10 Health Insurance Terms You Should Know – Before purchasing health insurance, it is important to be aware of health insurance terms to keep you on the right track. Finding the best insurance coverage can be difficult if you do not understand the terms and differences between premiums and deductibles. This write-up contains 10 health insurance terms you should know before purchasing.
While healthcare terms, forms, and medical bills can be difficult to understand, gaining enough knowledge before proceeding is vital. There are several health insurance companies, but they all abide by the same insurance terms. Aside from deductibles, premiums, and health savings, there are other health insurance terms you should know.
10 Health Insurance Terms You Should Know
As previously stated, understanding health insurance terms before purchasing is important. This helps in better decision-making, proper steps taken, and easy purchase. While there are several health insurance terms. This section contains 10 health insurance terms you should know, and these terms include:
Premium
Health insurance premiums are what policyholders are required to pay to the insurance company in exchange for an active health insurance plan. Most policyholders pay premiums monthly, while others pay quarterly or yearly. However, tax credits are made available to equalize the cost of health insurance premiums for insurance plans purchased through ACA. Also, if health insurance is gotten through work, the employer will be responsible for part of your monthly premium.
Deductible
Deductibles are payments made yearly for healthcare services before the health insurance company pays the rest. These deductibles are often paid out of pocket by policyholders. For example, if a policyholder has a deductible of $1,000. Then, the insurance plan may not offer coverage for part of your medical bills until the $1,000 is paid.
Health Savings Account (HAS)
A health savings account allows policyholders to save up to $3,650 in pre-tax dollars for medical expenses. This donation reduces tax bills and is tax-free if the money is used for qualified medical costs. A health savings account is a type of flexible spending account that is connected to the job policyholder’s job. And allows them to save pre-tax money you can for deductibles on medical costs. Until it is needed, funds left in the health savings account remain there.
Copayment
Copayment, abbreviated as copay, is the amount of money a policyholder owes every time they get certain types of medical care. Copayments vary depending on the type of service received. Generally, policyholders cannot use copays to get the entry for the deductible. However, this depends on the policyholder’s insurance plan. It is important to review the policy and get familiar with how it works.
High Deductible Health Plan
Policyholders with a high-deductible health plan are required to pay more on deductibles than other people. They are to pay more out-of-pocket before their insurance pays off the amount left. In exchange for this, their premiums will not be high, and they may qualify for health savings accounts. However, this can help save money and can be more useful to younger people and those who do not need much medical care and desire low premiums.
Coinsurance
After the deductible has been paid for the year, policyholders may still face some amount of coinsurance. Coinsurance is the percentage of medical costs policyholders pay. For instance, policyholders may pay their deductible in May, and after that, their coinsurance would be 20%. This means they will pay $20 out of a $100 bill while the insurance company pays the rest.
Health Maintenance Organization
Health maintenance organization plans may not offer the least amount of flexibility in insurance terms for those who are selected as health providers by policyholders. If a policyholder does not find a physician who is either an employee of the health maintenance organization or who works in contract for it, they will be required to pay out-of-pocket for the whole medical bill. Also, if you move or switch to a new job in a new city, you may lose your HMO insurance coverage.
Preferred Provider Organization
On this health insurance plan, the insurance company may pay a part of your medical bills if you visit a doctor or health specialist out of network. No referral will be required from your primary physician to do this; instead, you may be required to pay more on health insurance. However, to reduce this cost, sticking with in-network healthcare providers is a good idea.
Out-Of-Pocket Maximum
An out-of-pocket maximum is a certain amount of money a policyholder is to pay towards several costs, including copay, deductible, and coinsurance. For instance, a policyholder has gone the entire year without any medical expenses and needs to visit the hospital suddenly. If the policyholder is required to pay 30% of the medical bills out of pocket, the insurance company will pay the 70% left.
After the maximum payment is met, your insurance company will cover the remaining cost of your care. However, premiums are not included in the out-of-pocket maximum, nor are extra services like acupuncture and hearing aids. Also, if your insurance plan differentiates between in-network and out-of-network providers, out-of-network costs may not be included in your out-of-pocket maximum.
Point of Service
A point-of-service insurance plan does not allow policyholders to receive healthcare from a specialist without getting a referral from their doctor. Medical expenses will rise if you get help from an out-of-network physician. However, on the bright side, you will have a higher number of doctors to select from than you would with a health maintenance organization.