U.S. Health Insurance System + How to Understand Insurance Statements

If you travel to the U.S. or move to the U.S., many people are worried about when you get injured or sick there.

The U.S. is known for its very high medical costs, and in some cases, you may be charged hundreds of dollars for a minor injury.

I also had a minor injury to my hands and face while riding a bicycle the other day. I went to the clinic with a light feeling, but I was charged $300 just by disinfection and band-aids after a simple consultation.

It is essential in the U.S. to have health insurance to make such high medical expenses even a little cheaper, but if you come to the U.S. from Japan, you will be troubled by the difficulty of the U.S. medical insurance system.

In the U.S., public health insurance is only available to elderly and low-income people, such as Medicare and Medicaid.

Therefore, many people in the U.S. generally have private insurance.

Private insurers offer different insurance plans and are becoming more complex, and not a few Americans don’t even know details of their insurance.

In this article, I would like to explain about the U.S. health insurance system and how to understand insurance statements.

U.S. Health Insurance System

In Principle, all citizens in Japan have public health insurance, but in the United States, there are very limited people who can take out public health insurance, and in general, many people have health insurance provided by the private insurance company.

In Japan, we only need to pay 30% of the medical expense without deductible, but in the United States, the amount of out of pocket expense depends on the private insurance that you join, and health insurance premiums tend to be high, and there are many people who cannot take out insurance.

Obamacare

To break that situation, the Affordable Care Act, commonly known as Obamacare, came into effect in January 2014 under the administration of former President Barack Obama, and improvements were made to ensure that everyone had health insurance and access to health care.

However, it is completely different from Japanese national health insurance, and Obamacare is intended to mandate people to enroll in health insurance plans provided by private insurance companies.

This system basically imposes fines on people who do not have health insurance, but tax reform under the Trump administration has effectively eliminates fines at the federal level even if they do not have insurance since January 2019.

Obamacare’s key points include banning the refusal of health insurance for illnesses and raising premiums due to health conditions, and these systems have remained in effect since tax reform under the Trump administration.

In addition, individuals can only enroll in health insurance plan once a year (November 1 to December 15).

Insurance applied during this period will start on January 1 of the following year.

Outside of the period, you may not have personal health insurance except for those who meet certain conditions stipulated by law (marriage, divorce, loss of group insurance, etc.).

Under Obamacare, the minimum standards that insurance must cover were established, and insurance plans were divided into four levels: bronze, silver, gold, and platinum.

Bronze has the cheapest insurance premiums and platinum is the highest level. Bronze is a plan covered by insurance for about 60% of medical expenses, silver is 70%, gold is 80%, and platinum is 90%.

What is a Network?

There are four types of health insurance networks in the U.S.: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Point of Service Plan (POS), and Exclusive Provider Organization (EPO).

Each private insurance company has a contract with the above network, and if you use an out-of-contract network, you will not be available for insurance or your out-of-pocket costs will increase.

Type	Overview
HMO	The primary care physician (PCP) is decided, and in principle, treatment is carried out through the PCP. Insurance premium is set cheaper than other network, but insurance is not applied unless you use a doctor or medical institution in the network of insurance companies, except for emergencies.
PPO	You can choose your medical institution from within the network contracted with the insurance company, and if you use a medical institution outside the network, your out of pocket cost will be higher than usual. You will be referred to a specialist without a referral letter. Premiums are set higher than HMO.
POS	It is a hybrid plan between HMO and PPO, and although you decided a PCP, you can also use doctors and medical institutions outside the network. Premiums are between HMO and PPO.
EPO	You can choose a medical institution from within the network, but medical institutions outside the network are not covered.

Dental and Vision Insurance

In the U.S., dental and vision insurances (including the purchase of glasses and contacts) are generally a separate plan from health insurance, and you must purchase each.

How to Understand Insurance Statements

Insurance benefit statements, called Explanation of Benefits (EOB), have so many jargon that may confuse you if you are not familiar with.

For such people, here are explanation of the technical terms that are the key to understand EOB.

term	Mean
Allowed Amount	The amount subject to the insurance benefit calculation for the health service covered by the insurance. The amount after the total amount of the claim is discounted or deducted from medical expenses that are not covered by insurance benefits. Also known as Advanced Charge, Allowable Charge, Invisible Expense, Member Rate, Negotiated Rate, Payment Allowance.
Amount Billed	The amount charged by the medical institution for the medical services.
Amount Paid	The amount paid by the insurance company to the insured person.
Co-Insurance	The out-of-pocket percentage paid by the insured person after exceeding deductible. The out-of-pocket ratio varies depending on the insurance plan.
Co-Pay	A certain amount of money paid at the counter when receiving medical service or prescription drugs.
Deductible	Annual deductible. You need to pay out of pocket expense until you exceed the set amount. If you exceed the set amount, you will be covered by insurance for the first time.
Discount	A pre-agreement discount between a doctor, hospital or other healthcare institution and the network to which they are affiliated.
Explanation of Benefits (EOB)	Insurance benefit statement. If you visit using medical insurance, you will receive it from your insurance company.
Ineligible Charge	Amounts that have already been processed for benefit claims or are not covered by insurance plans.
Network	A group of medical institutions, such as doctors and hospitals, that are fending off insurance companies for contracts to provide medical services at discounted rates. If you use a medical institution in the network, you will receive a discount on the out-of-pocket cost. The doctor in the network is called In-Network Provider, and the doctor outside the network is called out-of-network provider.
Open Enrollment Period	Period you can enroll in health insurance plan.
Out of Pocket Maximum	The maximum out-of-pocket expense to be paid per year. After you exceed the limit, the insurance company pays everything. It resets on the insurance renewal date , often January 1.
Premium	Insurance premiums paid to insurance companies.
Preventive care	Health checkups, vaccinations, etc.
Primary Care Physician (PCP)	physician in charge.
Provider	Doctors and hospitals that provide medical services.
Service Date	Date of medical services.