Confused by health insurance terminology? We’ve got you.

March 28, 2016

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Lauren
Lead Copywriter

 

A recent study from Rice University’s Baker Institute for Public Policy and the Episcopal Health Foundation found that 25% of Texans who have health insurance through their employer and 42% of Texans who bought their own insurance don’t have a clear understanding of their health insurance plans, in part because of confusing terminology.

We know that understanding health insurance lingo can be frustrating, so that’s why we created a handy-dandy glossary to better explain industry terminology. You can see our entire glossary here, but below are some of our favorite confusing health insurance terms.

Affordable Care Act
Otherwise known as Obamacare, this is the healthcare reform act President Obama signed into law on March of 2010.

Brand name drugs
A prescription drug, sold by a company, that is protected by a patent.

Coinsurance
This is how much you pay after you’ve reached your deductible when your carrier doesn’t cover the full cost of service, which is typically around 30% of the cost.

Copay
A set and typically small amount you have to pay for a medical service. This amount can vary depending on your insurance plan. Example: Many insurance plans have a $25 copay for primary healthcare provider visits, which means you pay $25 for your doctor’s appointment.

Deductible
This is the amount you will pay for medical costs subject to the deductible until your carrier picks up the rest of the tab. Deductibles are different for each plan. Example: You have a silver plan with a $4,000 deductible; this means your insurance won’t pay for certain services until you’ve paid the $4,000 deductible.

FSA (Flexible Spending Account)
A medical savings account set up through an employer and can be deducted from employee’s paycheck. The tax-free funds can be used for a range of medical costs. Unused funds DO NOT carry over each year.

Generic drugs
A prescription drug that has the same ingredients as a brand name drug. Typically these pills cost less than brand name drugs and are deemed safe by the FDA.

HMO
Health Maintenance Organization (HMO) plan means you have to get referrals from your primary care physician in order to see a specialist. You also need to select your primary care physician when enrolling, otherwise the carrier will do it for you. HMOs typically have the least amount of providers out of all plan types. In other words, you’re paying for two doctor visits.

HSA (Health Savings Account)
A medical savings account typically available with high deductible health plans. The enrollee of the plan can make contributions to their HSA without being subject to federal income tax. The funds can be used for a range of medical costs. Unused funds roll over each year.

In-network 
This means your doctors or services are covered by your insurance plan.

Lifetime limit
The amount your carrier will pay in total, period. Once that amount is met, the carrier will no longer cover expenses, which is typically around $1,000,000.

Out-of-network
This means your doctors or services are NOT covered by your insurance plan.

Out-of-pocket max
This amount is the most you will pay for medical expenses in a given year. Example: No matter what your medical costs are in a year, you will never pay more the the out-of-pocket max amount, which is typically under $10,000 for an individual.

PPO
Preferred Provider Organization (PPO) means you can see any provider or specialist within your network and you don’t need a referral to do so. You also don’t have to select a primary care physician when enrolling. PPOs generally have the most providers out of all plan types.

Premium
This is your monthly payment for your health insurance plan.