Few things in life are as confusing as health insurance. The terminology, the numbers, the perplexing small print — what does it all mean? And if you don’t understand your own health insurance, how are you supposed to use it to your advantage and get what you’re paying for? Take mental health coverage for example. Maybe you’re considering therapy but holding back because you’re unsure if it’s included in your insurance plan.
We’re here to help you figure it out. In this article, we’ll give you a run down on all the confusing health insurance terms as well as how insurance works and what you can do to learn more about your plan.
How does health insurance work in simple terms?
Health insurance is a legal agreement between you and a health insurance company whereby you agree to pay for a health plan of your choice. This plan will provide coverage for a predetermined range of healthcare services that may be required in the future. It will assist you in paying for these services, reducing the burden of medical bills and expenses on your part.
Not only is health insurance a great way of managing risk if anything unexpected should happen to you or your family, such as an accident or an unexpected illness, but it also includes coverage for preventative services, like visiting your primary healthcare provider for your annual physical, prescription drugs, or even mental healthcare.
Public health insurance
The government offers public health insurance programs for low-income individuals or families, the elderly, and other individuals who qualify for special aid. The main public health insurance programs in the US are Medicare, Medicaid, and Children’s Health Insurance Program (CHIP).
Medicare primarily offers federal health insurance to those aged 65 years and over, while Medicaid provides insurance for low-income individuals or families. CHIP is a program that offers children low-cost health coverage, even if the rest of the family earns too much money to qualify for Medicaid.
One advantage of public health insurance is its affordability in comparison to private insurance. However, it is less flexible and limits the options of medical service providers available. This can restrict your ability to select your preferred healthcare provider and location.
Private health insurance
Offered by private companies, this type of health insurance is more expensive than public insurance. But on the plus side, there is a large pool of medical service providers, alongside more plans to choose from. In 2021, around 66% of Americans had private health insurance.
Understanding what your health insurance covers
All health insurance plans need to provide you with a Summary of Benefits and Coverage (or SBC) so that you know what is and isn’t included. Everyone’s health insurance is different, so it’s best to check out the details of your plan in your SBC.
Health insurance coverage for mental health care
In a 2018 study, 76% of Americans were reported to believe that mental health is just as important as physical health. However, in the same study, 42% of Americans claimed that they don’t access mental healthcare because of costs and poor insurance coverage.
Luckily, the Affordable Care Act (ACA) requires private health insurance sold on the individual and family health insurance marketplaces to include mental health insurance coverage. Medicaid also includes mental health coverage, including individual and group therapy.
Some of the private health insurance companies that offer mental health care are Aetna, Cigna, Kaiser Permanente, and UnitedHealthcare. We’ve got more information about whether therapy is covered by health insurance, and once you’ve clarified with your insurance provider about whether therapy’s included, here’s a helpful guide on how to choose the right therapist for you.
What do all those insurance terms mean, anyway?
Health insurance jargon can be very confusing. In fact, it may be one of the reasons people don’t take out coverage as it can seem nearly impossible to understand what it all means. “Health insurance can be extremely challenging to navigate. There are a lot of terms like ‘provider networks’ and ‘deductibles’ and all of the plans are a little bit different. Some people may find the confusing nature to not be worth it, especially if they are unclear what the tangible benefits are,” says Derek Lee, Grow Therapy’s Head of Insurance Operations.
If you’re in the dark about these puzzling insurance terms, we’ve broken down several of the important ones so you can understand and get what you need from your plan. Want to grasp these expressions at a glance? Check out our cheat sheet below.
Monthly Premium | The set amount you pay each month to access your health insurance plan — like a subscription. |
In-Network | Healthcare providers, facilities, or services that you can access at a discounted rate through your insurance plan. |
Out-of-Network | Healthcare providers, facilities, or services that are not contracted with your insurance plan. Your health insurance plan may not cover the full cost of the care, and you may be responsible for paying a larger portion of the bill, or in some cases, the entire bill, depending on your out-of-network coverage. |
Deductible | A set amount of money you need to pay for certain healthcare services before your health insurance plan starts to pay. |
Copay | Set costs that you pay for various healthcare services after you’ve paid your deductible or for services in which the deductible is waived. |
Coinsurance | A set percentage of healthcare costs that you pay for after you’ve paid your deductible. |
Sliding Scale | A payment plan agreed upon between a therapist and patient where session fees are lower than the normal rate based on the patient’s income. |
Out-of-Pocket Costs | All the payments you make yourself that won’t be reimbursed by insurance, such as deductibles, copays and coinsurance. |
HMO | This stands for Health Maintenance Organization, and is a plan that provides healthcare services from a limited network of providers for a set monthly fee. These plans don’t have out-of-network benefits. |
About Derek Lee
Derek Lee is Grow Therapy's Vice President of Insurance Operations, overseeing payor relations and success, credentialing and enrollment, new payor launch, revenue cycle management and billing, and insurance operations data analytics.
