Health Insurance Terms, Explained
HEALTH INSURANCE TERMS, EXPLAINED
We understand that deciphering your health plan options can be frustrating and intimidating – especially when you’re not sure what meaning is behind health insurance terms. Saunders Insurance Agency has put together a list of the Most Common Health Insurance Terms to help your understanding of health insurance terms and how health insurance works.
HEALTH INSURANCE COST TERMS
Premiums, Deductibles, Coinsurance, Copayments, and Out-of-Pocket Maximums are terms you regularly hear when discussing health insurance but may not completely understand. Your Health Plan will share the costs of your healthcare with you – understanding these terms will inform you what costs you’re responsible for, and when.
Premium: The dollar amount you pay for your Health Insurance Plan similar to your auto and home insurance payments.
Deductible: The amount of healthcare costs you are responsible for before the Health Plan starts sharing costs.
For example: If your deductible is $1,000, your Health Plan won’t pay any costs for services subject to the deductible until you’ve met your $1,000 deductible. The deductible may not apply to all services depending on your Health Plan.
Coinsurance: The amount shared by you and your Health Plan for healthcare costs, calculated as a percentage.
For example: Consider your Health Plan includes a 20% coinsurance limit. If your Health Plan’s allowed amount for an MRI is $1,000 and you’ve met your deductible, your coinsurance payment of 20% would be $200. Your Health Plan pays the additional $800 of the allowed amount - once your deductible has been met.
Copayment: The fixed amount you pay each time you see a network provider. The amount can vary by the type of service. You may also have copayments for prescription drugs.
For example: Your Health Plan may require a $30 copayment for a primary care doctor’s office visit while a $60 copayment may be required for a specialist’s office visit.
Out-of-Pocket Maximum: The total amount of healthcare costs you are responsible for before your Health Plan pays 100% of covered healthcare costs for the rest of the year. Your deductible, coinsurance and copayments count towards your out-of-pocket maximum.
For example: If your Health Plan’s Out-of-Pocket Maximum is $5,000 – your deductible, coinsurance, and copayments all apply towards your Out-of-Pocket Maximum. Using the above examples, after the $1,000 Deductible is met, you’d be responsible for $4,000 in combined Coinsurance and Copayments to meet the $5,000 Out-of-Pocket Maximum.
HEALTH INSURANCE COVERAGE TERMS
What is covered under each Health Plan varies. These common healthcare coverage terms will help your understanding of what your Health Plan actually covers.
Network: Healthcare providers (hospitals, clinics, facilities, doctors, specialists, and suppliers) that your Health Plan has contracted with to provide healthcare services.
Out-of-Network (OON): Healthcare providers that are NOT contracted with your Health Plan to provide healthcare services. Plans usually require higher deductibles, coinsurance, and out-of-pocket maximums for care you receive at an Out-of-Network provider.
Preventive Care: Routine healthcare designed to help you stay healthy. For example: If your doctor recommends services even though you have no symptoms. Most Health Plans are required to cover preventive care at no cost to you when you see a network provider since mandated by the Affordable Care Act (also known as the ACA or Obamacare).
- Preventive Care Plans & Guidelines from Anthem
- Preventive Care Tips from United Healthcare
- Medical Mutual of Ohio Preventive Care
Diagnostic Care: Care you receive to help diagnose symptoms or risk factors you already have. For example: Diagnostic Care occurs when you have symptoms, and your doctor recommends services to find out what is causing your symptoms.
Primary Care Provider (PCP): Routine healthcare, including screenings, check-ups, and patient counseling to prevent illness, disease, or other health problems
Specialist: A physician focusing on a specific area of medicine or a group of patients to diagnose, manage, prevent, or treat certain types of symptoms and conditions. For example: Dermatologist
Prescription Drug List (PDL): Every Plan with a pharmacy benefit contains a Prescription Drug List (PDL), also known as a Formulary. The PDL lists the plan-approved drugs that your insurance will help pay for as well as how cost sharing works in each tier of drugs.
Drug Tiers: A 3-to-4 level tiered system that determines how each plan covers different types of prescription drugs. Each tier is typically assigned a cost you will pay for drugs listed in that tier.
Generic Drugs (Tier 1): FDA-approved prescription drugs not associated with a brand name
Preferred Brand Name Drugs (Tier 2): FDA-approved brand name prescription drugs
Non-Preferred Brand Name Drugs (Tier 3): FDA-approved brand name prescription drugs
Prior Authorization: A decision by your Health Plan that a healthcare service, treatment plan, prescription drug or durable medical equipment (DME) is medically necessary. Your Health Plan may require preauthorization for certain services before you receive them, except in an emergency.