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A beginner's guide to understanding health insurance

What is a deductible? How do I find out what my copay will be? No matter how long you stare at your insurance EOB, or explanation of benefits, it’s likely you still don’t understand it.

Sound familiar? Don’t worry. Health insurance can be complicated, but we’re here to help. In fact, so many folks have a hard time understanding health insurance that we made a website about it. We hope this helps you better understand how insurance works.

To make sure you understand your plan, we’re outlining the most common terms that often confuse our members below.

Health insurance premiums, benefits and services

When you signed up for your health plan, you agreed to pay a monthly fee to Blue Cross and Blue Shield of North Carolina (Blue Cross NC). This monthly fee is called a health insurance premium.

Your premium stays the same each month until your plan expires. (You’ll want to pay your premium on time each month so your plan remains active.)

Benefits are the services you receive from your health insurance company.

You can find a list of your benefits in the coverage documents you received in the mail. You’ll notice that some benefits are covered and some that are excluded.

The difference between "covered" and "covered at 100%"

Covered means that, under your plan, a claim is eligible to be filed. Covered does not mean that insurance will pay the total amount.

Covered at 100% (such as preventive care) has a different meaning. This distinction is important because this can often be confused.

If you ever have questions about what’s covered or not, just call the number on the back of your health insurance ID card. Our customer service team can help.

Pre-existing conditions

If you had a health problem before your health insurance took effect, then you have a pre-existing condition.

What are pre-existing conditions? Common pre-existing conditions include asthma, cancer, high blood pressure and diabetes.

We won’t refuse to cover you or charge you a higher rate because of your pre-existing condition.

It is crucial to make sure you have a primary care doctor selected and that you set up annual checkups and other preventative care in advance.

A major decline in health begins at age 27, according to the Blue Cross Blue Shield Association Health of America report.

Primary care is the best place to start for most of your health care needs. It’s where you can get treatment for minor illnesses and injuries and get help with chronic conditions.

Excluded services

Excluded services are things that aren’t covered by your health plan. You’ll have to pay out-of-pocket for these services.

An excluded service may include cosmetic surgery, such as a facelift, teeth whitening or massage therapy.

Other services may be excluded from any health plan, so you want to check ahead of your appointments.

Health insurance deductibles, coinsurance and copayments

When your health insurance plan starts, you may have to pay for the total cost of care until you reach a certain amount. This amount is called a deductible, and it works just like your auto insurance deductible.

Once you reach this amount, Blue Cross NC starts paying a percentage of the cost of your care.

Once you hit your deductible amount, Blue Cross NC starts paying for a portion of the covered services you receive.

Coinsurance is the percentage we pay, and then you pay the difference in the amount you owe.

Here’s a real life example

Let’s say your coinsurance is 80/20. If your total bill is $1,000, Blue Cross NC pays $800, and you pay $200. Once you reach your out-of-pocket maximum, Blue Cross NC covers these costs at 100% until your health plan expires.

Some plans require you to pay a set dollar amount for each doctor’s visit or prescription medicine you buy. This is called a copayment. Your policy may require you first meet your deductible.

When you renew your health plan each year, the deductible and out-of-pocket maximum amounts reset.

Most people, no matter how long they have been responsible for their insurance, have a hard time understanding these complicated terms. We hope this makes your health policy a little easier to understand. As you start using your health plan, call our customer service team with any questions.

authors photo

Aolani Donegan

Aolani Donegan

Social Media Communications Specialist

Aolani worked as a social media communications specialist at Blue Cross NC. She's passionate about family, food, sports and media.

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