Understanding health insurance

Understanding health insurance can be challenging. The terminology, numbers, rules, and small print can all add up to confusion and stress—often at a time when people are already facing stress due to health problems. Understanding health insurance is key to getting the most out of your coverage, and that includes mental health coverage. 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?

Health insurance is a legal agreement where a health insurance company agrees to help pay for your health care services in return for a monthly premium. This premium may be paid by you or your employer. In the case of publicly funded health insurance programs like Medicaid and Medicare, the state and federal government fund the insurance.

The healthcare company you use agrees to contribute to the cost of your healthcare needs for a set amount of time. It will assist you by paying for all or some of the cost of healthcare services, depending on your specific plan. Health insurance covers unexpected healthcare needs, such as accidents or illnesses. But it also covers preventative care, like visiting your primary healthcare provider for your annual physical, prescription drugs, or mental health coverage.

There are two main types of health insurance: public health insurance and private health insurance. Public health insurance is for lower-income individuals or families, seniors, or others who qualify. Public health insurance programs in the US include Medicare, Medicaid, and Children’s Health Insurance Program (CHIP). Private health insurance is offered by private companies, or as part of their employment (called employer-sponsored health insurance (ESI). It can also be purchased by individuals through the health insurance marketplace.

What are the different types of health insurance plans?

Within the umbrella of private insurance plans, there are several different types of plans to be aware of. The most common health insurance plan types are:

• Health Maintenance Organization (HMO) – Coverage is limited to providers who are contracted with the health insurance company; out-of-network providers are rarely covered and referrals are typically needed to see specialists
• Preferred Provider Organization (PPO) – Out-of-pocket costs are less if you use an in-network provider, and referrals are typically not needed to see specialists
• Exclusive Provider Organization (EPO) – You are only allowed to use in-network providers, unless there’s an emergency, and referrals are typically not needed to see specialists
• High-Deductible Health Plan (HDHP) – You have a high annual deductible, but your monthly premium is usually lower

Public health plans like Medicare and Medicaid typically only allow you to see doctors who are in-network with your plan. Exceptions may be made if there is an emergency.

How much does health insurance cost?

The cost of health insurance depends on several factors, including what type of plan you have, your income, and how many people’s coverage you are paying for. Public health insurance plans like Medicaid, Medicare, or CHIP are either free or very low cost. Private health insurance is more expensive. For example, in 2024, the average cost of private health insurance premiums for individuals was $8,951 per year, and $25,572 for families.

Where do people get health insurance?

Most people who have health insurance get it through their employer, but many Americans also use publicly-funded insurance. In 2023, 65.4% of Americans had private insurance, and 36.3% had public health insurance.

People also get private insurance by purchasing it directly from an insurance company or using Healthcare.gov to buy insurance through the health insurance marketplace, which was created as part of the Affordable Care Act. Finally, lower-income individuals or people over the age of 65 may get insurance through public health insurance plans like Medicare or Medicaid.

In 2023, an estimated 26 million Americans did not have health insurance.

How do I know what my health insurance plan covers?

Each health insurance company is required to provide you with a list of your benefits, called a Summary of Benefits and Coverage (SBC), also called a Summary of Benefits (SOB). Your SBC or SOB will tell you how much your health insurance costs, what your benefits are, what your covered services include, and other important pieces of information. You can get this information by calling your health insurance company or looking for this information on your plan’s website.

If you call your health insurance company, you’ll want to take notes and get the full name of the representative you are speaking to. It can be helpful to come to the phone call prepared with a list of questions, which may include whether a specific doctor or facility is covered; whether a prescription drug you use is covered; and how much you will need to pay out-of-pocket for medical care and doctor visits.

To see if your insurance covers therapy, check with a provider like Grow Therapy.

We can check if your insurance is accepted and give an estimate on costs.

What’s the difference between an explanation of benefits (EOB) and a bill?

Often, you will get mail containing an explanation of benefits (EOB) after a doctor visit. This is not the same as when you get medical bills in the mail that you have to pay. Instead, an EOB is an explanation of how much of your medical expenses your healthcare insurance is paying for, as well as how much you will have to pay out-of-pocket. Other information in an EOB will include your name, your health plan, which doctor provided medical care, when the care was provided, and a claim number.

What do terms like coinsurance, co-pay, and deductible mean?

When you sign up for a health insurance policy, you will see various terms used to describe your coverage. These terms can get confusing, so let’s break them down simply.

• Coinsurance – A set percentage of healthcare costs that you pay for after you’ve paid your deductible.
• Copay –  Amount you pay for healthcare services after you’ve paid your deductible.
• Deductible –  A fixed amount of money you need to pay for certain healthcare services before your health insurance plan starts to pay.
• Monthly premium –  The amount you or your employer pays each month to keep your insurance.
• In-network –  Healthcare providers, facilities, or services that are contracted with your insurance company.
• Out-of-network –  Healthcare providers, facilities, or services that are not contracted with your insurance plan.
• 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.

How does a health savings account (HSA) work?

A health savings account (HSA) is a tax-advantaged bank account offered by your employer that lets you pay for many out-of-pocket healthcare expenses using tax-free dollars.

You contribute a portion of each paycheck to your HSA account, and then you can use or withdraw it tax free to spend on qualified medical expenses. HSAs can be used to pay for copayments, deductibles, some prescription drugs, medical services, and more. People also use HSAs to cover services like acupuncture, hearing aids, and therapy.

What is COBRA?

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It’s a federal law that allows you to keep your employee health insurance for a limited amount of time after you leave your job. You can get COBRA if you were laid off, if your spouse who collected the insurance passes away, if you got divorced from a covered employee, or if your work hours were reduced. If you choose to use COBRA, you have to pay the full premium amount.

What is a qualifying life event (QLE)?

A qualifying life event (QLE) is a major life change that allows you to enroll in or change your health insurance plan outside of an open enrollment period. Changes you might want to make could include adding or removing beneficiaries, adding new types of coverage, or changing your coverage.

Examples of QLEs include getting married, getting divorced or legally separated, having a baby, adopting a child, accepting a child for foster care, changes in residence, loss of health insurance coverage, or the death of a family member.

What’s the best insurance for mental health coverage?

Every health insurance plan is different in terms of what services are covered. The Affordable Care Act requires that all plans through the Marketplace provide mental health services coverage. Many insurance plans you get through your employer will cover mental health services as well.

The best way to find out what is covered by your insurance plan is to contact your health insurance company and ask for the Summary of Benefits and Coverage (SBC), which lists all services that are covered.

These days, many insurance companies will cover online therapy. Again, the best way to find out if your insurance plan covers online therapy is to contact your health insurance company directly. At Grow Therapy, you can search for online therapists who specifically accept your insurance.