5. September 2018 11:28
by Nicki
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Health Care Decoded

5. September 2018 11:28 by Nicki | 0 Comments


If you find the world of health insurance to be confusing, you’re not alone. Many people have a difficult time sorting through the buzzwords and terminology to figure out exactly what they need to know about their health insurance coverage. We’ve rounded up some of the top health insurance terms you’re likely to hear. And we’ve broken them down to explain what they really mean. It’s health care – decoded.

 

Click any of the terms below to jump right to the information you need:

Deductible

Many health insurance plans today have something called a deductible, which is the amount you must pay for covered health care services before your health insurance company begins to pick up the tab. If your cost exceeds that amount, your plan will cover the remainder, or a percentage of the remainder. (If you’re in the process of choosing a health insurance plan, it is useful to know that plans with higher deductibles tend to have lower premiums.

 

Copay

 

Your copay is the set amount that you pay for a health care service, like a doctor visit, or a trip to urgent care. The amount depends on your plan and the type of service you receive.


Keep in mind that if your plan has a deductible, you may be responsible for meeting your deductible first. Then, your copay will take effect. In addition, prescription medications also require copays, and they will vary depending on the medication 

Coinsurance

Coinsurance is the percentage of the bill you pay for a covered product or service. Unlike a copay, which is a flat amount, coinsurance is based on the cost of the service.

If your health plan has a deductible, the coinsurance is the amount you’re responsible for after your deductible is met. If you receive services from an out-of-network doctor, you may be responsible for additional charges above the coinsurance.

 

The bottom line: deductibles, copays, and coinsurance are all terms that add up to how much you owe. Get details on how much health insurance costs you. 

Out-of-Pocket Max

 

Many people don’t realize that every health insurance plan sets a maximum for the amount you will have to pay, referred to as the out-of-pocket maximum (OOP max). Once you have reached your OOP max, your health insurance company will begin to pay 100% of your costs for covered care. Different plans have different OOP maximums.

Formulary

 

A drug formulary is a list of prescription drugs your insurance company will pay for, based on the efficacy, safety, cost-effectiveness, and overall value of the drug. A formulary is typically divided into three tiers, with varying copay amounts (Tier 1 with the lowest and Tier 3 with the highest).

Knowing and understanding your formulary is important for several reasons. First of all, it’s important to establish whether the drug being prescribed is covered. Once you have determined a drug is covered, understanding your formulary will allow you to ask your doctor the questions to get the most effective medication possible – for your health and your wallet. 

 

Explanation of Benefits (EOB)

 

At first glance, it may appear to look like a bill – it’s not. An EOB is a statement from your health insurance company after you receive a health treatment or service. It tells you how much the doctor charged, how much your insurance allowed, how much your insurance paid, and the amount you may owe. 

Prior Authorization

 

Sometimes your health insurance plan requires that certain medical services are approved prior to your receiving them. This is called pre- or prior authorization, prior approval, or precertification. It allows your health insurance company to ensure that the care you are receiving is medically appropriate and delivered at the appropriate location. 

While you may be familiar with the terms emergency room (ER), urgent care, and primary care physician (PCP), do you know which to visit for a health issue – and when? Deciding the best course of action can be critical in getting you the most effective care for your medical needs. A PCP knows your medical history and can treat you with your unique health needs in mind, while an urgent care can be very convenient when your doctor’s office is closed. Of course, the ER is the best option when immediate care is needed.

 

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