Understanding your health insurance can be intimidating. Between unfamiliar terms, puzzling acronyms, and optional coverage items, there’s a lot to unpack. By better understanding how health insurance works and key aspects of your employer sponsored plan, you can better utilize your coverage to save both time and money. Take a few minutes to review these basic insurance terms:
- Premium: The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly, or yearly.
- Deductible: An amount you could owe during a coverage period (usually one year) for covered healthcare services before your plan begins to pay. An overall deductible applies to all or almost all covered items and services. A plan with an overall deductible may also have separate deductibles that apply to specific services or groups of services. A plan may also have only separate deductibles. (For example, if your deductible is $1000, your plan won’t pay anything until you’ve met your $1000 deductible for covered healthcare services subject to the deductible.)
- Copayment: A fixed amount (for example, $15) you pay for a covered healthcare service, usually when you receive the service. The amount can vary by the type of covered healthcare service.
- Coinsurance: Your share of the costs of a covered healthcare service, calculated as a percentage (for example, 20%) of the allowed amount for the service. You generally pay coinsurance plus any deductibles you owe. (For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your coinsurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.)
- Out-of-Pocket Limit or Maximum: The most you could pay during a coverage period (usually one year) for your share of the costs of covered services. After you meet this limit, the plan will usually pay 100% of the allowed amount. This limit helps you plan for healthcare costs. It never includes your premium, balance-billed charges or healthcare your plan doesn’t cover. Some plans don’t count all of your copayments, deductibles, coinsurance payments, out-of-network payments, or other expenses toward this limit.
Now that you better understand these key aspects of a health plans potential costs. Review these key terms and phrases to better understand your medical bills and how you can use your coverage in the most cost-effective way:
- Allowed Amount: This is the maximum payment the plan will pay for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.”
- Balance Billing: When a provider bills you for the balance remaining on the bill that your plan doesn’t cover. This amount is the difference between the actual billed amount and the allowed amount. For example, if the provider’s charge is $200 and the allowed amount is $110, the provider may bill you for the remaining $90. This happens most often when you see an out-of-network provider (non-preferred provider). A network provider (preferred provider) may not bill you for covered services.
- Prior Authorization: A decision by your health insurer or plan that a healthcare service, treatment plan, prescription drug or durable medical equipment (DME) is medically necessary. It’s sometimes called preauthorization, prior approval, or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.
- Network Provider (Preferred Provider): A provider who has a contract with your health insurer or plan who has agreed to provide services to members of a plan. You will pay less if you see a provider in the network. Also called “preferred provider” or “participating provider.”
- Explanation of Benefits (EOB): A list that you get after you’ve received a medical service, drug, or item. This list that tells you the full price of the service, drug, or item that you received. This is not a bill.
As a member, another great way to better utilize your health insurance benefits is to utilize our secure web portal, My eLink. This convenient online tool is free and gives you access to your personal health plan information 24/7. It’s even mobile friendly! You can check on claims, search for network providers, view EOBs, benefit information, and authorizations. You can compare medication pricing, print and request I.D. cards, and submit basic questions to your Member Services team. Log in to your My eLink account here. Don’t have an account yet? No problem, use the link and click on Proceed to our sign-up process to register.