When it comes to health insurance, most people know the basics. They know when they go to the doctor they either have a co-pay or they do not. If a specialist is needed, the co-pay may be a bit higher. Most do not know what a co-pay is exactly, but there is an awareness that it may be needed. For those with a deductible, it is understood that there may be a bill or two until it is met. After this, it gets a bit hazy.
This lack of knowledge can make a stressful trip to the doctor even more so. Fortunately, underneath the piles of paperwork that come with every plan, there is a simple definition for the vast majority of the most commonly used health insurance terms.
Of all the health insurance jargon, this is the most critical to understand. A deductible is simply the amount of money that has to be spent before the insurance company will cover anything. Deductibles typically range from $0 to $10,000 and most plans will require you to pay 100 percent of the costs until the deductible amount is reached.
Once a deductible is met, most insurance providers will still only cover a percentage of the costs for care. Co-insurance is the portion of the costs you are required to pay. The amount the insurance company will cover is typically determined by whether the doctor is considered “in-network” or “out-of-network.” This definition will be a 3-for-1 and you do not even have to meet a deductible first.
In-network medical offices have an agreement with the insurance company to be a part of their network. Once the deductible is met, the insurance company will cover a large percentage of the costs (usually 80 to 100 percent) and the patient will be required to pay the rest. Out-of-network doctors are not contracted with the insurance provider and the patient will have to incur more of the costs. Some health insurance companies will not cover any of the costs brought about by an out-of-network office visit.
There is a point where the insurance company will actually pay all of your health care expenses. This point comes after you have reached your “out-of-pocket maximum.” If something happens and you are going to need extended care, this is the number you want to look for. After you pay this amount, the insurance company will begin paying 100 percent of the expenses as long as they are covered and the maximum lifetime benefit has not been met (there is almost always a catch).
A lot of insurance plans are moving away from co-pays, but a number of patients are still forking over this money when asked without understanding exactly what it is. According to this helpful guide on Carrington.edu, a co-pay is the agreed upon amount that the insured and the insurer split for services like doctor’s visits and prescriptions. Most plans will require this amount to be paid for each visit until the deductible is met. Co-pays can also be higher for specialists and out-of-network doctors.
A claim is the doctor office’s formal request for payment from the insurance company. This is a term that the patient will usually not have to worry about until a letter is received saying a claim was rejected or not paid in full. In this situation, knowledge of the terms above will come in handy for that fun call to the insurance provider. There are times when knowing the full details of the claim ahead of time will be necessary. According to mmWellness.com, knowing your claim information is crucial for Motor Vehicle Accidents (MVA) and Labor and Industry (L&I) injuries. For most MVA and L&I cases a claim must be submitted and approved before you can even start receiving treatment. They also recommend verifying that the claim is open, being paid, and if there is a dollar limit.
While it is always helpful to be as informed and educated as possible about the details of your health insurance plan, in most cases just knowing the basic jargon can make a big difference when medical issues arise.
Sandra Mills is a freelance writer with a passion for healthcare and education. She enjoys covering topics in the fields of health, technology, and education. You can follow Sandra Mills on Google+.
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