Understanding Insurance Terms
The health care system in the United States can be confusing. In order to get the most out of your health care benefits, you need to understand the terms used by insurance companies, the government, health plans and health care providers. This way, you can make better decisions and ultimately receive better care.
Know Your Benefits
- Annual Limit- A cap on the benefits your insurance company will pay in a year while you’re enrolled in a particular health insurance plan. These caps are sometimes placed on particular services, such as prescriptions or hospitalizations. Annual limits may be placed on the dollar amount of covered services or on the number of visits that will be covered for a particular service. After an annual limit is reached, you must pay all associated health care costs for the rest of the year.
- Benefits- The amount of money payable by an insurance company to a claimant under the insurance policy.
- Broker- An independent insurance agent who works with many insurance companies to find insurance policies for his or her clients.
- Claim- A request by an individual (or his or her provider) for the insurance company to pay for services obtained.
- Coinsurance- The money that an individual is required to pay for services after the deductible has been met. It is often a specified percentage of the charges. For example, the employee pays 20% of the charges while the health plan pays 80%.
- Copayment- An arrangement where an individual pays a specified amount for various health care services and the health plan or insurance company pays the remainder. The individual must usually pay his or her share when services are rendered. Copayments are usually a set dollar amount (such as $20 per office visit), rather than a percentage of the charges.
- Deductible- A set dollar amount that a person must pay before insurance coverage for medical expenses can begin. They are usually charged on an annual basis.
- Dependent- Any individual, adult or minor whom a parent, relative or other person may choose to cover on his or her insurance plan.
- Essential Health Benefits- A set of health care service categories that must be covered by certain plans.
- Exclusions and Limitations- Specific conditions or circumstances for which an insurance policy or plan will not provide coverage (exclusions), or for which coverage is specifically limited (limitations).
- Grandfathered Health Plan- A group health plan that was created—or an individual health insurance policy that was purchased—on or before March 23, 2010, and is exempt from many, but not all, provisions of the ACA.
- Health Insurance MarketPlace- A state or federal resource where individuals, families, and small businesses can shop for health insurance plans based on costs, benefits and other important features, and enroll in coverage. Individuals who enroll in a health insurance plan through the Marketplace may be eligible for Advance Premium Tax Credits and other assistance in paying for coverage. Also known as Exchanges.
- Lifetime Limit- A cap on the total lifetime benefits you may get from your insurance company. An insurance company may impose a total lifetime dollar limit on benefits or limits on specific benefits, or a combination of the two. After a lifetime limit is reached, the insurance plan will no longer pay for covered services.
- Maximum Benefit- The maximum dollar amount that an insurance company will pay for claims, either for a specific procedure or service or during a specified period of time.
- Open Enrollment Period- A period of time, usually but not always occurring once per year, when employees of companies and organizations may make changes to their health insurance and other benefit options. The term also applies to the annual period in which individuals may buy health insurance plans through the Marketplace.
- Out-of-pocket Maximum (OOPM) – The total amount paid each year by the member for the deductible, coinsurance, copayments and other health care expenses, excluding the premium. After reaching the out-of-pocket maximum, the plan pays 100% of the allowable charges for covered services the rest of that calendar year.
- Premium- The amount of money charged by an insurance company for coverage.
- Qualified Health Plan- An insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost-sharing (like deductibles, copayments and out-of-pocket maximum amounts), and meets other requirements. A qualified health plan will have a certification by each Marketplace in which it is sold.
- Reasonable and Customary Charges- The commonly charged or prevailing fees for health services within a geographic area. If charges are higher than what an insurance carrier considers reasonable and customary, the carrier will not pay the full amount and instead will pay what is deemed appropriate for the particular service. The remaining charges are the responsibility of the patient.
- Summary of Benefits and Coverage(SBC)- An outline of a health insurance plan that allows somebody to evaluate costs and coverage and compare against other health plans.
- Waiting Period- A period of time in which your health plan does not provide coverage for a particular pre-existing condition.
- Waiver- A rider or amendment to a policy that restricts benefits by excluding certain medical conditions from coverage.
View more terms in the attached document below: