Health insurance can often seem like a foreign language, with a myriad of complex terms and phrases. Understanding these key terms is crucial to making informed decisions about your healthcare coverage. In this blog, we’ll break down some of the most important terms you should know.
1. Premium
A premium is the amount you pay to your insurance company for your health coverage, typically on a monthly basis. It’s important to note that you must pay this amount even if you do not use any healthcare services during the month.
2. Deductible
The deductible is the amount you need to pay for healthcare services before your insurance starts to pay. For example, if your deductible is $1,000, your insurance won’t pay anything until you’ve met that $1,000 deductible for covered health care services.
3. Copayment (or Copay)
A copayment, often referred to as a copay, is a fixed amount you pay for a covered health care service, usually at the time of service. The amount can vary by the type of service. For example, you might pay $20 when you visit the doctor or $30 for a specialist visit.
4. Coinsurance
Coinsurance is your share of the costs of a healthcare service. It’s usually figured as a percentage of the amount your insurance allows to be charged for services. For example, if your insurance allows $100 for a doctor visit and you’ve met your deductible, your coinsurance payment of 20% would be $20.
5. Out-of-Pocket Maximum
The out-of-pocket maximum is the most you’ll have to pay for covered services in a policy period (usually one year). After you reach this amount, your health insurance will pay 100% of the costs for covered benefits.
6. Network
The network refers to the facilities, providers, and suppliers your health insurer has contracted with to provide healthcare services. Going “out-of-network” can result in higher costs for you.
7. Coverage Area
The coverage area is the geographical area where your health insurance coverage is in effect. If you receive care outside of this area, you might have to pay more or all of your care costs.
8. Pre-existing Condition
A pre-existing condition is a health problem you had before the date that your health insurance coverage starts. Under the Affordable Care Act, health insurance companies can’t refuse coverage or charge more due to pre-existing conditions.
9. Preventive Services
Preventive services are routine healthcare procedures such as screenings, check-ups, and patient counseling to prevent illness, disease, or other health problems.
10. Prescription Drug Coverage
This refers to insurance or standalone plans that help cover the cost of prescription drugs. Each plan may have a list (formulary) of covered drugs.
Conclusion
Understanding these terms will help you better navigate your health insurance policy and make informed healthcare decisions. Stay tuned to our blog for more insights and explanations of health insurance topics. Remember, an informed patient is an empowered patient.
