When it comes to health insurance, there’s no doubt that it can be a complex and confusing topic. With so many technical terms and concepts, it can be overwhelming for someone who is not familiar with insurance.
There are some key terms to understand to make the process a little easier. Here in this article, we’ll break down the jargon, so you can understand the ins and outs of health insurance.
Premium
A premium is the amount of money you pay upfront to buy health insurance coverage for a specified period, usually monthly. It’s essential to pay the premium on time to get the benefit of your health insurance policy.
The premium is the cost required to keep your health insurance policy in effect.
Deductible
A deductible is the amount of money you pay out of pocket each year before your health insurance policy starts covering the cost of your medical bills. If you have a higher deductible, your premium will likely be lower.
On the other hand, if a deductible is lower, you’ll pay a higher premium.
Co-payments
A co-payment or “co-pay” is a fixed amount that you pay for doctor’s visits, prescription drugs, or other medical services covered by your insurance policy.
The insurance policy covers the rest of the healthcare costs after you pay your co-pay. Co-pays can range from $10 to $50, depending on the policy.
Coinsurance
Coinsurance is the percentage of the healthcare costs that you pay out of pocket after you meet your deductible. For example, if your coinsurance is 20%, you pay 20% of the healthcare costs, and your insurance policy covers the remaining 80%.
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Out-of-pocket maximum
An out-of-pocket maximum is the highest amount you can pay out of pocket each year for medical expenses, including co-pays, coinsurance, and deductibles.
Once you reach this limit, your health insurance policy will cover all related medical costs for the rest of the year.
Network
A network refers to a group of healthcare providers and medical facilities that accept your insurance policy. Some insurance plans require you to use healthcare providers in their network to get full coverage of medical expenses.
Enrolling in an out-of-network health care provider may cost you additional out-of-pocket expenses. Therefore you should make sure your healthcare providers come under your insurance plan’s network.
Pre-existing condition
A pre-existing medical condition is a condition that existed before enrollment into the insurance plan. Some insurance plans may not provide coverage for pre-existing conditions, while some have a waiting period before they cover those conditions.
Therefore, while in the process of selecting an insurance plan, you should always be aware of pre-existing conditions coverage as per policies’ terms and conditions.
Conclusion
Understanding health insurance jargon can be challenging; however, it’s essential to make informed decisions when choosing a health insurance plan.
With this breakdown of the frequently used health insurance terms, you’ll be able to navigate the process better. Always read the insurance policy document carefully before signing up, and if you have any questions, reach out to your insurance representative.
