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What are the basic Terms used in Health Insurance Industry?
As health insurance is becoming critically important, it is essential that each one of us is familiar with the various terms used in the health insurance industry. This knowledge will help us arrive at an informed decision while selecting the insurance plan best suited to our needs. Whether you are purchasing your own health insurance or attempting to understand the plan your employer provides, you need to know all the health care terminologies.
Coverage: The most widely used term that you should know is "coverage." Coverage will indicate what areas of health care the insurance company will cover. Your plan will show you what tests, prescriptions, treatments, medical facilities, and/or doctors are covered through your provider. Normally, a section of your insurance statement lists the services not paid for by the company. These are non-covered expenses. To cite an example, most insurance companies will not pay for services such as cosmetic surgery.
Co-Payment is another term you will quite often come across when discussing health care plans. When you visit a clinic for treatment, the doctor, nurse, and other staff members have to be paid. Co-pay is a fixed amount that a policyholder pays in order for him or her to meet a doctor and receive prescription cost benefits. The balance amount is covered by your provider.
Deductible: Some insurance companies run a risk when dealing with individuals whose medical history is not encouraging. In order for the insurance company to insure these persons, they must indicate a deductible amount. The deductible is the amount the policyholder pays every year in order to be covered. After the policyholder pays this amount, he or she will be reimbursed for all doctor or hospitalization fees
Premium: This is the amount you or your employer, as the case may be, must pay on a monthly basis, for you to enjoy the health insurance benefits. An employer may cover partially or wholly the premium for employees who have group coverage through the company. The premium depends on a variety of factors such as the type of coverage you select, your medical history, your age and gender. Premium is the amount you pay for coverage, even if you never see a doctor or file a claim. People with higher deductibles usually pay a lower premium and vice versa.
Pre-Existing Condition: Most health insurance companies will not provide coverage for pre-existing conditions during the initial term of coverage, usually 12 months. A pre-existing condition is any medical condition that a person experienced during a set time period before the commencement of the insurance policy. The time period for establishing pre-existing conditions varies, and in some states, this period is defined by law.
Co-Insurance: Please know that once your deductible is met, or if you do not have a deductible at all, the insurance company may require you to pay a percentage of your health care costs. This is called your co-insurance. Some policies cover 100 percent of costs after the deductible, and there is no co-insurance. In most cases, you will find that the insurance provider pays 70 percent to 90 percent and you pay the balance. Your policy may also include a maximum limit for the amount you pay for co-insurance. After you reach that maximum limit, your provider will cover 100 percent of covered costs up to your annual or lifetime.
Please know the list of terms used by the health insurance sector is quite vast and it is not possible to cover them all. Before choosing the health care plan, it is advisable you consult an experienced agent who will be in a fit position to explain the entire list of terminologies used in the health insurance industry.
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