In comparing and evaluating health plan options, the industry terminology can be a little overwhelming.
However, to make an informed decision, understanding all the elements of a health plan – and thus what the company will cover versus what the member will pay for– is vital.
Below are some of the most common health insurance terms, listed alphabetically and stated in plain language.
For additional definitions and resources, see the RMHP’s general glossary.
For Medicare resources, please see the RMHP Medicare Glossary.
Deductible – The annual dollar amount that you must pay before the insurance begins to cover certain medical services. High deductible plans often have a lower premium. For example, if a member has a deductible of $1000, he or she must pay the first $1000 of care before the insurance will kick in. Preventative services such as physicals are often an exception and are covered in many plans. If a member has a deductible of $5000, he or she must pay the first $5000 every year. The $5000 will likely be less expensive per month, since the member is responsible for more of the up-front costs of medical care.
Co-Insurance – The percentage of a covered health care service you must pay after the plan’s deductible. For example, if a member has 20% co-insurance, the insurance company will cover 80% of the costs. Therefore, a member would pay $200 of a $1000 procedure and the company would cover the remaining $800.
HSA (Health Savings Account) – A tax-exempt savings account established for paying qualified medical expenses. The account belongs to the individual, but both individual and employer can deposit funds into the HSA. Any money deposited belongs to the individual, even if some of the money is employer contributions. The funds are exempt from federal income taxes and carry over from year to year.
Inpatient Care – Care provided after a patient is admitted to a hospital or nursing care facility.
Lifetime Maximum – The maximum dollar amount an insurance provider will pay for one individual. The Affordable Care Act elimintes a lifetime maximum.
Network – The group of providers contracting with the health insurance company to provide discounted charges for the insurance company’s members. Providers who are not in the network do not contract with the insurance company and typically charge higher prices. This is why seeing an “in-network” doctor will be less expensive than seeing one that is “out-of-network”.
Office Visit/Prescription Copay – The copay is the amount you will pay each time you see a doctor or fill a prescription. Copays are a flat dollar amount, like $20 per visit or prescription.
Out of Pocket Max – The maximum each person or family will pay, per calendar year. This is often higher than the deductible, meaning the member will still have to pay co-insurance after reaching the deductible until he or she reaches the out of pocket maximum. Once reached, the insurance company generally covers all charges, with the common exception of copays. Please note office visit copays, prescription drug copays and certain other benefit copays will continue to apply even after a member reaches his or her out of pocket maximum.
Outpatient Care – Care provided at a hospital or care facility, but not requiring the patient to be admitted to the hospital.
Participating Provider – Physicians, Hospitals, Clinics and licensed clinicians who contract with the insurance provider to provide care to its Members.
Premium – The premium is the monthly payment for insurance. When an employer offers health benefits, they cover part or all of the premium cost each month. Premiums change based on variables such as benefits offered, deductible, age and geographical location.
Be sure to review the coverage provisions of any plan you are considering purchasing. Remember premium costs are only one part of your overall health expenditures.