Insurance 101

There are a lot of terms thrown around when talking about insurance that can be confusing for many. Insurance can be complicated, and The Insurance People are here to help. Not sure what a deductible or out-of-pocket max is? Wondering what the difference between an HMO and PPO plan could mean for your doctor visits? Here’s a quick insurance 101 guide to help you get started.

What’s a PPO plan?

A PPO, or Preferred Provider Organization, gives you the flexibility to see any doctor, with or without a referral. You’ll pay less when you use in-network providers, but unlike HMO plans, PPOs also offer partial coverage for out-of-network care. These plans are a good fit if you want more choice and don’t mind a higher monthly premium in exchange for that flexibility

What’s an HMO plan?

An HMO, or Health Maintenance Organization, requires you to select a primary care doctor who coordinates your care and provides referrals for specialists. These plans only cover care from in-network providers and often have lower premiums and out-of-pocket costs compared to PPO plans. They’re ideal if you’re comfortable staying within a limited network of providers. Some HMOs nowadays are called “no referral” HMOs, which allow you to use only your mini-network but do not require referrals to see specialists. 

What does a plan being Bronze, Silver, Gold, or Platinum mean?

These metal tiers refer to how you and your plan split healthcare costs. Unlike the Olympics, however, gold doesn’t always mean number one:

• Bronze plans have the lowest monthly premiums but the highest out-of-pocket costs and deductibles. 

• Silver plans usually strike a balance between monthly premiums and out-of-pocket costs. They are often recommended if you sign up for insurance through the marketplace, as Silver plans offer additional benefits, such as cost-sharing reductions, that lower overall costs. 

• Gold and Platinum plans come with higher monthly premiums but lower costs when you receive care. 

The best metal tier depends on your healthcare needs and budget. For example, if your income is lower and you're signing up through The Marketplace, a Silver plan is typically the best option. However, if you expect to need frequent care or prescriptions, a Gold plan might save you money overall, even with a higher premium. Sometimes, even a Bronze plan is best if you’re certain you’ll meet your out-of-pocket maximum. Need specific advice? We’d love to help.

What about other plan types, like POS and EPO plans?

These plans combine unique features that make them appealing to some. POS (Point of Service) plans combine features of HMOs and PPOs. You’ll need referrals, similar to those with an HMO, but you may also have limited out-of-network coverage. EPO (Exclusive Provider Organization) plans function like PPOs but without any out-of-network coverage, unless it’s an emergency. 

What does in-network and out-of-network mean?

In-network means a provider or facility has contracted with your insurance company to offer services at a discounted rate. Out-of-network providers don’t have that contract, which means you’ll pay significantly more, often the full cost.

How do I find a doctor who is in-network?

Each insurance carrier has a provider finder tool available on its website. Read our guide on how to check if your doctor is in-network with a provider finder here. You can also call the doctor’s office to ask, or ask us! 

What if I need to see someone out-of-network?

It’s best to stay in-network whenever possible. However, if you need to go out of network, you may still be able to submit a claim for partial reimbursement. As an example, you can use our guide on how to submit a BCBS claim, which is here.

What is a deductible?

A deductible is the amount you pay for covered healthcare services before your insurance begins to share the costs. Deductibles are normally for larger transactions like surgeries and procedures, whereas everyday items like medications and doctor visits are covered with a copay without paying towards the deductible.

For PPO plans, often the transactions that contribute to your deductible include durable medical equipment, physical therapy, procedures, surgeries, complex blood work, and other medical expenses. If your payments are subject to coinsurance instead of a flat copay, you will reach your deductible faster. Note: Coinsurance is covered further down.

Pro Tip: If you’re enrolled in a PPO that qualifies as a High Deductible Health Plan (HDHP), you may also be eligible to open a Health Savings Account (HSA) to set aside pre-tax money for healthcare costs. You can learn more about HDHP plans and HSAs here.

HMO plans may also have a deductible, which is often lower than that of a PPO plan. Unlike PPOs, most services on an HMO are covered with a copay and do not contribute to your deductible. HMO plans are not HSA-eligible, even if they have a high deductible. Always review the specific details of your plan, as your deductible and what counts toward it can vary.

What is an out-of-pocket maximum?

Your out-of-pocket max is the most you'll have to pay in a plan year for covered services. Once you hit this limit, your insurance pays 100% of any additional covered expenses.

What’s the difference between my deductible and out-of-pocket max?

Your deductible is what you pay before your insurance begins sharing costs. Your out-of-pocket max includes your deductible, plus any copays and coinsurance you pay throughout the year.

What is a copay?

A copay is a fixed amount you pay for a covered healthcare service, such as $25 for a doctor's visit or $10 for a prescription, regardless of whether you’ve met your deductible or not. Copays don’t count toward your deductible, but they do apply to your out-of-pocket maximum.

What is coinsurance?

Coinsurance is the percentage of costs you pay for a healthcare service after you've met your deductible and before you have spent your out-of-pocket maximum. For example, if your plan has a 20% coinsurance, you'll pay 20% of the cost, and your insurance will cover the remaining 80%. Coinsurance is common for larger procedures or specialized visits. 

What’s the difference between copays and coinsurance?

A copay is a flat fee that you pay upfront for specific services, such as a doctor's visit or prescription. You will pay them more frequently, but the costs you will pay for care are smaller. Coinsurance, by contrast, is a percentage of the total bill you pay after meeting your deductible. Copays often apply to basic services, while coinsurance typically applies to more expensive or specialized care. 

Still have questions?

We know insurance can be overwhelming, but you don’t have to figure it out alone! We’ve written blog posts on nearly every insurance topic, from HSAs to plan comparisons. Browse our blog for more helpful tips, or contact us directly if you have questions about your plan. We're here to help.