Adulting 101: Healthcare Basics
Whether you recently graduated from college or you’re a seasoned working professional, when it comes to health insurance, you may feel like this is yet another part of adulting that you don’t quite understand. Don’t worry, you’re not alone!
Healthcare basics are not exactly taught in school. We learn about health and the human body in biology class, but who teaches us how to sign up for health insurance or find a primary care provider?
Well, school is back in session (don’t worry, no exams or quizzes, though!). We’re here to help you navigate a few aspects of the healthcare system as easily and as stress-free as possible. Our speciality? Health and wellness, of course!
Read below for a general breakdown of what you should know about healthcare and a basic glossary of healthcare terms. Then, stay tuned for the next part in the Adulting 101 series!
I don’t know anything about healthcare or health insurance. Help!?
If we know anything about healthcare in America, it’s that it’s not always accessible, affordable, or easy to navigate—which is a big part of why Everlywell was founded (read more about our story here).
First, you should know that healthcare and health insurance are not the same. While these terms are often used interchangeably, healthcare is the umbrella term for medical services and practices, like preventive medicine, emergency room visits, prescription drugs, etc. Health insurance provides coverage for medical services—it’s an agreement that “requires your health insurer to pay some or all of your health care costs in exchange for a premium.” Keep in mind that your level of coverage is determined by your insurer—find more information on that later in the article.
While we can’t exactly break down the entire U.S. healthcare system in a blog post, we can give you a crash course on the most important things to know. Let’s start with the basics—a brief healthcare glossary.
What are some of the most important healthcare terms to know?
Here are some of the most commonly used healthcare terms we think may be helpful for you to know:
Affordable Care Act or ACA
- The ACA is a health insurance reform law that gives millions of Americans access to health insurance and provides more affordable health care costs.
- One of the most important provisions is that all plans offered in the Marketplace cover these 10 essential health benefits, including emergency services and hospitalization, mental health services, and more.
- All Marketplace health plans and many other plans must cover a set list of preventive services, including cholesterol screening and diabetes screening, without charging you a copayment or coinsurance. This is true even if you haven’t met your yearly deductible.
- The ACA also mandates that all insurance plans on the Marketplace, as well as private plans and employer sponsored plans, allow children to stay on their parent or guardian’s plan until age 26. If you qualify, discuss your options with the parent or guardian who is the policy holder. Learn more here.
- You can learn more about the ACA and how to get coverage on their website.
Benefits
- These are any health services covered under your health insurance plan. For example, you may have medical, dental, and/or vision benefits.
- If you are employed and your employer offers full or partial health coverage, your benefits may be outlined in your employee contract or “Explanation of Benefits” which is provided by your insurer.
Coinsurance
- The percentage of costs of a covered healthcare service you pay after you've met your deductible (see definition below).
- Unlike a copayment, where you pay a fixed amount, your coinsurance payment is calculated based on a pre-established percentage. Please keep in mind that coinsurance can vary by plan, so we encourage you to learn more about options for your specific case.
Copayment
- This is the fixed amount you pay for a covered health care service, usually at the time of your visit, after you've met your deductible.
- As an example, your copayment for a health appointment may be $20 if you already paid your full deductible or $100 (the full amount for the visit) if you haven’t met the deductible maximum yet. Copays can vary by plan, so we encourage you to learn more about options for your specific case.
Deductible
- This is the amount you pay for health care services before your insurance plan starts to pay. For example, with a $2,000 deductible, you pay the first $2,000 of covered services (for annual check ups, prescriptions and supplements, surgeries, etc.) out of pocket. Depending on your health plan, you may have a deductible and copays.
- After you reach your deductible amount, you usually pay only a copayment or coinsurance for covered services and your insurance company pays the rest.
- Learn more about the details here.
