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The Difference Between Healthcare and Insurance

Healthcare and health insurance are the same thing, right?

Actually, they’re completely different—and the difference is important. It can be easy to get the two confused, and if you have in the past, you’re not alone. Most people don’t choose to become consumers of healthcare, but we have to become consumers because we participate in the system whether we like it or not. 

Unfortunately, most of American’s only think about healthcare when they’re sick, which leaves them woefully unprepared and vulnerable to those sky-high costs you read about in the news.

Roughly 289 million people in America have some kind of health plan. Most of us get it from the following sources: 

  • we enroll in our employer-offered plans
  • we directly purchase from insurance carriers ourselves
  • we qualify for and enroll in Medicaid
  • we turn sixty-five and enroll in Medicare
  • or we are employed through a government entity and receive one of their offerings. 

And for many that’s where it starts and stops. Which begs the question, what is the difference? 

What is healthcare?

Healthcare refers to the system of doctors, specialists, nurses, hospitals and every other kind of profession in the health industry that’s responsible for caring for someone’s mental or physical wellbeing and treating illnesses. Every time you see your family doctor, get an X-Ray or get treatment for a chronic condition you are using the healthcare system.

Why is that important?

The important thing to remember is that the healthcare system is designed to care for you. The healthcare’s primary responsibility is not to look after your financial well-being. Doctors, nurses, surgeons and everyone else who treats an illness wants to serve their patient by making them better.

That makes our healthcare system very inviting and accommodating when it comes to providing care. However, as consumers of healthcare, we need to understand that we have the power and the responsibility to engage that care responsibly and in a way that best suits our health and financial needs.

What is health insurance?

Health insurance on the other hand refers to the financial tool that individual use to protect themselves against times when they need the medical system. It is a way to transfer the risk of paying for care from you as the individual to the insurance carrier. 

Health insurance helps protect you against the unexpected costs that arise when you have a sudden healthcare need or an ongoing chronic condition. 

Why is that important?

If you have a health insurance plan these days, one way or the other, you are paying more than you would have a decade or two ago. You then have the “privilege” to pay more when you actually incur a health expense—i.e., you see a doctor. 

We all know that health insurance doesn’t give you a free pass to use the healthcare system whenever you want for free. Which means that it’s critical that you shop for the insurance that’s right for you. 

Costs that are predictable and affordable, you do not want to insure otherwise you will be overpaying. By the same token, you want to make sure you’re not under insuring and that you’re prepared for the unexpected. 

Why is the difference so important?

Because health insurance isn’t an endless pool of resources – but many of us act like it is. 

Behind the scenes, Th confusion between the two can create a vicious cycle going on. The more people use healthcare, the more premiums go up next year when their health insurance policy renews. That’s because the insurance company sees the extra usage and assess that there is more risk than they expected.

Insurance companies are big businesses after all, and as businesses they’re trying to turn a profit.

The “Doctor Mystique”

Another piece that plays into this misconception is an affect we call the “doctor mystique.” People have grown to expect a cure for whatever they have and to revere their medical professionals. This behavior is in part because we think that we pay premiums for our health insurance which means we should be using it.  

As a result, when your insurance plan finally begins to cover all expenses at 100 percent or you’ve reached your out of pocket maximum, you mentally check out. You think, “I don’t care what the services cost, how many are performed, if they are necessary, or if services not provided are on the bill.”

What does that mean for me as a healthcare consumer?

Whether you agree with how the system works or you hate it, the fact is that it’s the system we have right now. Understanding the difference between healthcare and health insurance is one of the first steps you if you’re going to take back control.

The most important thing we want you to learn from this guide is that what you decide matters the most in this equation. It means we need to be smart when shopping for insurance and also wise when it comes to expecting the healthcare system to immediately cure any ailment.

This is what we must do if we are going to collectively flip the script on the system and propel a healthcare consumer revolution. 

How To Get The Insurance That’s Right For You

How To Get The Insurance That’s Right For You

HMO, PPO, HSA. We’ve all heard these terms before but many people really don’t know the difference and why the difference is so important.

The health insurance industry is filled with confusing acronyms like these —we call it healthcare soup. The confusion around them makes it hard to understand what insurance plans really offer, but also they make it hard to determine which plan is right for you.

This guide is designed to clear up the confusion and give you the tools you need to make the insurance decision that’s right for you.

Choosing A Health insurance Plan—Start With A Health Risk Assessment

What’s a health risk assessment you ask? A health risk assessment is a tool that you should use before you make a decision on health insurance. It helps you understand your needs as a healthcare consumer, helps you identify your risks and helps you understand your costs.

It all starts with defining who you are because without that understanding, you won’t know what to buy. You could over-buy or under-buy insurance, and both of those are bad decisions. 

