Understanding Health Insurance Terminology

Health insurance terminology can be confusing. As a result, understanding your benefits and what you may owe out-of-pocket can be difficult. In order to make sure you are using coverage effectively, it is important to understand some key health insurance terms.

You can purchase either group or individual health insurance. Group health insurance is typically acquired through your employer and covers many people. Individual insurance, on the other hand, is usually purchased by an individual or a family and is not tied to a job.
To better understand your health insurance, be aware of the following terms:

Participant

There are a few different participants involved in health insurance. One is the provider, or a clinic, hospital, doctor, lab, healthcare practitioner or pharmacy. The insurance or or the carrier is the insurance company providing coverage. The policyholder is the individual or entity who purchased the coverage, and the insured is the person with the coverage.

Premium

The amount of money charged by an insurance company for coverage. Rates are typically paid annually or in a smaller payments over the course of the year (for example, monthly).

Deductible

The amount you owe for healthcare services each year before your insurance company begins to pay. Your deductible may not apply to all services, such as preventive care.

The following are other important health insurance terms:

Copayment

The fixed amount that you pay for a covered healthcare service. That amount can vary by the type of covered healthcare service (for example, a doctors office visit or a specialist, urgent care or emergency room visit.

Coinsurance

The percentage of a medical bill that you pay (for example, 20%) and the percentage that the health plan pays (for example, 80%). You pay coinsurance plus any deductible you owe for a covered health service.

Out-of-pocket maximum (OOPM)

The most you should have to pay for healthcare during a year, excluding the monthly premium. After you reach the annual OOPM, your plan begins to pay 100% of the allowed amount for coverage health services.

These are just a few of the common terms associated with health insurance. For more information about health insurance terminology and your coverage, contact HR.

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