Ever feel like healthcare and insurance terms are written in a foreign language? You’re not alone. Most people don’t feel confident in the terms and concepts they find when looking at claims and coverage. Here are a few basics to help you understand what you’re paying and why you’re paying it.
1. Deductible
The amount you have to pay out-of-pocket before your plan begins to share your healthcare costs.
2. Coinsurance
After you’ve paid your deductible amount, your plan pays a portion of costs. This amount varies based on your health plan’s design.
3. Out-of-pocket maximum
This refers to the maximum amount you have to pay over the course of a year before the plan covers all remaining services. The out-of-pocket maximum protects you from unlimited expenses should something unexpected happen.
4. In-network and out-of-network
In-network providers are approved by your health plan and contracted to participate in their network, while out-of-network providers are not associated with the health plan. In many cases, the insurance will not pay at all for out-of-network providers, so it’s important to check your health plan’s details.
5. Allowed Amount
Health plans negotiate a set, discounted rate with in-network providers. For example, if your doctor charges $100, your insurance company may negotiate a rate of $60 for a member in its network.
6. Explanation of Benefits (EOB)
This statement shows how your insurance company covered your recent healthcare services. It explains your out-of-pocket costs, the amount the plan covers, and the medical services you received.
Other terms you should know
Pre-existing condition
According to the U.S. Department of Health & Human Services, a pre-existing condition is defined as a “health problem you had before the date that new health coverage starts.”
Essential health benefits
This term refers to a “set of 10 categories of services health insurance plans must cover under the Affordable Care Act.” They include doctor’s visits, pregnancy and childbirth, mental health services, and more.
Health savings account (HSA)
A tax-advantaged savings account that allows you to “set aside money on a pre-tax basis to pay for qualified medical expenses.” If your employer offers an HSA, you may have money to spend.
Check out our post, “Health savings account: Tips to maximize your dollars,” for tips, explanations, and even hidden tricks for how to invest with your HSA!
