period, the window when your choose plans, it was time for me to spread my wings.
Clicking the link to choose a plan felt daunting and it got worse when I started going through the selection process. What is an HSA? Or an FSA? Did I need that?
And what did high deductible versus low mean in terms of a plan?
Overwhelmed, I decided to talk to experts for help. One tip they gave me is to learn the language of enrollment before you start researching your health care plan. So, here’s a glossary of terms sourced by USA TODAY with additional resources to help you on your insurance selection journey.
Glossary of terms to know when selecting health insurance
Premium: The premium is the amount you pay for health insurance on a monthly basis, according to HealthCare.gov.
It’s the base expense and does not usually cover other health expenses. Premiums vary for different plans. A lower premium means a higher deductible and vice versa.
Deductible: A deductible is the amount you pay in expenses before their health insurance plan pays in full.
So, for example, if I were to enroll in a low deductible health plan of $1,000 with a high monthly premium of $220, I would pay all the costs tied to my health care until I hit $1,000 in expenses. If my deductible were higher, say around $3,000 and my monthly premium was lower say around $100 monthly, I would pay until I hit $3,000 in medical expenses for the year.
After a deductible is hit, insurance would take over the majority of costs.
Co-payment: A co-pay is what one pays at the health care provider’s office. It’s a “fixed amount ($20, for example) you pay for a covered health care service after you’ve paid your deductible,” according to HealthCare.gov.
Allowed amount: Before one hits their deductible, the visit cost is the “maximum amount a plan will pay for a covered health care service” that one will pay under their healthcare plan, according to HealthCare.gov. The agency gave the example that if one hasn’t hit their deductible, they may pay $100 for a covered service under the allowed amount versus a $20 co-pay.
Health Savings Account or HSA: Open enrollment offers employees the chance to contribute to something called an HSA if they select a High Deductible Health Plan (or a health plan with a lower premium per month), giving them the chance to save money to put towards health expenses tax-free.
According to HealthCare.gov, an HSA is “a type of savings account that lets you set aside money on a pretax basis to pay for qualified medical expenses.”
The untaxed dollars in an HSA can be used to pay for things such as deductibles, co-pays and other health expenses and can help to lower overall costs of health care. Typically, those funds in the HSA can’t be used to pay premiums.
Flexible Spending Account or FSA: An FSA is similar to an HSA in that the user can pay for out-of-pocket medical expenses such as copays, prescription drugs, medical devices and insulin, among others with pretax dollars.
According to HealthCare.gov, if not spent by end of the year, employers will allow users two options: two and a half extra months to utilize the funds in the account or to carry over $500 to the next year.
In-Network versus Out-of-Network: If a health care provider is “in-network” it means that that doctor or facility is part of a health care plan’s network. Typically, in-network providers cost less for the insured than out-of-network providers which exist outside of the insurer’s network because those in-network providers have contracts with the insurer.
Specialist: Not all doctors are covered the same way under insurance plans, specialists often cost more to see with some percentage covered by insurers. According to HealthCare.gov, a specialist is a physician who “focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent or treat certain types of symptoms and conditions.”
There are also non-physician specialists who have more training in a certain field of health care.
Preventative services: Preventative care appointments, or “preventative services” as HealthCare.gov says, are routine appointments such as screenings, check-ups and others focused on preventing illness or other health problems.
Other tools to understand open enrollment
There are plenty of resources for people seeking to understand health insurance and open enrollment online.
HealthCare.gov, for example, which has an extensive glossary of terms, also offers additional resources including guides on comparing plans.
It’s also worth checking out any tools that may be provided by your employer for open enrollment. My company, for example, gave us access to a bot called “Alex,” a kind of digital counselor meant to help explain each plan, what it would entail in terms of cost, the benefits and how to select one that matches your needs.