Are you “happy” with your health insurance plan, or just happy you have one? A recent Forbes study found that most Americans are happy with their health insurance plans yet are confused by basic insurance terms. Does this sound like you? Health insurance discussions are just one of those things that it is easier to smile and nod your way through while you’re actually just making your weekend plans in your head. Ignorance can feel like bliss, but when it comes to health insurance it pays – literally – to understand your options.
Health plan jargon can be overwhelming, but learning these terms and phrases is essential when making the best decisions for you and your family. Here are some common health insurance terms that are important for you to know.
Premium
This is the amount of money that a policyholder (that’s you!) pays for health insurance coverage. It is typically billed monthly.
In-Network Providers vs. Out-of-Network Providers
A health insurance network is a group of doctors, hospitals, and care providers that your health insurance company contracts with to provide medical services. Every health insurance policy offered through employers or individual marketplaces has a provider network attached to the plan.
In-network providers are health care professionals and facilities who have the right credentials as set by your health insurance network. These providers have been approved to join the network and have agreed to discounted service rates (prices) negotiated by the network.
Out-of-network providers are healthcare professionals, and facilities, who have not or can’t join your health insurance network. These providers do not have an agreement in place to charge discounted service rates, so they may charge the full price for services, which in turn can raise your out-of-pocket costs.
Allowed Amount
An allowed amount can also be referred to as an allowable cost, an eligible expense, a payment allowance, or a negotiated rate. This is the price that your health insurance network has negotiated for a specific service and is willing to cover. This is why choosing an in-network provider is so important – this provider will have agreed to receive the allowed amount from your insurance plan rather than charge you the full amount.
Deductible
Your deductible is the amount of money that you must pay out-of-pocket for services and medications before your insurance plan starts to cover the costs. This is different than a copayment! Typically, the higher the premium, the lower the deductible—something to keep in mind while shopping for health insurance.
If you have not met your deductible, or you are seen by an out-of-network provider, you may be responsible for paying the difference between the full amount and the allowed amount for that service. If you have met your deductible, in most cases, you will only have to make a copayment.
Copayment and Coinsurance
A copayment, or copay, is a set amount of money that you pay for a service or medication after you meet your deductible. This amount can vary based on the service type. For example, you may have the same copay for each general office visit, but you will have a different copay for an emergency room visit or for your monthly medication prescription. Along the same lines, coinsurance is a set percentage, rather than amount, of the total visit cost that you pay after you meet your deductible.
Having health insurance is wonderful.
Understanding your health insurance is even better. Equipped with basic insurance knowledge, you will be able to choose the health coverage plan that best suits your individual and family needs.
Natalia Kinney
Credentialing Coordinator, ViaroHealth
For questions or comments, please contact wellness@viarohealth.com