Decipher your health insurance policy

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Decipher your health insurance policy


When life is at its most stressful, you don't want to be stuck deciphering your health insurance policy alone. Let our health insurance glossary be your guide!

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This resource is complied from healthcare.gov sources with help from our "Smart Choice and Smart Use" program partners. Download as PDF

 

Understanding costs

Cost Term Definition

Allowed Amount

 

The highest amount your insurance will pay for covered services. Also called “eligible expense,” “payment allowance" or "negotiated rate." 

 

Balance Billing

When you are billed for the amount between how much the provider charges and how much your insurance allows for a service. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you $30. A preferred provider may not do this once you have met your deductible.

Coinsurance 

Your part of the costs of a covered service. This is a part of the allowed amount for the service. You pay this amount once you have met your deductible. 

Copayment

A set amount (for example, $20) you pay for a covered service. You pay this amount when you get the service. It can change based on the type of service. You may have to meet your deductible first.

Deductible 

The amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services. 

Fixed Health Care Expense

A medical or health care cost that stays the same each month or year. Example are monthly premiums and prescription drug costs.

Flexible or Periodic Health Care Expense

A medical or health care cost that changes based on services you use. 

Medical Expenses

Costs of health care. Examples are insurance premiums, coinsurance or copayments, costs of prescriptions, hospital visits, medical aids/devices/glasses, and travel for health reasons. Some of these may be used for tax deductions. Also called “health care expenses.”

Medical Identity Theft

When personal information is stolen to get medical care, health services or insurance. False information may be put in the victim's medical records. This may affect the health care or insurance coverage of the victim.

Out-of-Pocket Costs 

Your costs for services that are not paid by insurance. This includes deductibles, coinsurance and copayments. It also includes costs for services that are not covered by insurance.

Out-of-Pocket Maximum

The most you pay during a policy period (usually one year) before your health insurance plan pays 100% for covered services. This includes deductibles, coinsurance, copayments, or other charges. It also includes any other cost that is a qualified expense. This doesn’t have to include premiums, balance billing amounts for non-network providers and other out-of-network costs. It also doesn’t include what you pay for nonessential services.

Premium 

The amount you pay for your health insurance or plan. You and/or your employer may pay it monthly, quarterly or yearly.

Qualified Medical Expense

A cost for healthcare services, equipment, or medications. There are many types of medical expenses that qualify. You can find these at: http://www.irs.gov/pub/irs-prior/p502--2013.pdf

 

 

 

Essential health benefits

Essential Health Benefits Term Definition

Ambulatory patient services

When you receive care in a hospital or other health care facility and leave the same day. Also called “outpatient.”

Chronic disease management

A team-based way of helping with long-term illness. It includes education and other activities. It can improve your quality of life and reduce your health care costs. 

Dental care (Pediatric-for kids)

Helps pay for the cost of visits to a dental office.

Emergency services 

Any health care service to check or treat an emergency medical condition to keep it from getting worse.

Formulary

A list of prescription drugs that are paid in full, or in part, by a health plan

Habilitative services 

Health care services that help you keep, learn, or improve skills and activities for daily living. 

Hospitalization 

When you receive care in a hospital or other health care facility and stay overnight. Also called “inpatient.”

Mental health and substance use disorder services 

Health care to improve mood, feelings, behavior and substance abuse. Its goal is to help you recover.

Preventive services 

Health care that includes screenings, check-ups, and patient counseling to help prevent illness or other health problems.

Rehabilitative services

Services that help you keep, get back, or improve skills and activities for daily living that have been lost or limited because you were sick, hurt, or disabled.

Vision services (Pediatric-for kids)

Helps pay for vision care, like eye exams and glasses

Well-baby & Well-child care 

Doctor visits for preventive services when a baby is young. It also includes yearly visits until a child is 21 years old.

Wellness services 

A program that promotes health and fitness. It is usually offered through the work place. Insurance plans may also offer it directly to customers. The program lets your employer or plan offer you discounts on premiums, cash rewards, gym memberships, and other items.

 

 

Important documents

Document Term Definition

Evidence of Coverage and Benefits

A document that shows what’s covered, not covered, or limited in an insurance plan. It is a contract between you and the insurance provider

Explanation of Benefits (EOB)

A letter from an insurance company showing what treatments and/or services were paid for. It includes the service performed, the provider’s name, the patient’s name, the fee, how much the insurer allows, and how much the patient must pay.

