With so many confusing terms and concepts, the health insurance system can be complicated. For many Americans trying to get insured, the terminology can be a barrier to selecting a health insurance plan.
That’s why we’ve created this list of the most essential terms. Once you have read and understood the definitions below, you will have a much easier time understanding the health insurance plans available to you. This will help you choose the right one that offers the best affordable health care coverage for you.
The amount of money that a health insurance provider is willing to pay out each year. If you have an Affordable Care Act-compliant plan, your insurer may pay up to 90 percent of the costs after you have met your deductible. This percentage only applies up to your annual limit, however. After you meet your limit, you will have to cover the costs yourself (“out of pocket”). An annual limit can be placed on specific services, such as operations or prescriptions, or it may apply to all of your medical costs.
Instead of limiting the amount of money your insurance will pay each year, an annual limit may apply to medical visits. For example, your insurance plan may only cover six visits to a specialist each year.
The proportion of health care costs that you must cover yourself. For instance, if your insurer pays 70 percent of your medical costs, then your coinsurance is 30 percent. Keep in mind that this is the amount you pay assuming that you have already paid your deductible. Before you meet your deductible, you may have to pay 100 percent of the costs for services.
A fixed cost that you will pay after you have met your deductible. This is for particular services such as a prescription or doctor’s checkup. Your insurance policy will outline all the costs of copayments you will be expected to make.
Asking your insurer to cover the costs of a health care service. If you have recently received care, then you can submit a claim to your insurer if you believe that they are required to cover the costs. Alternatively, your health care provider (doctor) will send the claim to your insurance company.
The proportion of insurance costs that you must cover. This includes copayments, coinsurance and deductibles. It does not include monthly premiums or the cost of services not covered by your insurance.
Catastrophic Health Plan
Health insurance plans that people usually get just for emergency health requirements. Since these are rare events, a catastrophic health plan tends to be the cheapest option, with low premiums and high deductibles.
The amount you must pay before you are eligible to get your costs covered by an insurer. Once a deductible is fully paid, then you will only need to pay a fixed copayment for specific services or coinsurance for a medical bill. Your insurer will cover the rest.
Health insurance that covers your family members, such as your children or spouse.
Essential Health Benefits
Ten services that the Affordable Care Act (ACA) requires insurance companies to cover for customers. These include preventive services, prescription drugs, pregnancy, mental health support, pediatric services and other health care services. This is the bare minimum – some insurers will cover more.
Exclusive Provider Organization (EPO) plan
A health insurance policy that requires you to go to specific hospitals and health care providers that are in your health plan’s network. You won’t be covered if you receive health care from a provider that isn’t in your insurer’s network. There are exemptions for emergency cases.
Group Health Plan
An insurance plan that covers more than one person. Usually, this is insurance offered to employees of a company or members of a particular organization. By opting for a group health plan, employers or organizations may be able to cover their employees’ or members’ medical needs at a reduced cost.
Health Insurance Marketplace
A resource set up by the ACA to allow U.S. citizens to compare and enroll in health insurance plans. This makes insurance easier to apply for and more affordable, helping you to get the right coverage for your needs. However, there are limited periods of time in which a person may apply for a plan through the Health Insurance Marketplace.
High Deductible Health Plan (HDHP)
A health insurance policy that has deductibles of more than $1,400 for individuals or $2,800 for families. When deductibles are added to coinsurance and copayments, an HDHP health plan cannot cost families more than $13,800 a year or $6,900 for individuals.
Health Maintenance Organization (HMO)
An insurance provider that offers insurance through a network of medical specialists. With an HMO, you typically cannot be covered for out-of-network services unless it is for emergency services.
A group of doctors, physicians and other medical experts who have agreed to offer their services to customers on a particular insurance plan. Customers may be able to receive health care from outside of this network, but they might not be covered by their insurer.
Out-of-Pocket Maximum / Limit
The total amount you will have to pay for covered medical services in one year. This does not include monthly premiums, but it does include deductibles, copayments and coinsurance. Once the limit has been reached, your insurer must pay 100 percent of your health care costs.
Any illness or injury that already existed before you took out your insurance plan. Before the ACA was passed, an insurer was able to define what a pre-existing condition was defined as and could deny you coverage or increase prices if you were viewed to have one. This included conditions like cancer and diabetes. Since the ACA passed, insurers may not charge extra or deny coverage on the basis of a pre-existing condition.
How much you pay to your insurance company. This is usually paid monthly to ensure that you receive coverage when you need it. Not paying your premiums will invalidate your health insurance, since it is how the company makes their money in order to cover medical costs.