Insurance Terms Made Simple
Understanding the world of insurance can sometimes be confusing, especially with all the unique words and phrases.
It’s important to understand what these terms mean so you can make smart choices about your health coverage. In this blog, we’ll break down some key insurance terms that everyone should know. Knowing these words will help you feel more confident when asking questions and making decisions about your insurance coverage.
Here are some key terms you should know:
Coinsurance
An amount you may be required to pay as your share of the cost for services after you pay any deductibles (if applicable). Coinsurance is usually a percentage (for example, 20%).
Copay
An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit, hospital outpatient visit, or prescription drug. A copayment is a set amount (for example $10), rather than a percentage.
Deductible
The amount you must pay out of pocket for healthcare or prescriptions before your insurance plan pays.
Formulary
A list of prescription drugs (also called a drug list) covered by a prescription drug plan or another insurance plan offering prescription drug benefits.
In-Network
A group of doctors, hospitals, and other healthcare providers that have a contract with your insurance company. Using providers in your network usually costs you less money.
Maximum out of Pocket (MOOP)
This is an annual limit on your out-of-pocket costs. After reaching your MOOP, you will not owe cost-sharing for Part A or Part B covered services for the remainder of the year. Some plans may also apply the MOOP to supplemental benefits, such as vision, hearing, or dental.
Medical Deductible
This is the amount you have to pay for your medical care before your insurance starts to help cover the cost (if applicable).
Out-of-Network
This refers to doctors and hospitals that do not have a contract with your insurance company. If you go out of network, you may have to pay more out of pocket.
Out-of-Pocket Costs
The cost-sharing requirement you pay for a portion of services or drugs received.
Part D Deductible
The amount you must pay for prescription drugs before your Medicare Part D plan starts to help with costs. Not all plans have a deductible, but if yours does, it’s important to know how much it is.
Premium
The periodic payment to Medicare, an insurance company, or a healthcare plan for health or
prescription drug coverage.
Referral
A written order from your primary care doctor for you to see a specialist or get certain medical services. In many health maintenance organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor.
Tiers
Groups of drugs that have a different cost for each group. Generally, a drug in a lower tier will cost you less than a drug in a higher tier.
By understanding these key terms, you will be better equipped to manage your healthcare and make informed decisions about your insurance.
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