Insurance Card

A card that shows you have insurance. It shows things like contact information, member number, type of insurance, and copayment amounts

Summary of Benefits and Coverage

A chart that helps you compare costs and coverage of health plans. It includes price, benefits, and other items.

 

 

Health care service providers

Provider Terms Definition

Navigator

A person who helps you look for health coverage through the Marketplace. Their services are free.

Network

Groups your health insurer or plan has contracts with to provide health care services. Anyone who is part of the group is considered “innetwork” or a “preferred provider.” A provider who is not part of the group is “out-of-network.”

Primary Care Physician (PCP) 

A doctor who offers many kinds of services for patients. Also called a “general practitioner” or “GP.”

Preferred Provider

A provider who has a contract with your health insurer or plan to provide services to you at a discount. 

Specialists

Health care providers who focus on a specific area of medicine or health care

 

 

Health insurance plans, tiers and savings accounts

Term Definition

Exclusive Provider Organization (EPO)

A plan that covers services only if you go to doctors, specialists, or hospitals on the plan’s approved list (network). You can go to any provider in an emergency.

Health Maintenance Organization (HMO)

A plan that only covers care from doctors who are part of the HMO. It generally will not cover out-of-network care unless it’s an emergency. You may have to live or work in a certain area to be covered. 

Point of Service (POS) 

A plan in which you pay less if you use providers that are in the plan’s network. You will need to select a primary care provider for regular checkups and referrals to see a specialist. You can use out-of-network providers at a higher cost

Preferred Provider Organization (PPO) 

A plan that has a special network or group of providers. You pay less if you use providers in the plan’s network. You may not need a referral from you primary care provider to see a specialist. This type of plan usually has payment options for using health care services that are in and out of the network. Copayments are charged for each visit.

 

 

Bronze Tier

Insurance will cover 60% of costs for most people. Your coinsurance will be about 40% of costs. This tier has the lowest premiums and the highest out-of-pocket costs.

Silver Tier

Insurance will cover 70% of costs for most people. Your coinsurance will be about 30% of costs. This tier has low premiums and high out-ofpocket cost. This plan may offer the best value if you qualify for costsharing reductions based on your income

Gold Tier

Insurance will cover 80% of costs for most people. Your coinsurance will be about 20% of costs. This tier has high premiums and low out-ofpocket costs.

Platinum Tier

Insurance will cover 90% of costs for most people. Your coinsurance will be about 10% of costs. This tier has the highest premiums and the lowest out-of-pocket costs

 

 

Flexible Savings Account (FSA)

A plan through your job that lets you put pre-tax wages into a special account. The money can pay for medical costs, child care, and other health services. You decide how much of your pre-tax wages you want to put into an FSA. You don’t pay taxes on this money. Your employer’s plan sets a limit on how much you can set aside each year. You can’t carry-over FSA funds to the next year. FSA funds you don’t spend by the end of the plan year can’t be used the next year. This is true unless your employer’s plan lets you use leftover FSA funds during a grace period of up to 2.5 months after the end of the plan year

Health Savings Account (HSA)

A bank account that lets you put money aside, tax-free, to save and pay for qualified health care costs if you are enrolled in a High Deductible Health Plan. The Internal Revenue Service (IRS) limits who can open and put money into an HSA. HSAs are good because what you put in earns interest (more money). This money can be used to pay for future health care costs. You do not pay taxes on the earned interest. There are limits on how much you can set aside each year. 

 

 

Types of health care products

Type of provider Definition

Durable Medical Equipment (DME) 

Equipment and supplies for everyday or long-term use. It may include items like wheelchairs, crutches or blood testing strips for diabetics. Providers order these.

Prescription drugs

Drugs you need a prescription (doctor's order) to buy.

 

 

Learn more at www.healthcare.gov/glossary

 

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Developed by the University of Maryland Extension Health Insurance Literacy Team - Virginia Brown, Lynn Little, Mia Russell, University of Maryland Extension and Maria Pippidis, Extension Educator, University of Delaware Cooperative Extension Spring 2013. Updated January, 2016 by Maria Pippidis. Reviewed by Plain Pages, University of Arkansas Medical Sciences Center for Health Literacy, February, 2016.