Navigating health plans can be confusing, especially with all the jargon involved. Understanding key terms and concepts is crucial for making informed decisions about your health coverage. This guide will break down essential health plan terms and concepts to help you better understand your options.
Key Terms
Premium
The amount you pay for your health plan every month. This fee is required to keep your health plan active.
Deductible
The amount you pay out-of-pocket for covered healthcare services before your health plan starts to pay. For example, if your deductible is $1,000, you must pay that amount before your health plan begins covering costs.
Copayment (Copay)
A fixed amount you pay for a covered healthcare service, typically when you receive the service. For example, you might pay $25 for a doctor's visit.
Out-of-Pocket Maximum
The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance, your health plan pays 100% of the costs of covered benefits.
Network
The facilities, providers, and suppliers your health plan has contracted with to provide healthcare services. Staying within your network typically costs less than going out-of-network.
Types of Health Plans
Health Maintenance Organization (HMO)
A plan that requires members to use a network of doctors and hospitals. You must choose a primary care physician (PCP) and get referrals to see specialists.
Preferred Provider Organization (PPO)
A plan that offers more flexibility in choosing doctors and hospitals. You can see any doctor or specialist without needing a referral, though staying in-network saves money.
Exclusive Provider Organization (EPO)
A plan that covers services only if you use doctors, specialists, or hospitals in the plan’s network (except in an emergency).
Point of Service (POS)
A plan that combines features of HMOs and PPOs. You need a referral from your PCP to see a specialist, but you can see out-of-network providers at a higher cost.
Key Concepts
Preventive Care
Services like screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems. Most health plans cover preventive care at no additional cost to you.
Formulary
A list of prescription drugs covered by your health plan. Formularies often categorize drugs into tiers, with different costs for each tier.
Prior Authorization
Approval from your health plan required before you receive certain services or prescriptions. This ensures the service or medication is necessary.
Explanation of Benefits (EOB)
A statement from your health plan showing what costs it will cover for medical care or products you've received. The EOB is not a bill.
Understanding the key terms and concepts of your health plan is essential for managing your healthcare effectively. By familiarizing yourself with these terms, you can make better decisions, avoid unexpected costs, and fully utilize your health benefits. If you have further questions or need personalized advice, consult your health plan provider or a benefits advisor.