Insurance Terms Made Easy

Trying to make decisions about insurance can be a daunting task for many Americans. Add to that the extra stress of trying to decipher insurance terminology, and you may find yourself ready to throw in the towel. In an effort to make your insurance journey a little smoother, we’ve compiled a list of common insurance terms and definitions that you need to know.

Broker:

An individual who works to find the best insurance company or insurance plan for your unique needs. Unlike an agent, brokers aren’t typically employed by any one insurance company and is able to help you pick from a wider variety of options. Typically, the broker is paid by the insurance company you choose to buy a plan from, meaning there is no direct cost for you to use a broker’s services.

Coinsurance:

Instead of, or in addition to, paying a fixed amount up front (a copayment), the coinsurance is a percentage of the total cost that insured person may also pay. For example, the member might have to pay 20% of the cost of a surgery over and above a co-payment until they have reached their maximum out-of-pocket, while the insurance company pays the other 80%. This is the upper limit of coinsurance a policy holder is required to pay. Depending on plan, the policy holder could end up owing very little, or a great deal, depending on this factor.

Copayment/copay:

The amount that the insured person must pay out of pocket before the health insurer pays for a particular visit or service. For example, an insured person might pay a $45 copayment for a doctor’s visit or to obtain a prescription. A copayment must be paid each time a particular service is obtained.

Deductible:

The amount that the insured must pay out-of-pocket before the health insurer pays its portion. For example, a policy holder might have to pay a $500 deductible per year, before any of their healthcare is covered by the health insurer. It may take several doctor’s visits or prescription refills before the insured person reaches the deductible and the insurance company starts to pay for care.

HIPAA:

This refers to a law passed in 1996 called The Health Insurance Portability and Accountability Act. Arguably, the most important function of this law is the protection of your identity and medical information.

HMO:

A type of health insurance, HMO stands for Health Maintenance Organization. The most notable difference between an HMO and other plans is the need for your primary care doctor to confirm that you need to see a specialist before a visit will be covered. HMOs have a specific network of providers and facilities and receiving services outside of that network will typically not be covered.

Major medical:

The type of insurance that may be the most familiar to you, this term is widely used synonymously with ACA coverage or “Obamacare.” Major medical insurance must cover pre-existing conditions and a wide range of other services (e.g. maternity care, mental health, substance abuse disorders, etc.).

Maximum out-of-pocket:

Major medical plans have a maximum out-of-pocket. It is also referred to as a stop-loss. This simply means the most that the policy holder is allowed to spend based on policy limits. The higher the maximum out-of-pocket, the lower the monthly premium. Consequently, the lower your maximum out-of-pocket, the higher your monthly premium will be. Our expert agents can help you understand which plan and packages will protect your financial wellbeing.

Obamacare:

This term generally refers to the health insurance regulations passed in 2010. Also often referred to as the ACA, the name of the law is actually The Patient Protection and Affordable Care Act.

Open enrollment period:

The period established by the ACA which limits the time during each year when Americans can apply for an ACA-compliant individual medical plan. Outside of special circumstances (e.g. moving to a new state, losing ACA-compliant insurance coverage through your employer, the birth of a child, etc.), this is the only time during the year that new ACA plans can be selected or changes to current ACA coverage can be made. This year’s enrollment period runs from November 1, 2018 to December 15, 2018.

PPO:

A type of health coverage, PPO stands for Preferred Provider Organization. If you want to have the greatest possible portion of your health care costs covered with this kind of insurance, you must stay in the health plan’s network doctors, healthcare providers, hospitals and other facilities.

Pre-existing condition:

A health issue that was treated or existed before your insurance plan took effect. Insurers offering ACA-compliant plans can no longer deny you coverage based on a pre-existing condition.

Premium:

The amount the policy holder or his sponsor (e.g., an employer) pays to the health plan each month to purchase health coverage.

Preventative care:

Services that are meant to prevent health issues. For example, a once per year mammogram to screen for breast cancer, a dental cleaning or a colonoscopy. The ACA requires that ACA-compliant plans cover a specific list of preventative services.

Network:

A group of doctors, healthcare providers, hospitals and other facilities that accept your insurance plan. It’s your responsibility to ensure that your coverage is accepted where and from whom you are seeking treatment.

Subsidy:

With the advent of the Affordable Care Act, many Americans may receive financial assistance in the form of a “subsidy” to help offset the costs of an ACA plan. The subsidy amount is determined by FPL (Federal Poverty Level). Contact our professional agents today to see if you are eligible for a subsidy.

Now that you are an insurance term pro, you are ready to take on the upcoming open enrollment period and won’t be stumped in the future when your doctor’s office refers to your deductible or coinsurance. On top of your newly found knowledge, remember that VelaPoint is here as your health insurance resource. To help find health coverage or ask any questions, connect with our team of licensed health insurance agents by phone at 855-548-0727 or online at velapointmarkeplace.com.