terminology of health insurance

Terminologies of Health Insurance

Do you feel lost when an insurance provider starts talking about health insurance? When he uses the fancy jargons involved with health insurance? It’s OK—we know that the terminologies regarding health insurance can be hard to understand. Hence we have come up with these few terms that are often used with health insurance:

1. Allowable charge: it is also known as “allowed amount,” “maximum allowable,” and “Usual, Customary, and Reasonable (UCR)” charges, this is a fee that is charged by a health insurance company to be a reasonable charge for medical services or supplies based on the area where the service is being provided.

2. Benefit – the amount payable by the insurance company to a policyholder for medical costs.

3. Benefit level – the maximum amount that a health insurance company agrees to pay to the policyholder.

4. Benefit year – the 12 months for which health insurance benefits are calculated, not necessarily coinciding with the calendar year. Health insurance companies may update plan benefits and rates at the beginning of the benefit year.

5. Claim – it is a request made by a policyholder, or a health-care provider, for the insurance company to pay medical services.

6. Coinsurance – the amount you pay to share the cost of covered services after you have paid the deductible. The coinsurance rate is usually a percentage. For example, if the insurance company pays 80% of the claim, you pay 20%.

7. Coordination of benefits (COB) – COB occurs when an individual is covered under more than one insurance policy. When it comes to claiming, the policies are assessed to determine which will be assigned with the primary responsibility for covering the predominant share of the claim costs. The process also involves assessing the extent that other policies will contribute towards the claim.

8. Copayment – A fixed amount paid for a covered health care service after you’ve paid your deductible.

9. Deductible – the amount of money you must pay each year to cover your medical expenses before your insurance policy starts paying. After you pay your deductibles, the insurance company pays the rest. Generally, plans with low premiums will have high deductibles and vice versa.

10. Dependent – any individual, either spouse or child, who is covered under any policy.

11. Effective date – the date on which the policyholder’s coverage begins.

12. Exclusion or limitation – any specific situation, condition, or treatment that a health insurance plan does not cover.

13. Explanation of Benefits (EOB) – the health insurance company’s written description of how a medical claim will be paid. It contains detailed information about what the company will pay and what portion of the costs you are responsible for.

14. In-network provider – a healthcare professional, hospital, or pharmacy that is part of a health plan’s network of preferred providers. The amount paid for services received from in-network providers is generally less because they negotiate a discount for their services so that insurance companies send more patients their way.

15. Network – the group of doctors, hospitals, and other health care providers that insurance companies have contracts with to provide services at discounted rates. You will generally pay less for services received from providers in your network.

16. Out-of-Network provider – a healthcare professional, hospital, or pharmacy that is not part of a health plan’s network of preferred providers. You will generally pay more for services received from out-of-network providers.

17. Out-of-pocket maximum – the most money you will pay during a year for coverage. It includes deductibles, copayments, and coinsurance, but is in addition to your regular premiums. Beyond this amount, the insurance company will pay all expenses for the remaining year.

18. Payer – the health insurance company whose insurance plan will help you cover the cost of your care. It is also known as “carrier.”

19. Premium – the amount you or your employer pays each month to buy insurance coverage.

20. Provider – any person (i.e., doctor, nurse, dentist) or institution (i.e., hospital or clinic) that provides medical services.

21. Waiting period – is the period that an insurance company makes policyholders wait before he or she becomes eligible for coverage under a specific health plan.

Now that the number of people looking for health insurance has drastically increased, it’s necessary to educate yourself not just for knowledge sake but also so that you can be confident when you deal with conversations involving health insurance.

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