Insurance Terms You Should Know to Feel More Confident When Seeking Medical Care

Insurance lingo got you feeling confused and overwhelmed?

We hear you – insurance can be pretty complicated to understand, and you may avoid seeking needed care because you fear surprise costs. However, mastering a basic understanding of your insurance plan and the associated terminology can help you feel more confident and empowered when seeking care. We’ve compiled a short guide to walk you through the basics.

Health Insurance Terms to Master

Copay: The copay is a fee you pay each time you visit a doctor or specialist before your insurance kicks in and covers the remaining costs of the service performed on that visit. This fee is paid to your doctor’s office.

Deductible: This is the amount you must pay out of pocket per year before your insurance will kick in and begins to cover the costs of medical services billed throughout that plan year.

Coinsurance: Once you have met your deductible, you may be required to pay coinsurance on some services that aren’t 100% covered by your insurance. So, for example, a 20% coinsurance means you will need to pay 20% of the service, while insurance will cover the remaining 80%. This cost is additional to your copay.

Premium: The premium is the monthly fee you pay for insurance coverage. This may be automatically deducted from your employer-issued paychecks, or you may pay for it yourself through the insurance marketplace. The premium payment goes directly to the insurance company and does not automatically cover the cost of any medical services provided by your doctor.

Out-of-pocket maximum: This is the maximum you have to pay for covered services in a year. After you’ve spent this amount on copayments, deductibles and coinsurance for in-network care, your insurance plan pays 100% of the costs for covered benefits after that. The out-of-pocket maximum doesn’t include monthly premiums, out-of-network care, any services not covered by your plan, and charges above the allowed amount for a service billed by a provider.

What is the difference between HMO and PPO insurance?

The two most common types of health insurance are HMO (health maintenance organization) and PPO (preferred provider organization).

HMOs

These plans have a lower premium than PPOs and give you access to a network of doctors with which the insurance company has set price agreements. However, HMO plans typically don’t cover out-of-network providers, and specialist visits must be coordinated through your primary care physician.

PPOs

While these plans have a higher premium, they allow more flexibility allowing you to see specialists without a referral from your PCP and the option to seek care from out-of-network providers. However, your out-of-pocket costs, such as copay and coinsurance, will be lower if you see an in-network provider. The advantage of using in-network is that those providers will have preset rates established for their services through the PPO. On the other hand, your coverage with out-of-network providers may be much more limited, and your out-of-pocket costs will likely be higher.

With both types of plans, you’ll still usually have a monthly premium and both may require you to meet a deductible before services are covered.

Pro-tip to avoid surprise costs

When looking for a new healthcare provider, it’s always a good idea to call your insurance and confirm if the doctor is in-network or out-of-network before booking an appointment.