Important Health Insurance Terms, Explained
Health insurance can be a complex topic, filled with a plethora of terms and jargon that can leave even the savviest of consumers scratching their heads. From deductibles to copayments, understanding these terms is essential for making informed decisions about your healthcare coverage. In this blog post, we will demystify some commonly used health insurance terms to help you navigate the world of medical coverage more confidently.
1. Premium: This term refers to the amount of money you pay your insurance provider regularly (typically monthly) to maintain your health insurance plan. It is important to note that paying your premium does not necessarily mean you have coverage for all medical expenses. Premiums vary depending on the type of coverage, provider, and the specifics of your plan.
2. Premium Tax Credit: A tax credit you can use to lower your premium when you enroll in a plan through the Health Insurance Marketplace. Your tax credit is based on the income estimate and household information you put on your Marketplace application.
3. Deductible: The deductible is the amount of money you must pay out of pocket for covered healthcare services before your insurance plan starts to contribute. For instance, if you have a $1,000 deductible, you will be responsible for covering the first $1,000 of medical expenses before your insurer begins to chip in. Generally, plans with lower monthly premiums often have higher deductibles and vice versa.
4. Copayment (or coinsurance): A copayment is a fixed amount you are required to pay for covered services. For example, your plan may include a $20 copay for a doctor's visit, meaning that you would pay this amount at each visit while your insurer covers the rest. Coinsurance, on the other hand, refers to the percentage of the total cost of a covered service that you are responsible for paying. For instance, if your plan has a 20% coinsurance rate for a specialist visit that costs $100, you would pay $20, while your insurer covers the remaining $80.
5. Cost-Sharing Reductions: A discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance. On Marketplace, cost-sharing reductions are often called “extra savings.” If you qualify, you must enroll in a plan in the Silver category to get the extra savings.
6. Out-of-pocket maximum: This term refers to the maximum amount of money you will have to pay for covered healthcare services within a given period (usually a year) before your insurer covers 100% of the remaining costs. Once you reach the out-of-pocket maximum, your insurance plan takes over and pays for all eligible expenses for the rest of the year.
7. Network provider: These are healthcare professionals, facilities, or hospitals that have an agreement with a specific insurance company to provide services at negotiated rates. Network providers have a contractual relationship with the insurance company and often provide more affordable care. It is essential to review your insurance plan's network to ensure that your preferred healthcare providers are included.
8. Preauthorization: Some insurance plans require preauthorization, which means you must get approval from your insurer before receiving certain medical treatments, procedures, or prescription drugs. Failure to obtain preauthorization when required could result in your insurer not covering the costs or providing only partial coverage.
9. In-network vs. Out-of-network: As previously mentioned, network providers have negotiated rates with your insurance company, which generally results in lower out-of-pocket expenses for you. If you receive care from a provider outside of your insurance plan's network, it is referred to as out-of-network, and you may face higher costs or limited coverage. It is crucial to understand the coverage policies for out-of-network care in your plan.
10. Explanation of Benefits (EOB): An EOB is a statement provided by your insurance company that details the costs and services covered for each medical visit or procedure. It explains what your insurance covers and what portion you are responsible for paying. Reviewing your EOB can help you monitor your healthcare expenses and ensure accuracy.
For more, read how to navigate medical billing issues on the government's Center for Medicare Services (CMS) website.
(https://www.cms.gov/medical-bill-rights/help/guides)
Understanding these common health insurance terms will empower you to make educated decisions about your medical coverage. When selecting a plan, compare premiums, deductibles, copayments, and other details specific to your needs. Being well-informed about these terms will enable you to make the most of your health insurance and navigate the sometimes overwhelming world of healthcare with confidence.
Learn more by visiting Healthcare.gov's glossary:
https://www.healthcare.gov/glossary/
