As you navigate the world of health insurance, you’re going to stumble across a lot of interesting words. Some may be simple and intuitive. Others may leave you wondering, “What the heck are they talking about?”
To make it a little easier to sort through it all, here are some of the most common terms, broken up by category.
Allowed Amount – The maximum amount a health insurance plan will pay for a covered service
Coinsurance – A percentage of the cost of a covered service that you must pay out-of-pocket
Copayment – A fixed dollar amount you must pay out-of-pocket for certain covered health care services
Deductible – The amount you must pay out of pocket each year to cover your expenses for certain services before your health insurance plan pays. After you pay your deductible, you usually only pay a copayment or coinsurance amount for covered services.
Out-of-pocket maximum—This is the most money you will pay out-of-pocket during a calendar year. This is in addition to regular premiums but includes deductibles, copayments, and coinsurance. If you reach your out-of-pocket maximum, your insurance company will pay all expenses for the rest of the year.
Premium – The amount you pay each month for your health insurance
Claim – A request by a health care provider to the insurance company to pay for services.
Coordination of Benefits – A practice that makes sure a health insurance claim isn’t paid multiple times when a person has more than one health insurance plan at the same time.
Formulary – A list of prescription medications covered by your plan.
Network – A group of doctors, hospitals, and other health care providers that insurance companies contract with to provide services at discounted rates. You generally pay less when you seek care from a network provider.
Catastrophic Health Plan – A type of plan available to people under 30 or those who qualify for a hardship or affordability exemption. They generally have low monthly premiums and high deductibles.
Exclusive Provider Organization (EPO): A managed care plan where services are covered only if you use network providers.
Health Maintenance Organization (HMO): Usually limits coverage to care from doctors who work for or contract with the HMO.
Point of Service (POS): A type of plan where you pay less if you use network doctors, hospitals, and other health care providers.
Preferred Provider Organization (PPO): You pay less if you use network providers but can still use doctors, hospitals, and providers outside of the network for an additional cost.
Got questions? Reach out to the BuyHealthInsurance team, and we’ll be happy to help!