Top 12 Insurance Terms Most People Don't Understand
A November survey from the Kaiser Family Foundation found that more than 4 in 10 uninsured didn't know basic health insurance terms and even fewer understood complex coverage concepts.
It's really important to understand how your insurance claims are paid BEFORE you ever need to use your health plan. Understanding health insurance plan terms and definitions is the first step to being an informed consumer.
Explanation of Benefits: A statement you will receive from your health insurance company a few months after your medical appointment/service. This document will detail out what your health insurance company will pay and what you’re responsible to pay.
Copay: A predetermined, fixed amount that your health insurance has you pay for your health care. These fixed amounts can vary, and don’t usually count toward your coinsurance and the maximum out-of-pocket calculations. Copays are commonly used for doctor’s office visits, filled prescriptions, and emergency room visits.
Coinsurance: This is a percentage of a medical claim that you would pay. Your insurance would pay a percentage and you would share the payment with your part of the percentage. For example, for a 20% health insurance coinsurance clause, the policyholder pays for the deductible plus 20% of covered losses. After paying 80% of losses up to a specified ceiling, the insurer starts paying 100% of losses.
Coverage Levels: Most health insurance newly sold to individuals and small businesses must now be classified as one of four levels of coverage: Bronze, Silver, Gold or Platinum. In addition to those four levels of coverage, a minimum coverage plan is available to those who are younger than 30 or can provide certification that they are without affordable coverage or are experiencing hardship.
Deductible: The amount that you must pay before an insurance company pays for medical expenses. For example, if your deductible is $500, you must pay $500 for medical services (your copays do not count toward this amount) before your insurance will start paying for your medical claims. NOTE: High Deductible Health Plans: These may feature low premiums and an integrated deductible for both medical and pharmacy costs. Some plans can combine a health plan with a Health Savings Account.
Essential Health Benefits: All health insurance plans offered in the individual and small-group markets must provide a comprehensive package of items and services, known as essential health benefits. These benefits fit into 10 categories, and include services like prescription drugs, mental health care, and emergency services. SEE ALSO: Metal Tiers.
Flexible Spending Account (FSA): Pays for additional services and costs that the primary health plan may not cover.
Health Reimbursement Arrangement: Owners of high-deductible health plans who are not qualified for a health savings account (HSA) can use an HRA.
Health Savings Account: Plan that allows a participant to contribute pretax money to be used for qualified medical expenses. HSA's, which are portable, must be linked to a high-deductible health insurance policy.
Out-Of-Pocket Maximum: Limits the total amount you are responsible for paying during any one plan year. The latest regulations state that the maximum out-of-pocket cost is $6,350 for an individual plan and $12,700 for a family plan.
Metal Tiers: Health insurance plans are divided into 4 levels: Bronze, Silver, Gold, and Platinum. The richer the plan level, the richer plan benefits, meaning you would pay less for each service but the monthly premium will be higher.
Census: As of January 1, 2014, the census now requires you to list your name, birth-date, and zip code, and in addition the same information for your dependents. This information is needed because with the Affordable Care Act, health insurance carriers now have a rate for each person on a health plan (i.e. Employee, Spouse, Child).
Additional video resources:
Explaining The Terms and Definitions Of Health Insurance:
Health Insurance Explained – The YouToons Have It Covered: