Purchasing health insurance has become so indispensable these days, but with so many companies putting themselves on the market and claiming to be the best deal one can get, it is important to understand the relevant terms and definitions attached to these companies. Here are the most important terms that you need to know.
Important Health Insurance Related Terms and their Definition
Co-payment: It is an amount that must be paid for a specific service from a given medical provider. In some cases, it would be paying a small fee at the time of a doctor’s appointment and getting the insurance to pay for the rest. In other cases, people are expected to do co-payment on top of a percentage of the remaining balance.
Deductible: This is the amount of money that a person must spend before their health insurance company start to pay the benefits.
Coinsurance: It is the amount that someone needs to pay out of the total expenses of a medical bill, while the health insurance company would cover the rest.
Stop loss or out-of-pocket expense limit: When a policy mentions a stop loss or an out-of-pocket expense limit, it refers to the total amount that someone needs to spend before the health insurance covers all the bills completely. However, you must pay attention to co-payment policies as sometimes they will still require you to do co-payment even if you reach your out-of-pocket expense limit.
Lifetime maximum benefit: This term refers to the total amount of money that an insurance company will pay throughout someone’s lifetime. For the most part, people do not reach this maximum amount unless their health condition is extremely difficult.
Preferred Provider Organization (PPO): This is the group of health providers that work along the health insurance company in order to give a better rate.
Health Maintenance Organization (HMO): This kind of plan is the one that restricts patients to use a restricted pool of medical providers.
The Importance of Understanding These Terms
Make sure you get a deep understanding of each of these terms as they will show up on any contract you sign and any communication you share with your preferred health insurance company. Overall, the key to choosing the insurance that is most adequate for you relies on fully understanding their terms.