Health Insurance Terms You Need to Know

Sometimes, your insurance plan terms – or descriptions of provisions and coverages – can be quite difficult to understand. The following is a list of common health insurance coverage terms and what they mean.

Deductible

A deductible is the amount of money you, as the insured, will need to pay before the benefits from your insurance policy will kick in. This is typically an annual amount, so when your policy is renewed – generally after a year’s time – the deductible would once again be in effect. There are usually separate deductible amounts for each individual as well as a family as a whole.

Co-Payment

A co-payment is a fixed amount that you will be required to pay when receiving medical treatment or visiting your doctor. Typically a co-payment is required for basic doctor visits and when buying prescription medicines.

Co-Insurance

Co-insurance is usually a percentage amount that you, as the insured, is responsible for. For instance, if your co-insurance split is 70/30, the insurance will pay 70% of the cost of a hospital stay or procedure and you will be required to pay the other 30%.

Out-of-Pocket

This is the amount of money you will pay from your own pocket. This expense refers, in general, to the co-payment, co-insurance, and deductible. When the term “annual out-of-pocket maximum” is used, this refers to the total amount you will pay for the year, excluding your premiums.

Pre-existing Conditions

Insurance policies will often not cover a condition that you or your covered family members had prior to becoming insured with a particular company. Some plans will cover pre-existing conditions after a certain length of time, while others won’t cover them at all.

Exclusions

Exclusions are things your insurance policy will not cover; pay close attention to these items as they could include things like emergency room visits and certain types of illnesses.

Coordination of Benefits

Should you have two or more sources to cover healthcare for certain conditions, the insurance company will not double your benefit amount, but will coordinate with the other company to ensure each plan pays for a portion of the service(s) you’ve received.

Grace Period

You have a certain amount of time to pay your health insurance premium after the original date on which it is due before the company will terminate your coverage.

Lifetime Maximum

As the term suggests, this is the maximum amount the health insurance company will pay for your healthcare over your lifetime. Individual lifetime maximums may be different from lifetime maximums for an entire family.