There are currently over 32 million American individuals under the age of 65 with health insurance. But how many of these people understand how health insurance works, let alone their own individual policy?
If you don’t fully understand health insurance, don’t worry — like many things in this country, health insurance is very complicated. One of the most confusing factors for most is the myriad of complex words outlined in your policy.
Understanding health insurance is vital, and the first place to start is knowing the most common health insurance terms. This way, you’ll have an easier time shopping for health insurance and will have a better understanding of your policy.
This term is often abbreviated as “copay.” This is the fixed amount you pay for a medical service.
Perfect example: when you go to the doctor for your annual exam, do you have to pay anything for your visit? If so, this is known as the copayment.
Some health plans have no copays and they cover all expenses for doctor visits, while other plans require you to pay a copay at the time of visit. In some cases, you don’t have to pay a copay until you reach your deductible, which brings us to our next term.
A deductible is an amount you have to pay in health expenses until your insurance kicks in.
Let’s say your deductible is $2,000. You have to pay $2,000 in health expenses until your insurance kicks in. Keep in mind, monthly premiums and copays usually don’t count toward your deductible.
When shopping for health insurance, you’ll usually find plans with low and high deductibles. Is there a best plan to choose? Plans with higher deductibles usually have lower monthly premiums and vice versa.
If you have health issues and visit the doctor frequently, choosing a plan with a low deductible/high monthly premium is often worth it. But if you only visit the doctor once or twice a year for an annual exam, you can get away with choosing a plan that has a high deductible/low monthly premium.
The premium is simply the amount you pay per month to keep your health insurance active. This term often comes up on the Affordable Care Act (ACA) website and other health insurance plan comparison websites in addition to the deductible. It’s easy to confuse the terms, so make sure you know the difference before shopping for health insurance.
In order to keep your health coverage active, you must make all payments on time and in full. To ensure you pay on time, more health insurance companies are offering autopay options.
The out-of-pocket maximum is the most amount of money you’ll have to pay for health services in a year. The best part? The maximum counts toward your copay, deductibles, and coinsurance (we will cover this term next).
What happens if you meet the out-of-pocket maximum? Your health insurance covers all remaining medical costs for the rest of the year!
We mentioned that your health insurance kicks in after you meet your deductible. Does that mean your health insurance will cover 100% of your health expenses? It depends on your coinsurance. Coinsurance is the percentage of medical costs that your insurance pays for, but only after you met your deductible.
Most plans express your insurance as a figure like this: 90/10. In this case, your insurance pays for 90% of your health insurance costs and you pay for 10%. Keep in mind, this figure varies between plans.
If you have a Medicare plan, you’ll get a Medicare ID. This number is the ID number solely for Medicare enrollment.
This term is confusing because it could mean two things.
A provider can refer to a medical professional but is used in a specific context. You may hear “in-network provider” or “out-of-network provider.” This means the medical professional is either covered under your insurance (referring to “network”) or not.
However, “provider” can also refer to your insurance company. While you’ll mainly hear “insurance company,” understand that “insurance provider” is the exact same thing.
Benefit Level Exceptions/Single-Client Agreement
Going back to providers as doctors covered in your plan, you may assume that you’ll have to cover all expenses if you visit a doctor outside of your network. In most cases, this is true.
However, your doctor may have something called “benefit level exceptions” or a “single-client agreement” (can also be called a “single-case agreement”). This means the provider will receive in-network benefits when the specific provider sees a patient in that plan.
Does this mean you have to pay for anything? It depends on the agreement set forth by the provider and your insurance company. Oftentimes, the provider can negotiate your required payments.
The subscriber on a health insurance plan is the main person on the plan and the one responsible for paying the health insurance bills.
They may also be called the “primary subscriber,” especially if there’s more than one person on a health insurance plan. For example, if you get health insurance through a parent or your spouse, the parent or spouse will be the “primary subscriber.”
HMO is an abbreviation for “health management organization.” This is one of the four major types of health insurance plans. The other three are PPO (preferred provider organization), HDHP (high deductible health plan), and POS (point-of-service plan).
All of these plans vary by cost, doctor availability, and contractual agreements. Each type has pros and cons and it’s important to do your research before choosing a plan.
The Most Common Health Insurance Terms: Your Next Step
Understanding health insurance coverage is the best way to ensure you choose the best plan.
Now that you know the most common health insurance terms, what should you do now? It’s time to look for your next health insurance plan. Health plan enrollment has been extended this year, so now is the perfect time to start shopping for health insurance.
How do you start? Simply enter your zip code to find plans in your local area. If you have any questions, you’re more than welcome to contact us using this form or give us a call.