As you head into Open Enrollment, it helps to understand common healthcare terms. Here is a list of the top ones you'll want to know.
Deductible
The amount you owe during your health coverage period (usually one year) before your health insurance plan starts to pay. A deductible may not apply to all services. For instance, preventive care is often exempt from deductibles.
Co-insurance
Your share of the cost for a health care service, generally established as a percentage (e.g. 20%) of the total amount. If a doctor visit is $100 and your provider pays 80% you would be responsible for the additional 20% ($20).
HMO (Health Maintenance Organization)
A limited network of providers and facilities that provide health care. HMO insurance plans generally require referrals for specialist appointments and only cover services within this network. HMO plans tend to have low premiums and little to no deductibles.
PPO (Preferred Provider Organization)
A network of providers and facilities that provide health care. PPO insurance plans do not require referrals and generally cover services both in and out of the network.
In/Out of Network
A network is the facilities, professionals, and services your insurer contracts with to provide health care. Being “in network” means you are using services from one of those providers. Being “out of network” means you are getting health care outside of the contracted network of your insurer. It is generally more affordable to stay in network.
Out of Pocket
The most you could pay during your health coverage period (usually one year) for healthcare. Once you reach your out of pocket limit, insurance will generally cover everything at 100%. Co-insurance, deductibles and out-of-network payments may be applied towards your total. Insurance premiums and services not covered by your insurance will not be included.
FSA (Flexible Spending Account)
An account set up by the employer that allows an individual to contribute pre-tax dollars from paychecks to cover out-of-pocket health care expenses. Unused FSA funds do not carry over to the next year.
HRA (Health Reimbursement Arrangement)
An account set up and funded by the employer to cover health care services for its employees. The employer determines what will be covered by the HRA.
HSA (Health Savings Account)
An account set up by individuals enrolled in a high deductible health plan (HDHP) to contribute pre-tax dollars to pay for out of pocket health care services. The IRS limits the amount of money that can be set aside as well as the type of services that can be paid for through an HSA. Unused HSA funds carry over to the next year.
HDHP (High Deductible Health Plan)
A type of insurance plan that offers lower premiums than other traditional plans in exchange for a higher deductible.
Qualifying life event
A change in your current life such as having a baby, losing health coverage or getting married, that could qualify you for special enrollment outside the standard open enrollment period for insurance.
Open Enrollment
A limited time period (generally 2-4 weeks) when you can enroll or re-enroll in a health plan.
Preventive Care
Includes routine healthcare such as screenings, check-ups, and immunizations that are generally covered 100% with no deductible—the goal being to prevent health problems before they arise.
Read more to understand health plans and payments so you can minimize spending.