Flexible Spending Account or FSA
- This health account allows you to deposit and spend pre-tax money on out-of-pocket healthcare expenses. Think of your FSA as a prepaid gift card for health expenses with an expiration date. If you don’t use up your funds before the FSA deadline, you lose those funds forever. While most FSA deadlines are usually at the end of the calendar year, yours will be determined by your policy holder, so be sure to ask.
- Most people use their plan to cover costs like deductibles, copayments, prescriptions, and medical equipment (like crutches or bandages). However, there are a number of other categories that you can use your funds for—check out our FSA/HSA Shopping Guide to learn more!
- We recommend checking directly with your benefits provider before purchasing any potential FSA-eligible health and wellness products.
Health Savings Account or HSA
- This health account allows you to deposit and spend pre-tax money on out-of-pocket healthcare expenses. A slight difference from an FSA, think of your HSA as a debit card but with no expiration date. So, if you don’t use up your funds within the calendar year, they roll over to the next year.
- Most people use their plan to cover costs like deductibles, copayments, prescriptions, and medical equipment (like crutches or bandages). However, there are a number of other categories that you can use your FSA/HSA money for—check out our FSA/HSA Shopping Guide to learn more!
- We recommend checking directly with your benefits provider before purchasing any potential HSA-eligible health and wellness products.
High deductible health plan or HDHP
- For this health plan option, your deductible (how much money you pay out of pocket before your insurance provider covers the cost of treatment) will be higher than for other options.
- This plan may be a good option for someone who may only anticipate needing coverage for preventive care, like annual check ups, and do not see major procedures or expenditures in their near future.
- If you are someone with chronic ailments or pain, a HDHP may not be for you. Be sure to consult with a broker if you are purchasing on the Marketplace, or a representative at your employer to help pick the best plan available.
Out-of-pocket maximum
- This value is provided by your insurance and outlines the most you could pay for covered medical expenses in a year. This includes any money you spend on deductibles, copays, coinsurance, etc. Once you reach your annual out-of-pocket maximum, your health plan will pay your covered medical and prescription costs for the rest of the year at 100%.
Premium
- This is the amount you pay for your health insurance every month—if you sign up for benefits through an employer, this is often automatically deducted from your paycheck. Depending on your benefits package, premium options can range anywhere from paying little to nothing each month (meaning your company pays the premium on your behalf) to a few hundred dollars each month.
- In addition to your premium, you will pay other out-of-pocket costs for your health care, including a deductible, copayments, and coinsurance.
Primary care provider or PCP
- Think of this person, usually a physician or other healthcare professional of your choice, as your main point of contact for any health issues, concerns, or regular check-ups. They are oftentimes the only person who can write you a referral to see a specialist.
Qualifying Life Event or QLE
- Aside from registering for benefits when you first join a new company, most benefits providers will only allow you to change your health insurance coverage once a year during the official enrollment period. However, exceptions are made for those whose situation has changed, for example, by getting married or divorced, having a baby, adopting a child, or loss of existing health coverage through a student plan or your parents.
- Keep this in mind when you first sign up for health insurance, as you will not be able to change your plan until the enrollment period (usually at the end of a calendar year).
For more healthcare terms and definitions, check out a full glossary on the U.S. Department of Health and Human Services website.
After reading through the guide, we hope you’re feeling more confident about healthcare, health plans, and medical insurance. Please keep in mind that this article provides a general overview of healthcare basics and the information provided is not all-encompassing.
- More questions about your personal coverage? We recommend reaching out directly to your insurer and/or employer for questions regarding your plan. Your primary care provider may also be a helpful resource.
- For a more comprehensive look, visit the official Health Insurance Marketplace at Healthcare.gov & Cuidadodesalud.gov/es.
- For questions or more information on your employer sponsored options, we recommend reaching out directly to your benefits provider.
Share this article with your friends and encourage them to take control of their health and wellness no matter at what stage they are in their careers. Did you recently try one of our at-home lab tests or want to share a health and wellness tip with the Everlywell community? We’ve love to hear from you—tag us on Instagram [@everlywell]!