Health insurance words young people need to know

Health insurance words young people need to know

(WETM) – When it comes to any kind of medical care, it doesn’t take long for things to get complex. On top of worrying about your health, there are also lots of health insurance words thrown around that get confusing.

Especially for young adults who may be on their own insurance for the first time, knowing what and why you have to pay might be overwhelming. But there are some key terms when it comes to an insurance plan and doctor’s visits that will always be important.

Several agencies and hospitals, including the Center for Medicare & Medicaid Services (CMS), University of Pittsburgh Medical Center (UPMC), Cleveland Clinic, the Bureau of Labor Statistics, and HealthCare.gov offer glossaries of terms that are important to know to help alleviate some of the confusion.

Here are some of the most common and most important health insurance terms explained:

  • Deductibles: This is the amount of money you owe for medical services before your insurance kicks in; this amount can vary a lot depending on your specific plan. For example, if you have a $500 deductible, you’ll owe $500 for any services before your insurance company starts footing the bill.
  • Copy (copayment): This is a fixed amount for a specific service. For example, some insurance plans will require a specific copay amount (let’s say $20) for a visit to a specialist doctor. This amount can change depending on the type of service.
  • Co-insurance: This is a percentage of the bill that you’ll pay for a given service. This is a separate number from the deductible.
    • Let’s say you’ve already reached your $500 deductible, so your insurance has kicked in. But then you have a $1,000 surgery and you have a 20% coinsurance: you’ll end up paying $200 of that $1,000 bill. Your insurance company will pay the other 80% ($800).
  • Premiums: This is the amount you pay each month to have insurance. If you get your insurance through your job, the premium will usually be taken out of each paycheck.
  • Out-of-pocket maximum: This is the limit you’ll pay for health care services in a year. This includes all the totals of your deductible, copays, coinsurance. However, it doesn’t include what you’ve paid for your premium.
    • Let’s say you hit your $500 deductible, and after that, you had a few more operations and doctor’s visits. For those other visits, you ended up dishing out $1,000 copays and coinsurance. If you have a $1,500 out-of-pocket maximum, your insurance company will then pay all of your bills until the next year starts.
  • Prior authorization: Some healthcare services are covered by insurance, but not right out of the gate. Before you get a service (let’s say an MRI), your insurance company has to decide that the service is medically necessary before it agrees to cover some of the cost. HealthCare.gov says prior-auth isn’t a guarantee that your insurance company will pay for the service.
  • Claims: This is a request for payment that your doctor sends to the insurance company.
  • In-network/out-of-network: This refers to whether a specific doctor’s office is covered by your insurance plan. Not every insurance company works with every doctor, and not every doctor accepts all insurance. Your insurance company will usually have a way to search online for doctors that are covered by your plan.
  • Referrals: This is a formal request/recommendation from your primary doctor for you to visit a specialist (such as ENTs, dermatologists, cardiologists, etc.). Not all specialists require referrals, though.
  • Allowed amount: This is the maximum amount your insurance will cover for a specific service or visit. If a doctor’s appointment costs $150, but your plan’s allowed amount is $100, you’ll have to pay the other $50 yourself. The amount you get charged is “balance billing”.
    • CMS says this is also sometimes called “eligible expense”, “payment allowance”, or “negotiated rate”.
  • Balance-billing: In the definition above for “allowed amount”, this is when your doctor charges you the difference between the total charge and what you pay is “balance billing”.
  • Explanation of benefits: After you’ve been to the doctor or hospital for something, your insurance company might send you a breakdown of the costs and what’s been covered by your plan. This is not a bill, but simply an explanation and a heads-up of who’s paying for what for your service.
  • Itemized bill: Sometimes after some medical services, you’ll get a bill that has the total charge and nothing else. By contacting the doctor’s or hospital’s billing office, you can request an itemized bill, which lays out in detail all the charges for your visit. This can help you argue why you think there’s a mistake in the charges and have a better understanding of exactly what you’re paying for. For a regular doctor’s appointment, it probably isn’t as necessary as when you have a complex scan or surgery.

Click on any of the links above this list to see more terms related to your healthcare.

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