You’re fairly confident you understand health insurance definitions and terms, but continually doubt yourself. Fear no more, just continue to read and you’ll be up to speed in no time.
Deductible: the amount of money you pay out of pocket before your insurance even thinks about helping out. Deductibles are specific dollar amounts.
Out of Pocket Maximum (OOPM): the maximum amount of money that you will pay within a calendar year. OOPM is a specific dollar amount.
Coinsurance: the amount the insurance company will pay towards a specific claim. I.e. if you have a broken arm bill of $1,000 and have an insurance plan that has 20% coinsurance, you will pay $800 and the insurance company will pay $200 of that specific bill. Coinsurance is a percentage.
Copay: the amount you will pay for each use of your health insurance. For example, the most common use of a copay is the $30 charge (example) you pay at your primary care doctor’s office every time you visit. A copay is typically a specific dollar amount.
PCY: this stands for ‘per calendar year’.
PPO: This stands for Preferred Provider Organization which is a fancy way of saying you can visit any doctor who is in-network very easily. Typically with a PPO, you can see any doctor without a referral from your primary care doctor which means you have the flexibility to manage your own care.
HMO: This stands for Health Maintenance Organization. These plans require a primary care doctor to quarterback and coordinate all your health needs. If you need to see a physical therapist or want to get a second opinion for your diabetes care, you’ll need to talk to your primary care doctor first. These plans are typically a little cheaper because the doctors you’ll be able to see are limited to the HMO network. The reason for this is so the hospitals and insurance companies can reduce their operating costs thereby can reduce costs to you. Case in point, if you research cancer specialist Dr. Johnson and want to visit her specifically, there’s a 50/50 chance you’ll be able to because Dr. Johnson may not be part of your specific HMO network.
HDHP: This acronym is for ‘high deductible health plan’ which means both the deductible and OOPM (see definitions above) are higher than traditional plans. As an example, a HDHP may have a deductible around $5,000 and an OOPM around $20,000. The tradeoff is that HDHP have lower premiums and are allowed to attach a health savings account (HSA).
HSA: A ‘health savings account’ is a method by which a user can pay for medical bills through tax free dollars. The catch is that a HSA must be combined with a HDHP (see definition above), so a traditional PPO or HMO may not be allowed to have a HSA (check with your insurance broker because there are some HDHP PPO plans available). Further, a HSA is technically an investment account so you have the potential to grow your money while it’s in the account waiting to be used for medical expenses. Lastly, HSAs typically have a debit card tied directly to the HSA which you will use to pay your doctor. Check out this post for more information on how a HSA works.
In-Network: a doctor who is in-network will be cheaper for you. But what does in-network really mean? It means your health insurance provider has contracted with a group of doctors and that group of doctors have a negotiated rate they will bill to insurance. The benefit to the consumer (i.e. you) is that costs are cheaper. The benefit to the doctors is that they will see more patients. The benefit to the insurance company is that they can offer a larger number of doctors at a cheaper cost.
Out of Network / Non-network: this means that a specific doctor does not have an agreement with the insurance company. The impact to you is that the doctor will be more expensive. You can still see that doctor, but you’ll have to pay more out of your pocket to do so.
Sapper Insurance, 360-519-6990
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