Clarifying Health Insurance Terms: Key Definitions You Need to Know

Hard as it may seem, it is imperative that you understand the ABCs of health insurance in order to help you make informed decisions. Understanding these terms can help you navigate your health insurance plan more effectively. This article is to help you understand, in clear terms, the key terminology of health insurance.

Premium: This means the amount you pay for your health insurance coverage, typically on a monthly basis.

Deductible: This is the amount you must pay for covered health care services before your insurance plan starts to pay. This is paid annually.

Copayment (or Copay): This is a fixed amount you pay for a covered health care service, usually due at the time of service. It is one of the ways to share your medical cost.

Out-of-Pocket Maximum (or Limit): The most you have to pay for covered services in a plan year, after which your insurance plan pays 100% of covered benefits. This means your health insurance will pay for 100% of all covered health care services when this limit is met.

Pre-Existing Condition: This is a health condition that existed before your health insurance coverage began, which may affect coverage or premiums.

HMO (Health Maintenance Organization): A type of health insurance plan that requires you to select a primary care physician and get referrals to see specialists. Here, a comprehensive health care service is provided for the insured within their geographic area.

PPO (Preferred Provider Organization): A type of health insurance plan that offers more flexibility in choosing healthcare providers and does not require referrals to see specialists.

EOB (Explanation of Benefits): This is a statement from your insurer explaining what was covered and what you owe after a healthcare service.

In-Network and Out-of-Network: In-network refers to healthcare providers or facilities that are contracted with your insurance plan, while out-of-network refers to those that are not contracted and may result in higher costs.

Open Enrollment Period: This refers to a specific time during which individuals can enroll in or make changes to their health insurance plan.

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