post

Insurance Terms

Understanding important terminology pertaining to health insurance is the first step to obtaining a cost-effective coverage plan that serves all of your individual or family needs.

 

Premium: The amount you pay your insurance company for health coverage each month or year.

 

Deductible: The amount of money you must pay out-of-pocket before coverage kicks in. Deductibles are usually set at rounded amounts (such as $500 or $1,000). Typically, the lower the premium, the higher the deductible.

 

Coinsurance: The amount of money you owe to a medical provider once the deductible has been paid. Coinsurance is usually a predetermined percentage of the total bill. If the policy’s co-insurance is set at 15% and the bill comes to $100, the policy-holder owes $15 in co-insurance.

 

Co-pay: This type of insurance plan is similar to co-insurance, but with one key exception: rather than waiting until the deductible has been paid out, you must make their copayment at the time of service. Most often, copayments are standardized by your plan, meaning you’ll pay the same $30 each time you see a physician, or the same $50 each time you see a specialist.

 

Out-of-pocket maximum: The amount of money you pay for deductibles and coinsurance charges within a given year before the insurance company starts paying for all covered expenses.

 

In-network: This term refers to physicians and medical establishments that deliver patient services covered under the insurance plan. In-network providers are generally the cheapest option for policyholders. Insurance companies typically have negotiated lower rates with in-network providers.

 

Out-of-network: This term refers to physicians and medical establishments not covered under your insurance plan. Services from out-of-network providers are usually more expensive than those rendered by in-network providers. This is because out-of-network providers have not negotiated lower rates with your insurer.

 

Pre-existing condition: Any chronic disease, disability, or other condition you have at the time of application. In some cases, symptoms or ongoing treatments related to pre-existing conditions cause premiums to be higher than usual.

 

Waiting period: Many employer-sponsored insurance plans mandate a period of 90 days before employees can enroll in their insurance plans.

 

Enrollment period / open enrollment: The window of time during which you can apply for health insurance or modify a plan to include your spouse and/or children. Policy-holders are unable to adjust their plan until the next open enrollment unless they experience a qualifying life event. These include a marriage, divorce, birth of a child, changes to individual/household income, or interstate residence relocation.

 

Dual coverage: The act of maintaining a health plan with more than one insurer. For example, many married people receive coverage from both their employers and their spouse’s employer. Others may opt to receive individual coverage from more than one insurer.

 

Coordination of benefits: This process is applied by individuals who have two or more existing policies to ensure that their beneficiaries do not receive more than the combined maximum payout for the plans.

 

Continuation of coverage: This is essentially an extension of insurance coverage offered to individuals no longer covered under a particular plan; it most often applies to former employees and retirees of companies that offer employee coverage. COBRA benefits qualify as continuation coverage.

 

Referral: An official notice from a qualified physician to an insurer that recommends specialist treatment for a current policy-holder.

­­­­