A Guide to 10 Common Health Care Terms
Rick Notter
| 3 min read
Rick Notter is vice president, Individual Business U...
Millions of Americans are unfamiliar with basic health care terms that impact their out-of-pocket costs and ability to find a doctor. Knowing the definition of important terms and the difference between certain concepts can save you stress, money and time. Here are 10 important coverage terms to know.
10 health insurance terms you should know
- Copayment: A copay is a fixed-dollar-amount a patient is expected to pay for health care services. Scheduled doctor visits typically range between $25 and $50, depending on the plan. This cost is generally paid at the time of the visit, rather than billed later.
- Coinsurance: This term refers to the percentage of covered health care services a patient is expected to pay after a deductible is met. If a person’s health insurance plan has a 20 percent coinsurance, the individual is then expected to pay 20 percent of each medical bill.
- Prior Authorization: Prior authorization is when a patient must get approval from their health insurer to have certain treatments covered, services rendered, prescriptions filled or durable medical equipment (DME) delivered. Without that approval, these services will not be covered by a patient's plan. It is also known as prior approval or precertification. Emergency services are generally covered without the need for prior authorization.
- Deductible: The amount a patient must pay on covered health care services before an insurer starts contributing. Throughout the year, these payments go toward an annual deductible. Once the deductible is met, patients share the cost with the health insurance company by paying coinsurance and copays until the total benefit maximum is reached.
- Explanation of Benefits (EOB): An explanation of benefits letter outlines the amount of each service an insurer has paid for, which services are not covered by insurance and why, as well as any charges due for services received.
- Health Savings Account (HSA): A health savings account (HSA) can help prepare for current and future health care expenses. Individuals decide how much to contribute to their account every year and can use these funds to pay for IRS defined qualified medical expenses. An important reminder—savings roll over year-over-year without limit and are kept tax-free, grow tax-free and can be withdrawn tax-free for medical expenses at any time. These accounts work with qualified high-deductible PPO and HMO health plans.
- Premium: Health insurance premiums refer to the standing cost of coverage, typically charged every month by an insurer. This reoccurring payment can vary based on the plan type and level of coverage.
- In-Network Provider: A provider network is determined by a health care plan. Opting for an in-network doctor versus out-of-network can drastically affect the cost of services. When a doctor, specialist, or healthcare facility is “in-network,” it means they’ve partnered with your health insurance company, which negotiated set agreed-upon rates for patient care. When you stay in-network, you pay less for care, because your insurer already negotiated a lower price.
- Out-of-Network Provider: Conversely, a provider that doesn’t have a contract with your plan to provide services is considered out-of-network. Some plans, such as PPO plans, cover a portion of out-of-network services, but you'll usually pay significantly more to see an out-of-network provider than a preferred provider. Your policy should break down the costs associated with seeking out-of-network care.
- Total Benefit Maximum: This is the total dollar amount an insurance company will pay during an individual’s lifetime for health care services considered non-essential, such as chiropractic care, orthotics and services like acupuncture. Non-essential benefits differ between health plans, so it’s best to look at your plan details to determine what your plan considers non-essential.
Rick Notter is the director of Individual Business at Blue Cross Blue Shield of Michigan.
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- Showing Up for Our Members: My Commitment to Access & Affordability
- Blue Cross Uses Predictive Analytics to Reduce Costs, Create Better Health Outcomes for Members
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