Health insurance can be confusing, with many complex terms and concepts. Knowing the meaning of key health insurance terms can help you navigate medical bills, insurance policies, and benefits more effectively. Below is a breakdown of important terms to help you better understand your health insurance plan.
Basic Health Insurance Terms
1. Allowed Amount
The maximum payment your insurance plan will cover for a specific healthcare service. Also known as eligible expense, payment allowance, or negotiated rate.
2. Balance Billing
When a healthcare provider charges you for the remaining amount that your insurance does not cover. This often happens when you see an out-of-network provider.
3. Coinsurance
The percentage of costs you must pay for a covered healthcare service after meeting your deductible. For example, if your coinsurance is 20% and the allowed amount for a service is $100, you pay $20, while your insurance covers the remaining $80.
4. Copayment (Copay)
A fixed amount you pay for a healthcare service, such as $20 for a doctor’s visit. This amount can vary based on the type of service.
5. Deductible
The amount you must pay for healthcare services before your insurance starts covering costs. For example, if your deductible is $1,000, your plan won’t pay for most services until you reach that amount.
Understanding Your Insurance Coverage
6. Cost Sharing
The portion of healthcare costs you must pay out-of-pocket, including copayments, coinsurance, and deductibles.
7. Explanation of Benefits (EOB)
A summary provided by your insurance company explaining what services were covered, what was paid, and what you owe. It is not a bill.
8. Good Faith Estimate (GFE)
An estimate from a healthcare provider of the expected costs for medical services, required for uninsured individuals or those not using insurance.
9. Out-of-Pocket Limit
The maximum amount you’ll have to pay for covered services in a year. Once you reach this limit, your insurance pays 100% of the allowed amount for covered services.
Provider and Plan Types
10. In-Network Providers
Healthcare providers or facilities that have a contract with your insurance company to offer services at discounted rates.
11. Out-of-Network Provider
A provider who does not have a contract with your insurer. Out-of-network services typically cost more and may not be covered at all by your insurance plan.
12. Preferred Provider
A healthcare provider who has agreed to offer services at a lower negotiated rate as part of your insurance company’s network.
Protections and Rights
13. No Surprises Act
A law that protects patients from unexpected bills for out-of-network emergency services, non-emergency services at in-network hospitals, and air ambulance services.
14. Notice and Consent Form
A document you may receive from an out-of-network provider explaining your rights and protections against balance billing. Signing this form may waive those protections.
Billing and Payment Disputes
15. Dispute Resolution
A process where an independent third party reviews billing disagreements between a patient and a provider, particularly in cases involving surprise medical bills.
16. Self-Pay
When an insured individual chooses to pay medical bills out-of-pocket instead of using their insurance.
17. Surprise Bill
An unexpected charge from an out-of-network provider for services received at an in-network facility.
Final Thoughts
Understanding these health insurance terms can help you make informed decisions about your coverage, costs, and rights as a policyholder. Whether you’re choosing a plan, reviewing medical bills, or disputing a charge, knowing these terms will help you navigate the healthcare system with confidence.
Elly Nguyen is a skilled freelance writer with extensive expertise in medicine, science, technology, and automotive topics. Her passion for storytelling and ability to simplify complex concepts allow her to create engaging content that informs and inspires readers across various fields.