This assessment has a standard set of questions that helps develop your health profile. It assesses your health status, estimates your level of health risk, and recommends ways to change your behavior to improve your health. 

What Information a Health Risk Assessment Collects

Information collected includes your demographic information (age and sex), lifestyle information (alcohol intake, exercise habits, whether or not you smoke, etc.), personal and family medical his- tory, physiological data (weight, height, blood pressure, etc.), and your attitudes and willingness to change your behavior in order to improve your health.

The HRA analyzes this information to produce a health risk profile, which ranks your health in seven key health areas: heart, cancer, diabetes, obesity, nutrition, fitness, and mental and emotional health through color-coding, graphs, icons, and a number based scoring system that tells you if you are doing well, need to be cautious, or need to take immediate action. It recommends key ways to improve your scores and health.

How to Take A Health Risk Assessment

How can you get your own health risk profile? About 33 percent of employers offer these HRAs (Health Risk Assessments) through their employee health plan. If your employer is one who gives you access to an HRA they will direct you on where and how to take it.

If your employer doesn’t offer a HRA, that doesn’t mean you’re out of luck. There are other online resources where you can access one.  

What’s Next? Compile Your Health Record

After completing an HRA, you need to compile all your medical history to complete your total health profile. At first, it feels like a lot of busy work, not a joyous experience, but it’s worth it. Use the checklist below to make sure you have everything you need

Health Record Checklist

  1. Documentation of conditions you have been diagnosed with
  2. Biometric data 
  3. Copies of your past physicals
  4. Immunization records
  5. Records of surgeries you’ve had
  6. Past X-Rays, MRI’s, CT scans or other imaging you’ve had
  7. Diagnostic test results 
  8. Your current medications
  9. Family history of genetic conditions

It’s a big list, but your health record will be much easier to maintain and update once you do it. If you can’t manage to collect everything or don’t have the time, something is always better than nothing. In that case what’s most important is to have documentation of your current conditions, medications, surgeries and family history. 

Now You’re Ready To Make The Right Decision

These records complete your in-depth health profile. Having full access to your records, electronically or via hard copy, will help you communicate effectively with your doctor in an efficient manner. That way, they can more accurately assess your conditions and prescribe effective courses of treatment. These records also set you up to find a health insurance option that’s right for you and select a doctor who best fits your needs.

Making The Right Insurance Decision

What Insurance Has To Cover

What does insurance have to cover? The Affordable Care Act (ACA), aka Obamacare, man- dated all individual or employer-sponsored health plans must cover these ten essential benefits without annual or lifetime spending caps. Note: annual deductibles, copays, and out-of-pocket requirements must still be met, but once met, the medical expense cannot be limited.

  • Ambulatory patient services (outpatient care without being admitted to the hospital)
  • Emergency services
  • Hospitalization(such as surgery and over night stays)
  • Pregnancy, maternity, and new born care (both before
  • and after birth)
  • Mental health and substance abuse disorder services
  • including behavioral health treatment
  • Prescription drugs
  • Rehabilitation and habilitative services (those that
  • help patients acquire, maintain, or improve skills necessary for daily functioning) and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision

Make Sure Your Plan Has Access To The Providers You Need

Different types of plans (HMO, PPO) and different insurance carriers (Blue Cross Blue Shield, Aetna, Cigna, United Healthcare, etc.) repre- sent different providers. Some plans have more doctors and hospitals available and others fewer. Some may be limited by geographic areas. 

You can find this information using your insurer’s provider directory. Below is a list of the major insurance carrier’s provider directories. However, you will need to log in to view the directory.

HSA vs. PPO vs. HMO – General Strategies To Choose Between Plans

Everything you’ve done up until this point is critical because it’s what allows you to make sure your insurance decision is right for your personal needs. However, there are some general strategies that you should have in mind when it comes to choosing between HSA’s, PPO’s, and HMO’s. 

When To Choose A PPO 

If you’re a family who uses the healthcare system but doesn’t have a ton of claims A PPO will provide you with the right amount of coverage, but you shouldn’t get to a point where you’re paying more than you would with another plan type.
If your personal cash flow isn’t great Your monthly premium will be slightly higher but co-pays will make prescriptions and trips to the doctor more affordable in the short term.

PPO’s have become the most common type of plan offered and almost every employer will offer a PPO plan. PPOs grant you the freedom of choice to see any provider but create a network of physicians and hospitals (“in-network”) that offer discounted pricing to plan members. The networks are generally broad but do not include all providers.

It’s really important to have an idea of how much you will use the healthcare system during the year. A PPO can be a great general solution, but if you start to rack up claims, an HSA can be cheaper in the long run because the plan will pay 100% after you’ve met the deductible. 

