Open enrollment. Deductible. Coinsurance. HMO. Indemnity plan. If you’re listening this far, you probably have a migraine already. Understanding the language of the health insurance industry, let alone selecting a health insurance plan, can be confusing, frustrating, and disheartening. But never fear – we are here to give you a crash course on everything you need to know about your insurance plan. No need to scroll through Healthcare.gov’s Health Insurance glossary and risk throwing yourself out the window…

We want to give you some tools here to understand what you’re choosing when you pick a healthcare plan, but no one but you really knows what’s best for your health, so (for better or worse) we aren’t going to give any actual advice here about what healthcare plan to pick. 

Also, all health insurance kind of sucks, so you will probably get screwed no matter what you pick. Basically, we’re going to try to decode all the mystifying language that the insurance companies use to disguise the ways they’re going to screw you so at least you’ll be able to anticipate how you’ll get screwed.

Show Notes

Names

Whether you get health insurance offered by your employer, or you have to buy insurance on your own in an exchange or on healthcare.gov, or you have Medicare and you are looking at one of the privatized Medicare Advantage plans, you’re going to be choosing from a series of plans that have totally incomprehensible names and acronyms, so let’s start by breaking down the how the name of the plan itself will tell you something about how your insurer is going to screw you.

Generally the first part of an insurance plan’s name will be the name of the insurer (like “Blue Cross” or “United Health”), then you MIGHT get a word that says who is paying for the insurance plan (if it’s a “Group” plan that means an employer is paying for it, an “Advantage” plan is a privatized Medicare plan), and finally there will be an acronym that only 0.005% of people in America understand – and those are the generally people making money from the plans. These acronyms will be something like HMO, HSA, PPO, EPO, or my personal favorite “GTFO” – the “get the fuck out of here that can’t be a real plan” plan!

Indemnity Plans (“Open Choice” or “Open Network” plans): are the opposite of managed care; you could use any doctor or hospital, there are no networks, no review of care or pre-approvals, no claims denials. These were the plans that virtually everyone had prior to the 1980s, and plans that virtually no one has today except maybe the extremely wealthy. In 1978, 95% of people had indemnity plans, then that dropped to 71% by 1988, and by 1998 it was down to 14%. Today, only 1% of workers have indemnity plans.

Indemnity plans are the opposite of managed care – you can see any doctor or hospital you want, there Today, you probably wouldn’t even want an indemnity plan, because the modern versions usually only pay a percentage of the cost of your care, leaving you with the rest and massive bills.

Health Maintenance Organizations (HMOs) represent only 12% of insurance plans today, so after taking over in the 1990s, old school HMOs are going the way of the dinosaurs. HMOs usually limit coverage to doctors/providers who work for or contract with the HMO (“in-network”). It generally won’t cover out-of-network care except in an emergency. HMOs can also be limited by location, meaning you might have to live or work in a certain area to be eligible. 

Exclusive Provider Organizations (EPOs) are a new catch-phrase that are appearing more and more often, but they are VERY similar to an HMO, and you should think of them the same. In fact, that survey that only 12% of workers have HMO plans includes EPOs under the same category. EPOs often have larger networks than HMOs, and unlike HMOs, they don’t require referrals to see specialists – as long as the specialist is in their very limited network.

Preferred Provider Organizations (PPOs) are the dominant type of health plan in the United States today. 49% of workers are currently covered by PPO plans. Like HMOs and EPOs, PPOs have a network of providers. However, unlike HMOs and EPOs, PPOs will still cover out-of-network providers but at a higher cost, – i.e. the plan gives you a better deal and takes on more of the cost if you use providers in its network. You can see specialists and out-of-network doctors without a referral.

Point of Service (POS) is another uncommon type of plan – only 9% of workers have POS plans. The main difference with a POS plan is that they usually offer national coverage, if you’re someone who travels a lot, but if you go to an out-of-network provider anywhere in the country – big surprise coming here – you’ll be absolutely screwed with how much money you have to pay. Gillian’s dad had a spicy name for this type of insurance. 

Health insurance exchange categories

Just to make it extra confusing, plans in the exchanges are also categorized into 4 “metal categories” based on cost and quality of coverage, ranging from bronze (shittiest plan) to platinum (rich people plan). Those who buy individual insurance plan on the exchange (or marketplace) have to choose a metal level.

