Health Insurance Basics and Glossary
Get the basics on insurance for your eczema. Unpack everything you need to know from insurance plan types to open enrollment.
Health insurance basics
Health insurance is an annual contract between you and a health insurer to pay for your healthcare costs. Your eligibility for what type(s) of health insurance you are eligible for can depend on a few factors, including age, employment status and income.
What are the main types of health insurance?
There are three main types of health insurance:
- Employer-sponsored health insurance: Also known as private insurance, this type of health insurance is provided through your employer.
- Government-sponsored health insurance: Also known as public insurance, this is insurance you receive from a federally-funded program, such as Medicare or Medicaid.
- Individual health insurance: This is private insurance you purchase out-of-pocket, independent of an employer or the federal government.
What is open enrollment?
Open enrollment is an annual period where you are eligible to either enroll in a new health insurance plan or make changes to your current plan.
Usually occurring in the late fall or early winter, the open enrollment period date and length depends on the kind of insurance plan you are selecting and your insurance provider. Open enrollment dates may vary by state. Employer-sponsored plans typically have their own set open enrollment periods, which your employer will notify you about in advance.
It’s important to pay attention to the open enrollment dates for your type of health insurance plan. This is the one time a year where you can make changes to your insurance coverage. Once open enrollment closes, you have to wait until the next year’s open enrollment period to make health plan changes.
The only other times you can enroll in a new plan or update your plan is during a special enrollment period, which is limited to a few select life-altering events like having a child, getting married, or when you leave a job, etc. For example, if you get married, you can add your spouse to your health plan within a certain period of time after getting married.
How do you choose a health insurance plan?
There are many considerations to weigh when choosing an insurance plan, especially for people with a chronic condition like eczema. These considerations include what types of insurance plan(s) you are eligible for, as well as both your short-term and long-term healthcare needs. Check out our guide to choosing an eczema-friendly health plan.
What are the main types of health plans?
Two of the most common employer-sponsored plans offered are a preferred provider organization (PPO) plan or a health maintenance organization (HMO) plan:
- PPOs usually have a higher premium, or the amount you would pay each month for coverage. This cost usually includes a wider selection of covered healthcare providers compared to HMOs.
- HMOs usually require a lower premium. However, they will also offer a smaller selection of covered providers, and you may need a referral in some cases.
Less expensive premiums aren’t necessarily the better option, unless you anticipate a very low-cost year ahead. A recent survey conducted by NEA found that people with eczema tend to have increased healthcare utilization compared to those without, including more frequent outpatient doctor visits. The annual out-of-pocket cost for eczema management was $600. However, 42% of individuals spent $1,000 or more in a year, and 8.5% reported spending $5,000 or more.1
What is a flexible spending account (FSA) and health savings account (HSA)?
Many insurance plans come with options to create a savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. After you’ve considered what healthcare costs you anticipate for the upcoming year, you can estimate the amount of money you may want to contribute to one of these accounts for future use:
- Flexible spending account (FSA): This savings account allows you to set aside money on a pre-tax basis to pay for qualified medical expenses, such as deductibles, copayments and coinsurance. For FSAs, you must use all of your FSA funds within the designated plan year. They do not roll over to the next year. However, in some cases, there is a grace period. If money is left at the end of the year, your employer may offer one of two options: either you get 2.5 more months to spend the leftover money, or you can carry over up to $640 (as of 2024) to spend with your plan next year.
- Health savings account (HSA): This savings account allows you to set aside money on a pre-tax basis to pay for qualified medical expenses, such as deductibles, copayments and coinsurance. For HSAs, funds do rollover, but only high-deductible health plans qualify.
Does health insurance cover eczema?
Yes, most public and private health insurance does apply to dermatological conditions like eczema and medically necessary eczema care. This can include all forms of prescription medications and phototherapy. Since dermatology is a specialized healthcare field, depending on your doctor and your condition, you may need a referral from a primary care provider.
What if I can’t afford health insurance?
There are various government-funded aid and nonprofit programs that can help you cover the cost of health insurance. Here is a list NEA pulled together of some financial resources for healthcare coverage. For additional information on resources, visit HealthCare.gov.
Download our “FAQ: Eczema and Insurance” PDF.
Glossary of Insurance Terms
This glossary defines commonly used terms you may come across when choosing and/or paying for your health insurance.
Coinsurance: The percentage of costs of a covered healthcare service you pay (20%, for example) after you’ve paid your deductible.
Copayment: A fixed amount you pay for a covered healthcare service after you’ve paid your deductible.
Cost sharing: This is your share of costs for services that a plan covers that you must pay out of your own pocket (i.e., out-of-pocket costs). This can include copayments, coinsurance and deductibles.
Deductible: The amount you pay for covered healthcare services before your insurance plan starts to pay for them.
Explanation of benefits (EOB): An explanation of benefits (EOB) is a statement you receive after going to a doctor or other healthcare professional. The EOB shows the care you received and how your insurance benefits were applied to help pay for the care. Each insurance company has its own version of an EOB. An EOB is not a bill, but it can help you understand how much the service(s) you received cost, what may have already been paid, and how much you may owe.
Flexible spending account (FSA): The option to set aside money on a pre-tax basis to pay for qualified medical expenses, such as deductibles, copayments and coinsurance. For FSAs, you must use all of your FSA funds within the designated plan year. They do not roll over to the next year. However, in some cases, there is a grace period. If money is left at the end of the year, your employer may offer one of two options: either you get 2.5 more months to spend the leftover money, or you can carry over up to $640 (as of 2024) to spend with your plan next year.
Formulary: A list of prescription drugs covered by an insurance plan.
Health insurance: A contract that requires your health insurer to pay some or all of your healthcare costs in exchange for a premium.
Health savings account (HSA): The option to set aside money on a pre-tax basis to pay for qualified medical expenses, such as deductibles, copayments and coinsurance. For HSAs, funds do rollover, but only high-deductible health plans qualify.
In-network providers: These are providers that have a contract with your health plan. Generally, if you see an in-network provider it costs less than seeing a provider that is out of network.
Open enrollment: Open enrollment is a set time period each year when people can enroll in a new healthcare plan or make changes to existing coverage.
Out-of-pocket maximum: The most you have to pay for covered services in a plan year (not including premiums).
Out-of-network providers: Providers who don’t have a contract with your plan to provide services. Typically, visiting an out-of-network provider costs more. They also may be called “non preferred provider” or “non-participating provider.”
Pre-existing condition: A health condition, like eczema or asthma, that you had before the date that new health coverage starts. Insurance companies can’t refuse to cover treatment for your pre-existing condition or charge you more.
Premium: The amount you pay each month to pay for your health insurance.
Surprise bill: An unexpected bill for certain types of out-of-network costs that your insurance didn’t cover.