When To Choose A High Deductible Plan With An HSA

If you’re young and healthy You should be using the healthcare system rarely so an HSA will offer the cheapest monthly premiums and provide protection against any catastrophic health condition.
If you have a chronic condition or are battling a serious illness An HSA will be more effective than an alternative plan in the long run because you are essentially hacking the system to have your plan pay 100% of your health costs once your deductible is met. If you anticipate easily exceeding your deductible during the year you will actually end up saving money vs. a co-pay plan. 
If you don’t have enough cash up front to meet your deductible, set up payment plans with your providers to take the weight off financially. 

A High-Deductible Health Plan follows all the features of a basic PPO with one exception: it cannot offer any copays for any level of service. The plans do not pay until deductibles are met; that includes physician office visits and prescription drugs (see example plan). Deductibles must be at least $1,350 for an individual and $2,700 for a family. 

When To Choose An HMO 

If you have minor health needs, your current doctors are in-network and you don’t expect your health to change An HMO will provide the cheapest protection to you if you’re a moderate user of healthcare and you don’t expect to need care from a provider out of network.

HMOs offer a contracted network of physicians and medical providers that you may choose. There is no coverage for non-networked providers (except in emergencies). 

The major drawback of an HMO is the lack of choice. Before selecting an HMO as your health plan you need to make sure that you are satisfied with the doctors, pharmacies and hospitals that are in network because you will be locked in to those providers. 

Another thing to consider before selecting an HMO is whether or not you anticipate that your health situation will change. If you suddenly have a new need arise in the middle of the year, an HMO might not be the best plan option.

Using Alternative Health Insurance Options To Cover Gaps

Any health insurance plan can have gaps when it comes to what it protects. This can be true for all health plans but is especially true for high deductible plans with an HSA. In those situations you have options when it comes to closing the gaps. 

  • Critical illness plans
  • Accident plans
  • Christian coverage
  • Credit cards

Finding The Plan That’s Right For You

The most important thing to keep in mind when you’re shopping for health insurance is to make sure the plan fits your needs. 

What Does Insurance Cover

 “Does my insurance cover that?”

 “Does my insurance cover that?”

It’s a question I’ve heard asked many times, and it’s probably a question you’ve asked before. The healthcare landscape—especially insurance—can be a confusing mess. Trying to understand it is like untangling a mess of Christmas lights. You might get there eventually, but it’s not going to be easy and you will question your sanity at points.

I wrote this article to simplify things by answering: What do health insurance plans cover?

Essential Benefits Covered Under ACA

The Affordable Care Act (ACA), aka Obamacare, mandated all individual or employer sponsored health plans must cover these ten essential benefits without spending caps of any kind (annual or lifetime). Note: annual deductibles, copays, and out-of-pocket requirements must still be met, but once met, the medical expense cannot be limited.

Ambulatory patient services (outpatient care without being admitted to the hospital)

  1. Emergency services
  2. Hospitalization and hospital stays (such as surgery and overnight stays)
  3. Pregnancy, maternity, and newborn care (both before and after birth)
  4. Mental health and substance abuse disorder services
  5. Prescription drugs
  6. Rehabilitation and habilitative services (those that help patients acquire, maintain, or improve skills necessary for daily functioning) and devices
  7. Laboratory services
  8. Preventive and wellness services and chronic disease management
  9. Pediatric services, including oral and vision

In addition, a set of preventive services for men, women, and children are covered at 100 percent under the plans without charging copays, deductibles, or out-of-pocket costs. These include annual physicals, female contraceptives, and immunizations.

For a list of all fully covered services go to healthcare.gov. If you have coverage through your employer, ask for and review your employer’s Summary Plan Description (SPD).

Remember: The most efficient way to determine if your item is covered is to ask for the health insurance policy’s “not covered” or “exclusion” section.

What Does Minimum Coverage Cover?

Plans must cover the ten essential required benefits at an actuarial value of no less than 60 percent. Plans offered through healthcare.gov simplified the selection process by branding all plans that comply with the minimum actuarial value as bronze plans.

This is not to say that all healthcare insurance plans only cover the 60/40 percent split. There are 90/10 (platinum), 80/20 (gold), 70/30 (silver), and even some 50/50 (bronze as well) plans that comply with minimum actuarial value. Deductibles, copays, maximum out-of-pocket expenses and the amount you pay will vary by plan offering.

Note: What are medically necessary charges? Medicare’s definition of medically necessary charges is “health-related services or supplies needed to prevent, diagnose, or treat an illness, injury, condition, disease or its symptoms, and that meet accepted standards of medicine.” In general terms, it excludes experimental unapproved procedures, and cosmetic procedures.

What Physicians and Hospitals Are Covered?

So far, we have highlighted what procedures are covered. You must also consider which providers are covered. Whatever plan or plans you are presented with and are considering, make sure they offer the doctors or hospitals or facilities that you use.

Different types of plans (HMO, PPO) and different insurance carriers (Blue Cross Blue Shield, Aetna, Cigna, United Healthcare, etc.) represent different providers. Some plans have more doctors and hospitals available and others fewer. Some are limited by area.

How do you find out if your providers are available? Ask for the provider directory. Each insurance carrier’s plan has its own unique list or directory. All are available online.

You are given the option to review the provider directories when you are applying for the insurance. Health insurance companies, employer plans, and government-sponsored plans offer multiple types of plans each with their own unique provider directory. When looking for your provider(s) in the carrier’s directory, make sure you are looking at the correct health plan. Different plans within the same carrier will have different lists of providers.

One Final Tip

If you don’t have a doctor relationship established, you need to ask how many doctors in the plan you are choosing are accepting new patients. Doctors on the list may not be taking new patients. Ask the insurance company or pick a doctor and call them to ask if they are taking new patients under the plan you are looking to select.

It’s a question I’ve heard asked many times, and it’s probably a question you’ve asked before. The healthcare landscape—especially insurance—can be a confusing mess. Trying to understand it is like untangling a mess of Christmas lights. You might get there eventually, but it’s not going to be easy and you will question your sanity at points.

I wrote this article to simplify things by answering: What do insurance plans cover?

Essential Benefits Covered Under ACA

The Affordable Care Act (ACA), aka Obamacare, mandated all individual or employer sponsored health plans must cover these ten essential benefits without spending caps of any kind (annual or lifetime). Note: annual deductibles, copays, and out-of-pocket requirements must still be met, but once met, the medical expense cannot be limited.

Ambulatory patient services (outpatient care without being admitted to the hospital)

  1. Emergency services
  2. Hospitalization (such as surgery and overnight stays)
  3. Pregnancy, maternity, and newborn care (both before and after birth)
  4. Mental health and substance abuse disorder services
  5. Prescription drugs
  6. Rehabilitation and habilitative services (those that help patients acquire, maintain, or improve skills necessary for daily functioning) and devices
  7. Laboratory services
  8. Preventive and wellness services and chronic disease management
  9. Pediatric services, including oral and vision

In addition, a set of preventive services for men, women, and children are covered at 100 percent under the plans without charging copays, deductibles, or out-of-pocket costs. These include annual physicals, female contraceptives, and immunizations.

For a list of all fully covered services go to healthcare.gov. If you have coverage through your employer, ask for and review your employer’s Summary Plan Description (SPD).

Remember: The most efficient way to determine if your item is covered is to ask for the health insurance policy’s “not covered” or “exclusion” section.

What Does Minimum Coverage Cover?

Plans must cover the ten essential required benefits at an actuarial value of no less than 60 percent. Plans offered through healthcare.gov simplified the selection process by branding all plans that comply with the minimum actuarial value as bronze plans.

This is not to say that all healthcare insurance plans only cover the 60/40 percent split. There are 90/10 (platinum), 80/20 (gold), 70/30 (silver), and even some 50/50 (bronze as well) plans that comply with minimum actuarial value. Deductibles, copays, and maximum out-of-pocket expenses will vary by plan offering.

Note: What are medically necessary charges? Medicare’s definition of medically necessary charges is “health-related services or supplies needed to prevent, diagnose, or treat an illness, injury, condition, disease or its symptoms, and that meet accepted standards of medicine.” In general terms, it excludes experimental unapproved procedures, and cosmetic procedures.

What Physicians and Hospitals Are Covered?

So far, we have highlighted what procedures are covered. You must also consider which providers are covered. Whatever plan or plans you are presented with and are considering, make sure they offer the doctors or hospitals or facilities that you use.

Different types of plans (HMO, PPO) and different insurance carriers (Blue Cross Blue Shield, Aetna, Cigna, United Healthcare, etc.) represent different providers. Some plans have more doctors and hospitals available and others fewer. Some are limited by area.

How do you find out if your providers are available? Ask for the provider directory. Each insurance carrier’s plan has its own unique list or directory. All are available online.

You are given the option to review the provider directories when you are applying for the insurance. Health insurance carriers, employer plans, and government-sponsored plans offer multiple types of plans each with their own unique provider directory. When looking for your provider(s) in the carrier’s directory, make sure you are looking at the correct health plan. Different plans within the same carrier will have different lists of providers.

One Final Tip

If you don’t have a doctor relationship established, you need to ask how many doctors in the plan you are choosing are accepting new patients. Doctors on the list may not be taking new patients. Ask the insurance company or pick a doctor and call them to ask if they are taking new patients under the plan you are looking to select.