If you are trying to buy health insurance, or understand a mysterious charge, these terms should help.
Maybe you've just gotten kicked off your parents' health insurance plan and find yourself plunged head-first into the wild, wild world of United States health care, trying to pick out an insurance plan for the first time. Or maybe you're like a lot of us - you've been around the block but are still a little bit fuzzy on what some of your plan's fine print actually means.
Navigating healthcare and health insurance in the U.S. is notoriously complicated, so we made a cheatsheet for common terms that you might need to know. Just in time for 2019 open enrollment!
Health Insurance Lingo: A glossary
Benefit: A benefit is any health service (like an appointment or operation) or medical item (like an IUD or prescription medication) that your insurance pays for in full or in part. When people refer to things being “covered” by insurance, those things are benefits. You should be able to find out what your benefits are by calling your insurance company or by checking their website.
Premium: Your premium is how much you pay for insurance, usually on a monthly basis. If you are insured through your job, your employer may pay some or all of the insurance premium on your behalf. Monthly premiums don’t include other potential costs, like copays.
Copay (or copayment): A copay is a fixed amount you pay towards the cost of an appointment or medication when your insurance company is paying the rest. Copays are an “out-of-pocket” expense, and are often paid at the time of the appointment. Luckily for us, the Affordable Care Act (ACA, a.k.a. ObamaCare) requires all insurance plans to cover birth control, well-woman visits, and all sorts of other good stuff without a copay.
Co-insurance: Co-insurance is just like a copay, but it’s a percentage of the cost of an appointment instead of a flat fee.
Deductible: A deductible is the amount you have to pay for health care in a year before your health insurance kicks in. For example, if you have a $1,500 deductible and you undergo two $1,000 procedures in one year, your insurance will pay $500 of the second procedure. If you have a high deductible (e.g. $3,000) your monthly premium will probably be cheaper, but if you have an unexpected health cost, you will have to shell out the cash before insurance kicks in.
A happy caveat: Currently under the ACA, health insurance plans have to pay the full cost of preventative services, like birth control and well-woman visits, even before you meet your deductible.
Out-of-pocket maximum: Your out-of-pocket maximum is the most you have to pay for covered services in a year. If you hit this amount by paying your deductible, copays, and coinsurance, then your health insurance will pay the full cost of all covered benefits for the rest of the year.
In-network vs. Out-of-network: Insurance companies negotiate with certain health care providers to lower costs—those providers are in their “network.” Typically, your out-of-pocket costs will be higher when you see an out-of-network doctor or specialist. Most health insurance companies make it easy to find in-network providers on their website.
Claim: A claim is an invoice that your provider/clinic/hospital sends to your health insurance company. It explains the health service(s) you received (e.g. “mammogram”) so that your insurance company knows what it needs to pay.
Dependent coverage: Dependent coverage is health insurance for the “dependents” (such as children, spouse, or partner) of someone who has a health insurance policy (often referred to as the “policyholder”).
Explanation of Benefits (EOB): An EOB is a form from your insurance company that lists everything they have helped pay for during that statement period. EOBs are sent to the “primary enrollee,” which could be your parents if you are on a family plan. If you’re on your parents’ plan and would prefer to keep your health care info private, you may be able to get your EOBs sent to you directly.
Drug formulary: Alternatively referred to as a “prescription drug list” or “preferred drug list” (PDL), a drug formulary lists the prescription medications your plan covers and explains how much each will cost you out-of-pocket. Often, brand name drugs will be much more expensive than their generic version. (That may go for birth control, too.)
Health savings account (HSA): An HSA is an un-taxed savings account that can only be used to pay for health care. Only people with high-deductible insurance plans are eligible for HSA accounts (as of 2016, an annual deductible of $1,300 or more for self-only coverage is considered a high deductible). You can typically set up an HSA through your bank.
Pre-existing condition: A pre-existing condition is any health condition you have before you are covered by new health insurance. Under the ACA, health insurance companies can’t deny you coverage or charge you more because of a pre-existing condition.
HMO vs. PPO: These are umbrella terms for two of the most common types of health insurance plans. (There are also EPOs and POSs, but those are less common).
Health Maintenance Organizations (HMOs) generally have lower premiums and no deductible, but if you want to see an out-of-network doctor, you have to foot the entire bill yourself. Also, HMOs often require you to get a referral from your primary care provider if you want to be covered when you see a specialist.
Preferred Provider Organizations (PPOs) tend to have higher monthly premiums, but you are still covered when you see out-of-network doctors (although you might pay a fee). If you have a PPO plan, you shouldn’t need a referral to be covered when you see a specialist.
Phew, that wasn’t too bad!
Health insurance can feel like one of those I’ll-never-really-get-it-so-why-bother-trying things, especially because every plan is slightly different. But don’t let that deter you—insurance companies pay people to take your calls and answer your questions. And if you have a question about getting your birth control covered, the National Women’s Law Center will help you out. You can call their toll-free hotline 1-866-745-5487, or email CoverHer@nwlc.org.
By the way, open enrollment for 2019 health coverage goes through December 15th! Insurance may end up being cheaper than you think—most people can find a plan with a $50-$100 monthly premium. So whether you’re currently uninsured or just want to see if there are better options than your current plan, now is the perfect time for a visit to HealthCare.gov.