In an effort to make your insurance journey a little smoother, we’ve compiled a list of common insurance terms and definitions that you need to know.
Broker: An individual who works to find the best insurance company or insurance plan for your unique needs. Unlike an agent, a broker isn’t typically employed by any one insurance company and is able to help you pick from a wider variety of options. Typically, the broker is paid by the insurance company you choose to buy a plan from, meaning there is no direct cost for you to use a broker’s services.
Coinsurance: Instead of, or in addition to, paying a fixed amount up front (a copayment), the coinsurance is a percentage of the total cost that insured person may also pay. For example, the member might have to pay 20 percent of the cost of a surgery over and above a co-payment until they have reached their maximum out-of-pocket amount, while the insurance company pays the other 80 percent. This is the upper limit of coinsurance a policyholder is required to pay. Depending on plan, the policyholder could end up owing very little, or a great deal, depending on this factor.
Copayment/copay: The amount that the insured person must pay out of pocket before the health insurer pays for a particular visit or service. For example, an insured person might pay a $45 copayment for a doctor’s visit or to obtain a prescription. A copayment must be paid each time a particular service is obtained.
Deductible: The amount that the insured must pay out of pocket before the health insurer pays its portion. For example, a policyholder might have to pay a $500 deductible per year, before any of his or her healthcare is covered by the health insurer. It may take several doctor’s visits or prescription refills before the insured person reaches the deductible and the insurance company starts to pay for care.
HIPAA: This refers to a law passed in 1996 called the Health Insurance Portability and Accountability Act. Arguably, the most important function of this law is the protection of your identity and medical information.
HMO: A type of health insurance, HMO stands for Health Maintenance Organization. The most notable difference between an HMO and other plans is the need for your primary care doctor to confirm that you need to see a specialist before a visit will be covered. HMOs have a specific network of providers and facilities, and receiving services outside of that network will typically not be covered.
Major medical: The type of insurance that may be the most familiar to you, it is insurance that covers a wide range of services. This kind of insurance has traditionally come with a high deductible.
Maximum out-of-pocket amount: Major medical plans have a maximum out-of-pocket amount. It is also referred to as a stop-loss. This simply means the most that the policyholder is allowed to spend based on policy limits. The higher the maximum out-of-pocket amount, the lower the monthly premium. Consequently, the lower your maximum out-of-pocket amount, the higher your monthly premium will be. Our expert agents can help you understand which plan and packages will protect your financial well-being.
Obamacare: This term generally refers to the health insurance regulations passed in 2010. Also often referred to as the Affordable Care Act or ACA, the full name of the law is the Patient Protection and Affordable Care Act.
Open enrollment period: The period established by the ACA limiting the time during each year when Americans can apply for individual insurance eligibility for government premium assistance. Outside of a special set of circumstances, this is the only time during the year that new plans can be elected or changes to current coverage can be made. This year’s enrollment period runs from Nov. 15, 2014 to Feb. 15, 2015.
PPO: A type of health coverage, PPO stands for Preferred Provider Organization. If you want to have the greatest possible portion of your healthcare costs covered with this kind of insurance, you must stay in the health plan’s network of doctors, healthcare providers, hospitals and other facilities.
Pre-existing condition: A health issue that was treated or existed before your insurance plan took effect. During open enrollment, due to changes brought about by the ACA, insurers can no longer deny you coverage based on a pre-existing condition.
Premium: The amount the policyholder or his or her sponsor (e.g., an employer) pays to the health plan each month to purchase health coverage.
Preventive care: Services that are meant to prevent health issues. For example, a once-per-year mammogram to screen for breast cancer, a dental cleaning or a colonoscopy. The ACA requires that plans cover a specific list of preventive services.
Network: A group of doctors, healthcare providers, hospitals and other facilities that accept your insurance plan. It’s your responsibility to ensure that your coverage is accepted where and from whom you seek treatment.
Subsidy: With the advent of the Affordable Care Act, many Americans may receive financial assistance in the form of a “subsidy” to help offset the costs of an on-exchange marketplace plan. The subsidy amount is determined by FPL (Federal Poverty Level). Contact our professional agents today to see if you are eligible for a subsidy.