Commonly Used Health Insurance Terms
Health insurance has its own set of commonly used terms. Learn what these terms mean below.
- What is a copay? A set amount that you pay when you visit the doctor, pick up your medicines at the pharmacy, and use other services that are included in your health plan.
- How do I know what to pay? Your member ID card and plan information state exactly how much the copay is for each type of service. You’ll know what to expect when you use these healthcare services.
- What’s in the fine print? Copays are set for the year, but may change in a new plan year.
- What is a deductible? A set amount that you must pay each year before your health insurance company begins to cover the cost of services that you use.
- How do I know what to pay? Your member ID card and plan information state the amount of your deductible. This is a yearly amount. At the beginning of a new year, you will start your deductible over again. You’ll pay as you use services before you meet the deductible and your health insurance company begins to cover the costs.
- What’s in the fine print? Each health insurance company sets up its plans differently. With one plan, you may be required to pay all costs of services you use until you reach the plan’s deductible amount. With other plans, certain services you use regularly may require only a copay.
- What is coinsurance? A percentage amount that you pay for covered services you use. Your health insurance pays the rest. This goes into effect after you have paid the deductible amount required by your plan.
- How do I know what to pay? Your plan information describes the coinsurance amount that you are required to pay. This will appear as a percentage amount, for example, “20% after deductible.”
- What’s in the fine print? Coinsurance may be required for all services you use, or only for some services. Because it is a percentage of the cost of the service, you will not know how much you are required to pay until you use the service.
- What is an out-of-pocket limit? The most you will need to pay in a one-year period. If you reach this amount, the health insurance company will cover 100% costs of the services you use for the rest of the year.
- How do I know? Your plan information describes the out-of-pocket limit for your coverage plan.
- What’s in the fine print? This does not include your monthly premium payments! There may be other payments, such as copays or out-of-network payments, that are not included in this amount either.
- What is in-network? The doctors, hospitals, clinics, pharmacies, and medical equipment suppliers that your health insurance company has agreements with to provide services to their subscribers, like you.
- What is out-of-network? This refers to the doctors, hospitals, clinics, pharmacies and medical equipment suppliers that DO NOT have agreements with your health insurance company. You may still use services at these locations and providers, but your costs will be higher.
- How do I know? Your plan will provide a list of doctors, hospitals, clinics, pharmacies, and medical equipment suppliers that are in-network. Your plan information will also describe the costs of in-network vs. out-of-network services and providers.
- What’s in the fine print? Services that you need may not be covered at all by your plan if you are using out-of-network providers. If they are covered, your copayment amounts and coinsurance percentages will likely be higher than if you were using in-network providers.
- What is a formulary? Also called a drug list, a formulary is a list of prescription medications covered by your health plan. A formulary includes generic, preferred, non-preferred, and specialty drugs. Preferred drugs are brand-name medications that usually have lower copayments than non-preferred brand-name drugs. Specialty drugs are sometimes used to treat complex and chronic conditions. They can require special handling and administration. Specialty drugs tend to have the highest out-of-pocket costs for members.
- How do I know what to pay? Your plan will provide details on coverage for each type of drug mentioned above. You’ll pay the least amount out-of-pocket when you choose generic drugs. Talk to your provider about generic drugs that may be available for your health condition.
- What’s in the fine print? If your provider thinks you need a medication that is not in your health plan’s formulary, he or she can request a pharmacy exception. This is a request for the health plan to provide coverage for that drug. Also, some drugs require step therapy. Step therapy requires you to take a less-costly medication for a while before changing to a drug that costs more. This practice helps keep overall pharmacy costs under control.
- What is a provider? A licensed healthcare professional, such as a doctor, nurse practitioner, or physician assistant. Primary care providers (PCPs) manage and/or coordinate your overall care. If you need to see a specialist (a provider who practices a specific type of medicine, such as a heart or lung doctor), your PCP will coordinate that. He or she should receive information from any specialist you visit. Your PCP can help you find and manage health problems before they become more complicated and costly to treat. It’s important for you to find a PCP you trust.
- How do I know what to pay? Your member ID card and plan information tell you how much you have to pay for each provider visit.
- What’s in the fine print? Some healthcare services require prior approval (also called prior authorization) before you can receive them. Refer to the coverage details of your health plan for complete information.
- What is a CO-OP? A CO-OP is a consumer-operated and oriented health plan. CO-OPs were formed in many states after the passage of the Affordable Care Act. In a CO-OP health plan structure, plan members have a say in how the insurer runs its business. That includes the plan's benefit design, premiums, and provider network. In addition, health plan CO-OP members have the opportunity to serve on the plan's Board of Directors.
- What’s in the fine print? CO-OP health plans are non-profit, which means that any profits they make must be reinvested into member benefits, programs, and services.
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