Health insurance basics

Health insurance terms to know

Coinsurance

Your share of the costs of a covered health care service, calculated as a percent (for example, 20 percent) of the service cost. Depending on your plan type, you pay coinsurance plus any deductibles you owe. For example, if your health plan’s cost for an office visit is $100 and you’ve met your deductible, your coinsurance payment of 20 percent would be $20. The health plan pays the rest of the allowed amount. (See deductible and allowed amount.)

Copayment

A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care received.

Deductible

The amount you owe for health care services your plan covers before your health plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible. The deductible may not apply to all services.

Out-of-pocket limit

The most you pay during a policy period (usually a year) before your health plan begins to pay 100 percent of the allowed amount. This limit never includes your premium, balance-billing amounts or charges for health care your health plan doesn’t cover.

Allowed amount

Maximum amount on which payment is based for covered health care services. This may be called an “eligible expense,” “payment allowance” or “allowed amount.” If your provider charges more than this amount, you may have to pay the difference. (See balance billing.)

Individual vs. family deductible

With some health plans, there can be two deductibles or two out-of-pocket maximums to reach: individual and family.

• Individual: This is the amount an individual on the plan must reach before the plan pays.
• Family: This is the amount the family must pay as a whole before the plan pays.

Inpatient vs. outpatient care

Depending on where you get care, it can affect your costs.

• Inpatient care refers to care when you've been admitted to a hospital and requires one or more overnight stays — having a baby or needing heart surgery are both examples of inpatient care.
• Outpatient care, on the other hand, doesn't require an overnight stay at a hospital — services like a tonsillectomy or putting tubes in a kid’s ears are typically handled in an outpatient setting.

In general, your costs will be lower in an outpatient setting and given the many recent advancements in care, many services are available in this setting.

Preventive visits vs. medical visits

Both types of visits are important to maintain good health, but one is covered at no cost and the other will have a cost share.

• Preventive visits: These may be covered at no cost under your health plan. They include yearly physicals and an annual OB-GYN visit. Immunizations are also covered.
• Medical visits: A pesky cold that won’t let up, a potential sprain, any trip to a doctor where you have a health concern. With these visits, you will most likely have a cost share (copay or coinsurance).

PPO plan

A preferred provider organization plan, or PPO, has a network that offers more flexibility when it comes to choosing where you want to receive care and from which type of health care provider. Generally, your costs will be lower if you stay in-network. With this type of plan, you can often see specialists without a referral from your primary care provider (PCP).

HMO plan

A health maintenance organization plan, or HMO, has a specific network of health care providers and hospitals you can see that are in-network. This saves you money, while also allowing you to see a wide range of health care providers who are nearby. HMOs cover a wide range of services, but may allow only a certain number of visits, tests or treatments. You may need to select a PCP who can refer you to specialists within the network for services, if needed.

POS plan

POS stands for point of service. These plans combine several features from HMOs and PPOs. You may need a PCP to coordinate your care (like with an HMO), but you'll be able to go outside the network to receive care in non-emergent cases (like with a PPO). While a POS plan offers the flexibility of going out-of-network, you'll pay a greater portion of all out-of-network charges.