Understanding health insurance language.

The language used in most health insurance documents can be very confusing. The result is that most people just end up signing the documents without having a clear understanding of what these words are. It is therefore not surprising that some people end up getting frustrated with insurance companies because they did not take the time to understand what some of the jargon used means.

We will explore some of the insurance terms in the article below.

Premium.

This is the amount you pay on a monthly or annual basis for your insurance cover. Some employers have health insurance plans that their employees contribute to. The amount is deducted from the paycheck.

 Deductible.

This is an amount you will need to pay before your insurance kicks in. For example, if your insurance has a $500 deductible, and you have not made any claims within the year, and you get into a situation that requires you to visit the hospital and the bill comes to $2000, you will receive a bill from the hospital after the insurance company pays their share so that you can pay your part, also known as co-insurance. Deductibles accrue throughout the year and after making this one payment you will not have to pay it again.

 Co-insurance

 This is the percentage you will be responsible for when you receive a service. These vary depending on the plan you have taken and normally kick in after you’ve met your deductible obligation.

Co-pay.

This is the amount you pay for prescriptions or visits to the doctor at the time of service. The rates vary, while some insurance plans do not come with them at all.

 Maximum out-of-pocket.

 This is the maximum amount you’ll pay out-of-pocket and includes deductibles co-pay and co-insurance payments. They apply to in-network expenses only. Once you have met your maximum out-of-pocket amount, your insurance company will pay full medical expense amounts going forward.

 Covered person.

This refers to anyone who can receive benefits on your health insurance cover usually the owner of the policy and the family members.

Preferred drug and medical healthcare providers list.

 This refers to the type of drugs covered by the health insurance cover and the healthcare providers you can visit under the cover. This means that if you buy medicine outside of that list or you visit a health care provider who is not in the plan, then you will have to pay for it on your own.

Pre-authorization.

This is basically permission given to you by the insurance company to buy a certain drug or visit a particular health care provider. They will decide whether it is medically necessary for you to get the drug or to visit that particular healthcare provider. This, however, does not normally apply to emergency situations. 

Exclusions.

These refer to the things the healthcare insurance provider will not cover under the plan. Some covers, for example, do not have dental or optical plans; others will not pay for pre-existing conditions, cosmetic surgeries among others. It is very important that you have a clear understanding of what your health insurance cover does not pay for because you will have to pay for it out of pocket.