Whether your health insurance is offered to you by an employer or you get it through the Affordable Care Act marketplace, most plans use the same words to describe exactly what you’re entitled to. Like filing your taxes or fixing a flat tire, health insurance terminology is one of those necessary pieces of knowledge that adults are supposed to have, but if you don’t know what all the lingo means, you’re not Alone.
Knowing these words can help you take full advantage of everything your plan entitles you to, which is important, to say the least. Let’s look at some terms and why they are important.
Health insurance financial terms you need to know
- Deductible. Your deductible is the amount you pay for your health services before your health insurance starts paying its share. If your deductible is $1,500, for example, you must pay that amount yourself before your insurance kicks in and starts paying the rest. However, some services, like preventative doctor visits, may be covered before you pay your deductible, so be sure to read all of your plan’s guidelines.
- Premium. A premium is what you pay the insurance company to have your plan. You can pay monthly, like most people, or quarterly or annually. If your bonus comes directly from your salary, it’s deducted from your pre-tax salary and your employer likely pays part of the share as well. If you obtained your plan through the ACA marketplace, tax credits are available to help offset your premium costs.
- Authorized amount. An authorized amount (or eligible expense or payment allowance) is the discounted price your plan has negotiated in advance for the service you get. This means that this is the maximum amount your plan will pay for a covered service.
- Co-payment. Your co-pay is what you have to pay each time you have a certain service or appointment. These fixed amounts may vary depending on the service you receive. You might owe $50 every time you go to the emergency room, for example, or $20 every time you fill a prescription.
- Coinsurance. This comes into play once you hit your deductible. Coinsurance is the percentage you pay for your medical bills after meeting him. If your co-insurance rate is 25%, you will still pay 25% of your bills after reaching your deductible, while your insurance company will pay the remaining 75%.
- Disbursement limit. This is the maximum you will pay during your policy period, which is usually one year, before your plan starts paying 100% of your authorized amount. Your deductible, co-payment and co-insurance costs are included here, but your premium is not.
- On-grid/off-grid providers. When booking appointments with various doctors and service providers, you may notice that some are listed as “in-network” while others are “out-of-network”. Any supplier or facility that is part of the network is the one that has contracted with your health insurer to provide services. Depending on your plan, if you visit an out-of-network provider, they may not be covered or only partially covered. You can expect a higher deductible and reimbursement limit from out-of-network providers. Your coinsurance and co-payments may also be higher for out-of-network providers.
- Pre-authorization/prior authorization. A pre-authorization is a decision made by your insurer regarding the medical necessity of a service, treatment, medication or equipment. Also called prior authorization, this is not a guarantee that your insurance cover the cost, but getting one gives you a better chance. Talk to your doctor when you get a prescription and check your insurer’s website to see if it’s covered.
The different types of insurance plans you need to know about
- HMO. It stands for “health maintenance organization” and refers to health plans which are generally less expensive but offer more limited choice.. Under an HMO plan, you usually need to choose an in-network provider (unless you want to pay the entire bill). An HMO typically offers limited or no out-of-network coverage.
- POS. A point-of-care plan will not allow you to obtain specialized care without a referral from your primary care physician.
- PPO. A preferred provider organization plan is a plan under which your insurer will pay part of your bill, even if you go to a provider outside your network. You don’t even need a referral to do this. Nevertheless, try to stay in network just to save money, if you can.
- EPO. In a sole-provider organization plan, you can only use suppliers, specialists and facilities that are part of the plan’s network (except in an emergency).
- Prescription drug coverage. This is health insurance or a plan that helps pay for your prescription drugs. All ACA plans cover prescription drugs, but if you get your insurance through your employer, make sure yours does.
- Catastrophic. A catastrophic plan is a plan that only pays out once you have reached a very high deductible, but it does so without co-payments and coinsurance. In general, the lower your premium, the higher your deductible, and catastrophic plans are the best example of this rule. If you pay for one, you won’t lose a lot of money unless something catastrophic happens. Notably, catastrophic plans must cover your first three primary care visits and some preventive care visits for free, even if you missed the deductible, which was $7,900 in 2019 and $8,150 in 2020. Generally , to qualify for a catastrophic plan, you must be under 30 or be granted an exemption from hardship – say, due to the unthe affordability of other insurance options.
Why is all this important?
Simply put, there are a lot of obstacles in the American healthcare system. There’s no numerous things you can do about systemics, but what you can do is arm yourself with information about what you are entitled to.
Dr Gerald Kominski, ssuperior nellow at the UCLA Center for Health Policy Research, is all about health literacy, and he told Lifehacker why consumers need to know this stuff. Kominski not only studies the barriers to healthcare access in the country, but has experienced them firsthand. He explained that, like many people, he discovered that one of his existing prescriptions was not covered without prior authorization when he switched to a new insurance provider.. His new insurer asked him to try other drugs and demonstrate that they didn’t work before considering covering the one he had been taking for years, but he “didn’t want to experiment”. Instead, he got a GoodRx card, which provides users with coupons for drugs. Coupons cannot be used in conjunction with insurance, but they are a great option and the service is free.
“The question we often ask is, ‘How many PhDs does it take to calculate your health insurance benefits?'” he said. “Health insurance is so complicated and there are so many things that can vary from one policy to another that there is a lot of confusion among the general public, let alone among people who work in the field. . I can’t tell you how many medical professionals I’ve dealt with over the years who don’t fully understand the insurance they have — and they work as clinicians.”
Simply put, you’re not alone if you don’t know what your policy does and does not cover, but it’s imperative that you try to figure it all out before an emergency happens.
“It’s really important for consumers to know the specifics of their policies,” Kominski said. “Otherwise, you may find yourself in a situation where you suddenly receive a large bill that you did not expect. IThis may or may not be something you’ll eventually have to pay, but it’s your best protection against receiving a large, unexpected bill, also known as a ‘surprise bills.
If you do receive a surprise invoice, file a request for review with your insurance company and document the circumstances. Document everything, in fact. Kominski also recommended keeping track your disbursements and, when you reach your deductible, proactively leave your insurance company knows. Some insurers are good at tracking this and informing plan holders, he said, but others are not. Don’t let your insurer’s lack of organization cost you you money.