Common Health Insurance Terms Explained

Navigating the world of health insurance can be daunting, especially when faced with a slew of unfamiliar terms. Understanding these common health insurance terms is crucial for making informed decisions about your healthcare coverage. In this guide, we’ll break down some of the most frequently used health insurance terms to help you better understand your policy and make the most of your benefits.

Premium

The premium is the amount you pay for your health insurance policy, usually on a monthly basis. It’s important to keep in mind that paying your premium doesn’t mean all your healthcare costs are covered. It simply ensures that you have health insurance coverage.

Deductible

The deductible is the amount you must pay out of pocket for healthcare services before your health insurance begins to pay. For example, if your deductible is $1,000, you’ll need to pay the first $1,000 of your medical expenses before your insurance kicks in.

Copayment (Copay)

A copayment, or copay, An insurance agent in Florida can help clarify these terms and guide you through your options. is a fixed amount you pay for a covered healthcare service, usually at the time of service. For example, you might have a $20 copay for a doctor’s visit. Copays can vary for different services within the same plan.

Coinsurance

Coinsurance is the percentage of costs you pay for a covered healthcare service after you’ve paid your deductible. For instance, if your plan has a 20% coinsurance, you will pay 20% of the cost of services after meeting your deductible, and your insurance will cover the remaining 80%.

Out-of-Pocket Maximum

The out-of-pocket maximum is the most you’ll have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance, your health insurance will cover 100% of the costs for covered benefits. This does not include your premium.

Network

The network refers to the group of doctors, hospitals, and other healthcare providers that have agreed to provide services at reduced rates for the common health insurance terms plan’s members. Staying within your plan’s network usually results in lower out-of-pocket costs.

In-Network and Out-of-Network

In-network providers have a contract with your health insurance company to offer services at a reduced rate. Out-of-network providers do not have such a contract, and using them typically results in higher out-of-pocket costs. Some plans may not cover out-of-network services at all.

HMO (Health Maintenance Organization)

An HMO is a type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency. HMO plans often require you to have a primary care physician and get referrals to see specialists.

PPO (Preferred Provider Organization)

A PPO is a type of health insurance plan that offers more flexibility when choosing doctors and hospitals. You can see both in-network and out-of-network providers without a referral, but you’ll pay less if you use providers in the PPO network.

EPO (Exclusive Provider Organization)

An EPO is a type of health insurance plan that requires you to use doctors and hospitals within the plan’s network, except in an emergency. Unlike HMOs, EPOs usually do not require you to get a referral to see a specialist.

POS (Point of Service)

A POS plan combines features of HMOs and PPOs. You pay less if you use healthcare providers in the plan’s network and are required to get a referral from your primary care doctor to see a specialist.

Explanation of Benefits (EOB)

An EOB is a statement from your health insurance company explaining what costs it will cover for medical care or products you’ve received. The EOB is not a bill but an overview of how your claim was processed.

Formulary

A formulary is a list of prescription drugs covered by a health insurance plan. Formularies are often divided into tiers, which determine the amount you’ll pay for each drug. Typically, generic drugs are on a lower tier and cost less, while brand-name drugs are on higher tiers and cost more.

Prior Authorization

Prior authorization is a requirement that your healthcare provider obtain approval from your health insurance company before prescribing a specific medication or performing a particular medical procedure. This process ensures that the treatment is medically necessary and covered under your plan.

Claim

A claim is a request for payment that you or your healthcare provider submits to your health insurance company for services you believe are covered. After reviewing the claim, the insurance company will determine how much, if any, of the cost they will pay.

Preventive Services

Preventive services include routine healthcare services that are intended to prevent illnesses, disease, or other health problems. Many health insurance plans cover preventive services, such as vaccinations and screenings, at no cost to you when you use in-network providers.

Open Enrollment Period

The open enrollment period is the yearly period when you can enroll in a health insurance plan. If you miss this period, you may have to wait until the next open enrollment period unless you qualify for a Special Enrollment Period due to a life event such as marriage, childbirth, or loss of other coverage.

Special Enrollment Period

A special enrollment period is a time outside the open enrollment period when you can sign up for health insurance. You qualify for a special enrollment period if you experience certain life events, such as losing health coverage, moving, getting married, or having a baby.

Health Savings Account (HSA)

An HSA is a savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. HSAs can be used only with high-deductible health plans (HDHPs). The funds in an HSA roll over year to year if you don’t spend them.

Flexible Spending Account (FSA)

An FSA is a special account you put money into that you use to pay for certain out-of-pocket healthcare costs. You don’t pay taxes on this money. FSAs are typically offered through an employer and must be used within the plan year.

High-Deductible Health Plan (HDHP)

An HDHP is a health insurance plan with a higher deductible than traditional insurance plans. HDHPs are often paired with Health Savings Accounts (HSAs), which allow you to pay for medical expenses with pre-tax dollars.

Understanding these Common Health Insurance Terms Explained in Florida can help you make more informed decisions about your healthcare coverage. Whether you’re choosing a new health insurance plan or trying to better understand your current policy, having a clear grasp of these terms is essential. By familiarizing yourself with these concepts, you can navigate the complexities of health insurance with confidence and ensure you’re getting the most out of your coverage.