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Choosing a good health care insurance package can be confusing. The first step in the right direction is knowing what all the terms used in these various packages mean especially if you want to avoid buying a health care insurance package that doesn’t suit your needs or doesn’t have the level of coverage you may require.
To help you better understand what exactly you are getting into, we’ve outlined 11 key health care insurance terms you should know.
1. PREMIUM
A premium is the amount you pay to an insurance company in exchange for their coverage. It can either be paid monthly(monthly premium) or yearly(yearly premium) depending on various kinds of plans.
2. REFERRAL
A referral is an official note from a qualified health care personnel to the insurer to enable the insured seek the expertise of another health care personnel. It is often required when there is a need for specialist intervention.
3. HSA
This stands for health savings account. With this account, you can save money towards health care that will not be taxed by the government. It is kept aside to be spent on variety of healthcare related cost, from drugs to hospital e.t.c. It I’d very advisable to open this account as it eases down future health care financial cost.
4. CO-INSURANCE
This is a percentage of medical bill kept aside to be paid after the deductible is paid. For example, if you have $3,000 deductible and 15% co-insurance and your bill is $15,000, you’d be obligated to pay $3,000 deductible plus 15% of the remaining $12,000 which is $1,800.
Some companies hide all these various payment when presenting their plans. Be careful when choosing a company and a plan and ask pertinent questions.
5. DEDUCTIBLE
This medical term is very confusing. It simply is the amount of money you need to pay out of your own pocket before the insurance plan you are on starts paying. The lower the deductible, higher the premium to be paid and the higher the deductible, the lower the premium to be paid. The trick is getting a plan that balancing them out.
6. CO-PAYMENT
A co-payment can be likened to a co-insurance. The only difference is, you pay this at the time of the insurance service and not after. Most insurance plans have some sort of co-payment to be made during insurance services being rendered. When choosing health care insurance companies to work with, be watchful of this.
7. IN NETWORK
As a patient, this is one common term often said and written by healthcare providers. In Network signifies healthcare providers that align with your insurance company and have direct connection to them. These are the providers that you are required to see because their fees have most times been covered.
8. OUT OF NETWORK
These healthcare providers do not have any negotiated rates with your insurance company. Therefore their service fees are most times way above what your insurance can cover.
9. OUT OF POCKET MAXIMUM
This is the total amount of co-insurance, co-payment, deductible fees a person needs to pay yearly before the insurance company will cover everything. This amount can be rather high and can be difficult to pay at once. Once paid, your insurance company handles everything and you are not bothered in case of future health hazard. You no longer need to worry about paying any healthcare bill throughout that year.
10. PRE-EXISTING CONDITION
A pre-existing condition is any disease, disability, or condition that you have prior to enrolling with an insurance company. While the ACA made denying coverage for pre-existing conditions illegal in most cases, there are still a few types of insurance where it is allowed. If you are on a ‘short-term’ plan or have to renew your health insurance every 3-6 months – double check your benefits language, your insurance company may be able to deny you for a pre-existing condition.
11. Provider—any person (i.e., doctor, nurse, dentist) or institution (i.e., hospital or clinic) that provides medical care.
We hope these key health care insurance terms are explanatory and help you make smart decisions on this necessary journey.
