Understand this list of common health insurance coverage terms and you will better understand what your health insurance plan has to offer:
Allowed Amount/Contractual Allowance
Insurance companies contract with health care providers at a discounted rate off of the provider’s billed charges. This rate is the amount that the healthcare provider agrees to accept for that service. These rates vary by insurance company and provider. What does this mean? Not every provider costs the same.
Co-insurance
This is a percentage of each claim that will be passed on to the patient in addition to the deductible amount. For example, if you have 90/10 coverage, you will be responsible for paying 10% of the allowed amount of that claim.
Coordination of Benefits
If the insured has available two or more sources that would cover payment for certain conditions, such as being under a spouse’s insurance plan along with their own, the insurance company would not pay double benefits. In this case, the health insurance company would coordinate benefits to make sure each plan pays a portion of the service.
Co-payments
This is the pre-determined amount set by the insurance company that the patient will pay prior to receiving services. This is often associated with physician office visits.
Deductible
The deductible refers to the amount of money that the insured would need to pay before any benefits from the health insurance policy can be used. This is usually a yearly amount so when the policy starts again, usually after a year, the deductible would be in effect again. Some services, like doctor visits, may be available without meeting the deductible first. Usually there are separate individual deductible amounts and total family deductible amounts.
Exclusions
The exclusions are the things that the insurance policy will not cover.
Lifetime Maximum
This is the most amount of money the health insurance policy will pay for the entire life. Pay attention to individual lifetime maximums and family lifetime maximums, as they can be different.
Out-of-Pocket
This is the cost a person would pay out of his or her own pocket. An out-of-pocket expense can refer to how much the co-payment, coinsurance, or deductible is. Also, when the term “annual out-of-pocket maximum” is used, that is referring to how much the insured would have to pay for the whole year out of their pocket, excluding premiums.
Pre-existing Conditions
This is an illness or condition someone had before obtaining the insurance policy. Some plans will cover pre-existing conditions while others may completely exclude them. If excluded, the patient will be responsible for all costs related to that condition under their new policy.
You may also want to read:
- Health Insurance 101 – When it comes to health insurance, people don’t budget for procedures. MVHNews provides six important facts every healthcare consumer should know about health insurance and how to manage their coverage and costs.
