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Health Insurance Definitions

Shopping for health insurance is challenging. Wading through all of the jargon that describes various policies can be overwhelming to any consumer. In fact, the mere mention of the phrase “health insurance” can trigger a feeling of apprehension. Young adults enroll for health coverage, but their unfamiliarity with terms can cause them to miss out on valuable benefits. And years later, having been insured by various types and levels of coverage, experienced insurance customers can still be confused by the vocabulary in benefit summaries. Understanding common terms associated with health benefits can be advantageous in the pursuit of good insurance coverage.

 

Health Insurance Definitions: Premium

The premium is the cost amount required to purchase insurance coverage. This premium amount will vary by customer, based on age, physical build, area of residence, pre-existing health conditions and prescription medications, whether a client had previous insurance coverage, and if a client uses tobacco products. Premium amounts may be due monthly, annually, or semi-annually – and there may be some premium discounts available if a client selects auto bank draft of monthly premiums for their policy.

 

Health Insurance Definitions: Deductible

The first expression associated with any health insurance policy’s benefits will be the deductible. This is the amount of charges that must be met each benefit period before a policy begins covering expenses. Remember, however, that a deductible is not a clear “line in the sand” limit to a client’s expenses. Most insurance policies do not cover all expenses after a deductible is met – further charges will apply to the insured. And some small benefits are available even before the deductible is met. However, the deductible is the general “starting line” for the benefits of an insurance policy to launch. Deductibles can also be compound – for a policy that covers multiple members of a family, there can be individual deductibles for each person, and a separate (higher) family deductible amount that must be met before qualifying for further coverage.

 

Health Insurance Definitions: First-Dollar Benefits

First-dollar benefits are expenses that are covered by the policy even before deductible, coinsurance, and out-of-pocket limits are met. These will vary by policy, and may still require a set charge per use of this benefit.

 

Health Insurance Definitions: Co-payment

A type of first-dollar benefit, a fixed co-payment amount may be set for various services such as office visits, emergency room visits, prescription drugs or wellness exams. This amount is charged at the facility where service was rendered. There are a few further factors involved with “co-pays”: depending on the policy’s particular benefits, the remainder of the expenses incurred may submitted as claims to the insurance company or will be charged to the insured, contributing towards deductible and co-insurance limits. There may be a limit on how many times a co-pay can be used on visits to providers. And co-pays may not apply, or may be a higher amount, for visits to health providers that are not in the insurance company’s provider network.

 

Health Insurance Definitions: Out-of-Pocket Limit

After a patient meets the deductible amount, some expenses are still left to the responsibility of the insured to contribute toward medical expenses. However, most policies have a limit set to the amount an individual will be obligated to pay in a given benefit period. The out-of-pocket limit is a final cap to the potential costs an insured may be required to pay for expenses – also known as a “stop-loss” amount.

 

Health Insurance Definitions: Coinsurance

Coinsurance is not an amount – it is the percentage of each health claim that the policy will cover until the out-of-pocket limit is met. If a policy’s coinsurance is 70%, then the insured will still be obligated to pay for the remaining 30% of each bill. Some coinsurance amounts may actually be 100% - meaning once the deductible is met, all expenses are covered by the policy.

 

Health Insurance Definitions: Get a Free Quote

Shopping for health insurance can pose quite a challenge for Americans unfamiliar with insurance terminology. Enter your zip code at the top of the page to receive a FREE health insurance comparison quote, and see how understanding insurance terms can alleviate the stress of selecting good coverage.

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