Health insurance can be confusing
Health insurance can be confusing, with lots of unfamiliar terms and acronyms. Understanding the basics of health insurance can help you choose the right plan for you and your family. Here are some common health insurance terms you need to know:
- Premium: The amount you pay each month to maintain your health insurance coverage.
- Deductible: The amount you have to pay out of pocket before your insurance coverage begins to kick in. For example, if your deductible is $1,000, you will have to pay the first $1,000 of your medical expenses before your insurance starts paying.
- Co-pay: The fixed amount you pay for a covered service, such as a doctor’s visit or prescription drug, after you have met your deductible.
- Coinsurance: The percentage of the cost of a covered service that you are responsible for paying after you have met your deductible. For example, if your coinsurance is 20%, you would be responsible for paying 20% of the cost of a covered service, and your insurance would pay the remaining 80%.
- Out-of-pocket maximum: The maximum amount you will have to pay for covered services in a given year, including your deductible, co-pays, and coinsurance. Once you reach your out-of-pocket maximum, your insurance will cover the rest of your covered expenses for the year.
- Network: The group of healthcare providers and facilities that have contracted with your insurance company to provide services to their members. In-network providers typically have lower costs than out-of-network providers.
- Provider: Any healthcare professional or facility that provides medical services, such as doctors, hospitals, and clinics.
- Pre-authorization: The process of obtaining approval from your insurance company before receiving certain medical services or procedures. Your insurance company may require pre-authorization for services that are expensive or not typically covered.
- Exclusions: Services or conditions that are not covered by your insurance plan. It is important to understand what is not covered by your plan so you can plan accordingly.
Open enrollment: The period of time when you can enroll in or change your health insurance plan. Open enrollment typically happens once a year and is a good time to review your coverage and make any necessary changes.
Pre-existing condition refers to any medical condition that existed before you enrolled in your current health insurance plan. Examples of pre-existing conditions include diabetes, asthma, cancer, or heart disease.
Before the Affordable Care Act (ACA) was enacted in 2010, insurance companies could deny coverage or charge higher premiums to individuals with pre-existing conditions. However, under the ACA, insurance companies are required to cover individuals with pre-existing conditions and cannot charge them higher premiums.
Additionally, under the ACA, individuals cannot be denied coverage or charged more based on their health status. This provision is known as the “guaranteed issue” and “community rating” rules.
It’s important to note that not all health insurance plans cover pre-existing conditions in the same way. Some plans may have waiting periods before covering pre-existing conditions, while others may have exclusions for certain conditions. Be sure to read your policy carefully and understand how pre-existing conditions are covered under your plan.
- Pre-authorization: Approval from your health insurance company before receiving certain medical services or treatments.
- Explanation of Benefits (EOB): A document from your health insurance company that explains how your medical claim was processed and how much you may owe for services received.
- HMO: Health Maintenance Organization – a type of health insurance plan that usually requires you to choose a primary care physician and receive care within a specific network of providers.
- PPO: Preferred Provider Organization – a type of health insurance plan that allows you to see any healthcare provider, but you may pay more to see out-of-network providers.
- POS: Point of Service – a type of health insurance plan that combines aspects of HMOs and PPOs. You may have to choose a primary care physician and receive referrals for specialists, but you may also have the option to see out-of-network providers.
Open Enrollment: A specific time period each year during which you can enroll in or make changes to your health insurance plan.
Medicaid: A government-funded health insurance program for low-income individuals and families.
Medicare: A government-funded health insurance program for individuals age 65 and older or those with certain disabilities.
Premium Tax Credit: A subsidy provided by the government to help offset the cost of health insurance premiums for individuals and families who qualify based on their income.
Cobra: A federal law that allows individuals to continue their employer-sponsored health insurance coverage for a limited time after leaving their job, but they may have to pay the full cost of the premium.