Massachusetts has plenty of options for health insurance. Whether you’re applying through your employer, a government program like Medicare or Medicaid, or going through the Health Insurance Marketplace, it can be helpful to get as much information as possible before choosing a plan.
The world of health insurance uses many terms that aren’t common in daily conversation. First-time insurance applicants will probably pick up some new vocabulary during the application process. Whether you’re a newly-turned 26-year-old leaving your parents’ plan or a brand new citizen of the United States, there’s a lot to know when purchasing health insurance for the first time. Here are a few terms (and their definitions) that will likely come up when applying for a health insurance plan in Massachusetts.
Affordable Care Act
The Affordable Care Act, also known as Obamacare, was signed into law by President Barack Obama in 2010. It reduces the cost of health insurance for U.S. citizens whose income falls under 400% of the federal poverty level. It is paid for by the government.
An insurance plan’s allowed amount is the maximum amount that the plan will pay for a healthcare service.
Many health insurance plans cover a percentage of your healthcare bills. The other percentage, known as a copayment (or copay), is what you are required to pay your healthcare provider during each visit.
A deductible is an amount you are required to pay for your healthcare services before your insurance plan pays. For example, a $1500 deductible means you must pay the first $1500 in healthcare bills yourself. After the deductible is met, you typically will only have to pay a copay for each visit.
A dependent is an individual such as a child or spouse who may be eligible for coverage under a policyholder’s plan.
An FSA, or Flexible Spending Account, is an account set up through an employer to pay for certain out-of-pocket healthcare needs. The money put into your FSA isn’t taxed, and employers have the option to contribute to this account. You can use FSA funds on expenses like deductibles, copays, prescription medications, over-the-counter medications, and other medical equipment/supplies.
An HMO, or Health Maintenance Organization, offers coverage to policyholders that is restricted to a certain group of providers (known as a network).
An HSA, or Health Savings Account, is a non-taxed account to help policyholders enrolled in high-deductible plans save for future medical expenses.
The Health Insurance Marketplace is an organization in which people can purchase a health insurance plan. Massachusetts is one of only a few states with its own official Marketplace under Obamacare, known as the Massachusetts Health Connector. The Marketplace allows individuals to compare plans side by side according to their needs in order to determine the best fit.
Medicare is a federal program that provides health insurance for people above the age of 65 as well as some younger people with disabilities.
A PPO, or Preferred Provider Organization, is a more flexible type of insurance plan. Unlike HMOs, PPOs allow patients to choose any provider regardless of their network status.
A premium is a monthly payment made to keep your health insurance coverage.