Bronze plans have the lowest monthly premiums, highest costs when you need care, and huge deductibles each year.

Silver plans have a “moderate” monthly premium and “moderate” costs at the point of care. Deductibles are lower than a Bronze plan. Some Silver plans come with “cost sharing reductions” or “extra savings” for some households.

Gold plans have a high monthly premium, low costs when you need care and low deductibles.

Platinum plans have the highest monthly premiums but pay the most when you need care.

What to look out for in the small print:

Summaries (or Schedule) of Benefits (SOBs) this case that isn’t a reference to the CEOS of your insurance company. In insurance lingo, SOB is is where you find the deets about what is and isn’t covered.

Premium: The amount you pay to your insurance company monthly to maintain your health insurance. Premium amounts vary along with deductibles, co-insurance, and other aspects of the plan; if other aspects of the plan are more expensive (like a high deductible) then premiums will be lower.

Deductible: The amount that you are responsible for paying out-of-pocket per year. Whenever you pay for health care services, it goes towards your total deductible for the year. After you hit your deductible, the insurance company should be covering the rest of your costs. 

HDHP with HSA (High Deductible Healthcare Plan with a Health Savings Account) A high-deductible plan can be any of the plan types listed above – EPO, PPO, HMO – provided it has a deductible of over a certain amount determined by the IRS. (As of 2023, a “high deductible” is at least $1,400 for an individual and $2,800 for a family). Insurance companies that provide high deductible plans will set up Health Savings Accounts, which allow members to set up an account where they deposit pre-tax dollars from their paycheck in order to cover medical expenses.

High deductible plans can leave you open to massive costs, depending on how high the deductible is. People with high deductibles often behave the same way as uninsured people: they delay and skip care because the cost of meeting their deductible is so high it could bankrupt them to seek care. This is also why you will find clinics andhospitals very full at the end of the year: all those people who have met their deductibles rushing to get care before their deductible reset at the first of the year.

Co-insurance: Did I say that the insurance company will pay for the rest of your costs after you hit your deductible? SIKE. A lot of the time, it won’t. On many plans, once you hit your deductible, co-insurance kicks in, meaning that the insurance company will begin covering a certain percentage, but not all, of your expenses.

Co-insurance out-of-pocket max: The maximum amount of co-insurance money that you have to pay on your plan in a given year.

Maximum prescription and out-of-pocket max: This is the total amount of co-insurance you have to pay out of pocket plus your deductible. In the biz they call this your “annual exposure.”

Co-pays: A fixed amount you pay for a doctor’s visit or a specialist’s visit. Can vary based on the type of provider or service. Can also vary based on whether or not you’ve met your deductible (they usually go down at that point)

Election tier: Plans have “tiers” depending on whether you are electing to cover yourself, yourself and a spouse, yourself and children, etc. Commonly the “tiers” would be “individual,” “Individual plus family,” “individual plus children,” “individual plus spouse”

Plan year: the “plan year” is 12 months from the date of effective coverager (when your coverage kicks in). Deductibles can either apply to a calendar year or a plan year.

COBRA: If you become ineligible for a health insurance plan that you are a dependent on (common examples would be turning 26 or getting a divorce), the payor on the plan can elect to keep you on as a dependent and pay an additional amount 

What are our takeaways here?

1. Generally, you’ll see a tradeoff in plans – lower premiums generally come with higher deductibles and more limited networks. That means that if you can only afford the lowest possible premium, you’ll get stuck with the worst coverage. So basically class warfare.
2. Again, this is all an elaborate scheme to screw you.
3. All of this is bullshit that was invented by the industry to lead you toward the choices that are worse for you and more profitable for them.
4. Medicare for All would put these fuckers out of business and make it so you never have to hear the word “coinsurance” again!

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SOURCES:

The health plan categories: Bronze, Silver, Gold & Platinum | HealthCare.gov

Consumer Guide to Understanding Health Insurance | Mass.gov

Health insurance and Obamacare te rms | healthinsurance.org

HMO, PPO, and EPO – What’s the Difference and Why Does It Matter? – CalPERS PERSpective   

Managed Care: MedlinePlus

Data Resources | CMS

The Most Common Types of Health Insurance | Northwestern Mutual

Publication 969 (2022), Health Savings Accounts and Other Tax-Favored Health Plans | Internal Revenue Service