This post is going to focus on explaining what some of the myriad terms and acronyms that insurance companies and your doctor’s office often use to describe and/or explain the particulars of your medical benefits. It is important to know the definitions of these terms as they can and should affect your decisions when it comes to your personal health care. These definitions are meant for general educational purposes only. You should read your benefit booklet obtained from your insurance for any plan related specifics or how these concepts apply to your policy. This list could grow as I add more and more terms.
Coinsurance (%): A cost sharing part of a health insurance plan that requires the insured party (you) to pay a stated percentage of the eligible medical expenses after the deductible (in most cases) is paid. Coinsurance rates may vary depending on your policy, type of service rendered, where the service was rendered, and if your deductible has been met.
Copay or Copayment: Another cost sharing device that requires the patient to pay a stated dollar amount at the time of service. The insurer is responsible for the remainder of the days services/claims. Any amount that the insurance doesn’t pick up or invalidate will become your responsibility. The copay amount can vary depending on the type of service, where the service is obtained, and possibly if your deductible has been met.
Deductible: A fixed amount per benefit period that must be met before the insurer starts to make payments for covered medical services. Having a lower deductible means that the insurance company coverage will start sooner. Ex. If your deductible is $250, then you are responsible for the first $250 of eligible medical expenses and any eligible expenses over that $250 would be processed with your regular coinsurance. The deductible may vary depending on several factors including type of service, and network status (in network/out of network). Plans may have individual and family deductibles.
Flexible spending accounts or arrangements (FSA): These are special accounts offered by some employers that provide a way for employees to set aside a portion of their income, pretax dollars to be used for health care costs, including costs not usually covered by your insurance company. Some employers will make contributions to these accounts. The common downside of such accounts is that the funds must be used within a benefit year or they can be forfeited. Some FSA’s can be set up for other costs such as childcare.
Maximum plan dollar limit: The maximum amount that the insurer will pay for covered medical expenses. Plans can have a yearly, or lifetime max, and often they can have different maxes for some services. I.E. a $10k lifetime infertility benefit, or a $1 million lifetime plan maximum.
Out of pocket max: The maximum dollar amount a covered member is required to pay out of pocket during a benefit year for all covered expenses. After this is met, all covered expenses will be paid at %100, no matter what your coinsurance is, up to the lifetime maximum.
Premium(s): The agreed monthly/quarterly fees paid for your coverage; health, car, home or otherwise. These can be paid by your employer, you, unions, etc.
Primary care physician (PCP): a doctor that you elect to serve as your primary contact for any medical care. Think “family doctor”. Under a managed care plan your PCP would provide basic medical care, and coordinates any/all your referrals for outside specialists.
If I left anything out, or made an error please let me know in the comments. I plan on adding more terms as they come up :)