To make the health insurance choice that’s right for you and your family, you have to start with understanding the basic terms. Here’s a quick start on your journey to understanding health insurance terminology.
Health insurance is a policy or a contract between an individual and an insurance company to pay a portion of the individual’s health care costs, such as doctor’s visits, surgery, and sometimes prescriptions. Depending on the terms of the insurance policy, the insurance company can pay the health care provider directly, or the individual can pay out of pocket and get reimbursed by the insurance company.
Health care can include health-related services provided by physicians, surgeons, nurses, nurse-practitioners, pharmacists, paramedics and sometimes therapists, among others.
Provider: A doctor, clinic, hospital, facility, or other licensed health care professional.
Private health insurance: Insurance provided by a private insurance company. Most Americans under the age of 65 have private health insurance, often through their employers.
Public or government health insurance: Insurance where the government subsidizes health care costs. In the United States, these include Medicare, Medicaid, the Veteran’s Health Administration and the Indian Health Service.
The Affordable Care Act (ACA): Nicknamed Obamacare, the ACA prohibits insurance companies from denying coverage for pre-existing health conditions. The premiums are based on age, not health status. The ACA set up health insurance exchanges to “shop” for plans. Subsidies are available to pay some of the premiums for those with lower incomes.
Pre-existing conditions: Any medical condition that started before you applied for health insurance or before your benefits were in effect.
Premium: The monthly cost for the insurance policy.
Primary care provider: Your family physician, nurse practitioner or the doctor you usually see, who may refer you to other providers such as specialists, therapists or laboratories for tests.
Covered person: The individual whose medical costs are paid for, or covered, by the plan.
Covered services are the medical procedures and costs that your health plan will pay for. This can include visits to your primary care provider for checkups, hospital stays, tests, medical procedures, or prescription medications. The plan may have limits, maximums, deductibles, co-payment requirements and a range of conditions or other requirements, so read the policy carefully.
Deductible: The amount you will pay for health care before the insurance policy pays. Deductibles usually apply annually. For example, if your plan has a $2,000 annual deductible, you will pay the first $2,000 of medical expenses you incur during the year. The insurance company will pay its share of any costs above that. Next year, you’ll start paying again.
Co-payment or copay: The amount you pay from your own pocket each time you receive medical services. For example, you may have to pay for each covered visit to your primary care provider.
Coinsurance: A portion of the fees you pay each benefit period after you have paid your deductible. It does not include the co-pay.
Out-of-pocket costs: Costs you have to pay. They vary from plan to plan, so read the paperwork carefully.
Allowed amount: The highest amount the insurer will pay for a service.
Benefit period: The period of time that the plan covers medical care. The plan will define when coverage begins (such as three months after you start working for a new employer), and when deductibles, coinsurance limits and maximums apply.
Prescription medications: Any medicine that you must have a physician’s prescription to buy, by law.
Non-covered charges: Costs of services and products that are not covered by the health plan. These can include weight-loss treatments or acupuncture.
Managed care plan: A private insurance plan where the insurer negotiates preferential fees with a group or network of health care providers.
Fee-for-service or indemnity plans: Plans that allow the insured person to choose health care providers themselves. Typically, the insurer pays 80 percent of the costs, and the insured person pays the remainder as a co-payment.
Health maintenance organization (HMO): Organizations that provide health care directly to the insured person. The policy typically lists a dedicated primary care physician who will coordinate all the care needed.
Preferred provider organization: Similar to an indemnity plan, it allows you to choose the health care provider you prefer. It also has a network of approved providers with preferential rates. If you choose a provider outside the networks, they will pay less for any treatment.
Short-term health insurance: A healthcare plan with a limited duration, usually under 12 months, suitable for those who only need coverage to cover a gap between long-term health insurance plans — such as when changing jobs or moving to another state.
Fixed indemnity or fixed benefit plans: Healthcare insurance that pays a set amount for each covered medical expense.
Healthcare sharing plans or faith-based health plans are offered by health care sharing ministries, not insurance companies, that facilitate the sharing of medical costs among members of a group, often those of the same faith. Having a faith-based plan means you will be exempt from the penalties under the individual mandate of the ACA. Premiums are typically lower than healthcare insurance, but healthcare sharing plans do not always cover everything a health insurance plan does.
Get informed about health insurance
Health Choice One can answer all your questions about health insurance and can help you find the right type of plan for you and your family. Call us today to get started.