Understanding healthcare plans can sometimes feel like trying to understand another language. With insurance terms like premiums, deductibles, copays, and networks, it can be confusing and hard to understand.
Whether you’re picking a plan for the first time or looking at your current one, understanding the terms can help you manage your health and money better. In this post, we’ll explain the key words you need to understand when choosing and handling a healthcare plan.
Key Healthcare Terms You Should Know
Premium
The premium is the money you pay for your healthcare plan, usually every month. Even if you don’t use healthcare services, you still have to pay this fee to keep your insurance.
The cost of insurance can be very different depending on the plan you select, the company providing it, and how much coverage you want.
For instance, a simple plan that has high deductibles can have a lower monthly payment, while affordable healthcare plans with lower deductibles and more benefits usually costs more each month. It’s important to pick a payment amount that you can afford but also gives you enough health care coverage.
Deductible
The deductible is the amount of money you have to pay yourself for medical care before your insurance starts to help with the costs. If your deductible is $2,000, you have to pay that amount for covered services before your insurance starts to help with the costs.
Usually, plans that cost more each month (higher premiums) have smaller amounts you pay before insurance starts (lower deductibles), and plans that cost less have bigger amounts you pay first (higher deductibles).
It’s important to know how your deductible works with your insurance plan. If you pick a plan with a low monthly cost but a high deductible, you might have to spend a lot more money if you need to see the doctor often.
Copay (Co-payment)
A copay is a set amount of money you pay when you get a healthcare service, like seeing a doctor or buying medicine. You usually pay for it when you get the service. For example, you might pay $25 for a doctor’s visit or $10 for a generic medicine.
Co-pays can be different for each service and may change depending on the doctor you see or the type of care you get. They are small payments you make for medical services, which help you and your insurance company share the total cost. They are usually less than the full price of the service.
Coinsurance
This is the part of your medical bills that you need to pay after you’ve paid your deductible. Copays are set amounts you pay for a service, while coinsurance is a part of the total cost that you pay as a percentage. If you have to pay 20% of your medical bills and you get a bill for $1,000, you will need to pay $200.
Your insurance will pay the other $800. Coinsurance usually happens when you have big medical services, like going to the hospital or having surgery. Unlike copays, coinsurance can lead to higher costs that you have to pay out of your own pocket, based on how much the service costs.
Network
This is a group of doctors, hospitals, clinics, and other healthcare providers who have made a deal to provide services to people with a specific insurance plan for lower prices. Healthcare plans usually have different kinds of networks, like HMO, PPO, or EPO.
- HMO (Health Maintenance Organization) plans usually ask you to pick a main doctor and get referrals to see other doctors.
- PPO (Preferred Provider Organization) plans give you more choices for doctors. You can see any doctor, but you will pay less if you choose one that is in the network.
- EPO (Exclusive Provider Organization) plans are like PPOs, but they don’t pay for care outside their network unless it’s an emergency.
Knowing your plan’s network is important because using a doctor or provider outside of that network can result in much higher costs or no coverage at all.
Pre-Authorization
Pre-authorization is when your insurance company wants you to get their approval before you can receive certain healthcare services. This usually refers to special treatments, procedures, or medicines that might not be paid for unless the insurance company agrees that they are needed and suitable.
For example, if you need an MRI, your insurance company might ask you to get approval before you book the appointment. This step makes sure the treatment is needed for your health and is covered by affordable healthcare plans.
Conclusion
Knowing the important terms related to healthcare plans is important for making good choices for you and your family. Keep in mind that healthcare plans are not the same for everyone. Always take some time to look up and compare different choices, and feel free to ask an insurance advisor for help. The more you learn, the easier it will be to make a decision that suits you and your family.
Disclaimer
- MPB Health memberships are a non-insurance solution designed to provide access to healthcare services. To determine if this aligns with your specific needs, we recommend consulting a certified expert advisor.
- Per state regulations, we are not permitted to present ourselves as selling health insurance. We can use the following terms “health insurance alternatives, non-insurance”, we can contrast our product to insurance and talk about insurance in a way that does not present to clients that we are health insurance.