If you find yourself confused about health insurance terms, you are not alone. A recent Forbes Advisor survey of 2,000 Americans who have health insurance found that over three-quarters of the people surveyed could not identify the term “coinsurance” and nearly half struggled to define the terms copayment and deductible.
Kantor & Kantor works with patients and their families to ensure health benefits get paid. Communication with an insurance company can be confusing and complicated, but Kantor & Kantor has decades of knowledge dealing with insurance companies to obtain benefits for our clients.
Here are 10 health insurance terms we think everyone should know and understand:
- A deductible is what you pay annually for health services before your insurance company pays its share. For instance, if you have a deductible of $1,000, your insurance plan might not start covering its share of your bills until you’ve paid $1,000 for healthcare each year. However, plans often cover the cost of things like preventive care doctor’s visits even before you’ve paid your full deductible amount.
- The copayment, or copay, is the amount you owe each time you receive certain types of medical care. Copayments can vary depending on the kind of service you receive. For example, you may have to pay a $30 copayment for each visit to your primary care physician and $60 for each visit to a specialist.
- Normally, you cannot use copayments to reach the threshold for the deductible. It depends on your plan, so you will need to read the fine print to find out how your coverage works.
- After you have met your deductible for the year you will generally face some amount of coinsurance. Coinsurance is the percentage you will pay of medical expenses. For example, you might meet your $2,500 deductible in May and from then on, your coinsurance would be 20%. That means you would pay $20 of a $100 bill and the insurance company would pay the other $80.
- Out of Pocket Maximum
- This amount is the most you will pay each year toward costs including your deductible, copayment, and coinsurance. Once you have met the out-of-pocket maximum, your insurance company will pay for the remainder of your care, as long as it’s a covered service.
- If your plan distinguishes between in-network and out-of-network providers, out-of-network bills may not count toward your out-of-pocket maximum.
- Allowed Amount
- The allowed amount is the maximum amount that your insurance company determines is reasonable for covered services. The allowed amount includes any payments to a provider, plus any deductible, coinsurance, or copayment. For in-network providers, the allowed amount is usually the amount the provider has agreed to accept as payment in full.
- In Network
- An in-network provider, hospital, doctor, other medical practitioner and/or supplier is contracted with your insurance plan. Services provided by an in-network provider are covered at a higher benefit level.
- An out-of-network provider is a provider who does not contract with your insurance company. Out-of-network services may not be covered or may be covered at a lower level. You may be responsible for all or part of an out-of-network provider's bill.
- A preferred provider organization (PPO) is a type of insurance plan that offers more extensive coverage for the services of healthcare providers who are part of the plan's network, but still offers some coverage for providers who are not part of the plan's network. PPO plans generally offer more flexibility than HMO plans, but premiums tend to be higher.
- Preferred Provider
- A provider who has a contract with your health insurer or plan to provide services to you at a discount.
- Your health insurance plan may have preferred providers who are also “participating” providers. Participating providers also contract with your health plan, but the discount may not be as great, and you may have to pay more.
- A health maintenance organization (HMO) plan offers healthcare services only with specific HMO providers. Under an HMO plan, you might have to choose a primary care doctor. This doctor will be your main healthcare provider. The primary care doctor will refer you to other HMO specialists when needed.
- Services from providers outside the HMO plan are rarely covered except for emergencies.
- EOB or Explanation of Benefits
- An EOB or Explanation of Benefits shows the price of a medical service, the amount the insurance company will reimburse a provider based on negotiated rates, how much your health plan paid them, and your member savings. You’ll also see how much of your deductible you've paid, and any copayments, coinsurance, or other amounts you may owe.
- When you receive your EOB, check it against your bills to make sure all the charges and payments are correct. If you disagree with an amount paid by your insurance company, or if a service was denied, you can file an appeal.
Understanding the health insurance basics can be daunting and challenging, but don’t get discouraged. At Kantor & Kantor we are here to help. If you or someone you know has been denied healthcare benefits or access to treatment, please call Kantor & Kantor for a free consultation or use our online contact form. We understand, and we can help.