Affordable Care Act (Obamacare): Your guide to health insurance terms
Are you up to speed with all the health insurance buzz-words like “co-pay” and “premium”? If not, you’re not alone. Most Michigan residents probably don’t understand all the basic health care terminology, which could be a serious disadvantage when choosing a plan during open enrollment.
Insurance is fundamentally complicated. Without help, people could make disastrously bad insurance choices because they don’t understand this basic language. This is where independent insurance agents like Allied Insurance Managers can help educate people and give good advice on finding the plan that is right for them.
Here are some basic terms you may want to learn before you dive into a decision about your health insurance for next year.
Deductible – The amount you owe before your health insurance benefits kick in. For example, if your deductible is $500, your insurance won’t pay for anything until your costs are more than $500.
Co-pay – A co-payment, or co-pay, is the amount the insured person pays every time he or she receives a health service. For instance, if your co-pay to see a doctor is $25, you pay that amount each time you see him or her. The insurance takes care of the rest.
Co-insurance – Your part of the costs of a health service that is covered by insurance. It is calculated as a percentage and you pay it in addition to whatever deductible you may owe. For example if your plan allows $100 for a doctor visit and you’ve already met your deductible, your co-insurance payment of 20% would be $20. The insurance plan picks up the rest of the cost.
Out-of-pocket maximum – The most you pay during the period of your policy (most policies go for a year) before your insurance plan begins to pay 100% of the allowed amount. This total does not include your balance-billed charges, your premium, or the health care services your plan doesn’t cover. Some plans don’t count the out-of-network payments, co-insurance payments, co-payments, other expenses or deductibles toward this amount, so read the plan instructions carefully.
Premiums – The amount you must pay for your insurance plan.
Claim – The bill you or your doctor or health care provider submits to your health insurance company.
Allowed amount – This may also be called an “eligible expense” or “negotiated rate” or “payment allowance.” It is the maximum amount on which payment is based for health care services that are covered by your insurance.
In- and out-of-network – An in-network provider is a health care office that has contracted with the health insurance company to provide services for people on that insurance plan. An out-of-network provider is someone who does not have such a relationship with the insurance company. Typically, insurance will only cover the cost of services from health care providers who are “in-network.”
Essential health benefits – This is the set of health care services that must be covered by certain plans starting in 2014. There are 10 categories in which insurance plans must provide services and items: Maternity and newborn care, prescription drugs, rehabilitative services and devices, lab services, ambulatory patient services, emergency services, hospitalization, wellness and preventive services, chronic disease management, and pediatric services that include vision and oral care.
Preventive care – Routine health care that includes regular checkups, patient counseling and screenings to prevent disease, illness and other health complications.
If you need help navigating the new Michigan Health Insurance Marketplace, please contact Allied Insurance Managers today (248) 853-0930.