Glossary

Coinsurance

Explanation: This is the percentage of medical costs for which you are responsible for covered services. Coinsurance percentages vary between plans. In most cases, coinsurance charges begin after you’ve met your deductible.

Example: Continuing the example above, your coinsurance responsibility is 20 percent. You will have to pay your deductible of $500, then 20 percent of the remaining $1,000 bill ($200), and your insurer will pay $800.

Co-pay

Explanation: This is the dollar amount that you pay for office visits and prescriptions, commonly required to be paid at the time of service. Urgent care and emergency room visits generally have more expensive co-pays, which generally range from $100 to $500. Some plans do not have copayments.

Example: For your broken arm, you are charged a $250 copay to be seen and you are given a prescription for pain medication. If you have a generic prescription co-pay of $20, then this is the amount you will pay for the prescription when you purchase it at the pharmacy.

Covered Person

Explanation: This is any person who is eligible to receive benefits on your health insurance plan. This would include the policy owner (you) and any family members covered by your plan.

Example: You, your spouse or a dependent would all be considered a covered person if you are on the same health plan.

Deductible

Explanation: This is the amount of medical costs that you must pay before your insurance will kick-in. Copays dollar amounts and coinsurance percentages generally do not count toward the deductible.

Example: Your insurance has a $500 deductible, and you haven’t made any claims so far this coverage year. After you visit the emergency room for a broken arm, the total bill is $1,500. You will likely receive a bill from the service provider after the insurance company pays their portion, leaving you to pay your coinsurance percentage (see below). Your deductible accumulates throughout the year, so after this visit, you wouldn’t have to pay the deductible again.

Explanation of Benefits

Explanation: This document is not a bill, but rather an account statement. After you make a claim on your policy and the insurance company has made a payment, you will receive an EOB in the mail. It will explain the actions the insurer took on the claim, the available benefits, and, if necessary, any reasons for denying the claim, as well as the explanation of the claims appeal process.

Example: After the insurer pays their portion of the bill from the hospital for the broken arm, you receive an EOB itemizing provider charges of $1500, the deduction of $800 for how much your insurer has paid, and any remaining portion left to be paid.

Formulary/
Preferred drug list

Explanation: This is also referred to as a drug list. It is a list of prescription drugs that are covered by your health insurance plan. You should verify all drugs you take are on the list, otherwise they may not be covered.

Example: You receive a prescription for a pain medication for your broken arm. If possible, you can see if the prescribed drug is on your formulary. If it is not, you can request your doctor to prescribe a covered alternative. This isn’t generally an option in an emergency.

Maximum out-of-pocket

Explanation: This is the most that you will be required to pay out of pocket for in-network expenses during a year. This includes your deductible, co-pays and coinsurance payments. Your monthly premiums, expenses not covered by your plan, or out[1]of-network expenses do not count toward the maximum out-of-pocket amount, your insurance should pay 100 percent of your covered expenses.

Example: If a family is covered under a Marketplace plan, then maximum out-of-pocket expenditure for 2016 is $13,700 per family, with an individual limit of $6,850. Your broken arm has cost you $270 in copays, $500 deductible, $200 coinsurance. You have paid $970 toward a maximum annual individual limit of $6,850.

Preauthorization

Explanation: This is also called prior authorization, prior approval or precertification. It refers to a decision by your health insurer whether a service, treatment plan, prescription drug or medical equipment is medically necessary. Your insurer may require that you receive preauthorization for certain treatments before you receive them. This usually doesn’t apply to emergencies.

Example: In the continued example, no preauthorizations were necessary to receive covered care for the broken arm. An example of a service that might need a preauthorization would be an MRI test.

Premium

Explanation: The premium is the amount you or your employer pays for your health insurance coverage every month.

Example: If you have enrolled in your employer’s health After enrolling in a Marketplace plan for individual health insurance benefits, you are billed $200 per month.

Preventive Services

Explanation: The majority of health plans must cover certain preventive services for free. These services include things like immunization vaccines and screening tests.

Example: Flu shots, diabetes screening tests, mammograms, and certain cancer screening tests are considered preventative services.