In order to get the most out of your health care benefits, you need to understand the terms used by insurance companies, health plans, and health care providers.
Coinsurance – The money that an individual is required to pay for services, after a deductible has been paid. It is often a specified percentage of the charges. For example, the employee pays 10% of the charges while the health plan pays 90%.
Copayment – An arrangement where an individual pays a specified amount for various health care services and the health plan or insurance company pays the remainder. The individual must usually pay his or her share when services are rendered.
Deductible – A set dollar amount that a person must pay before insurance coverage for medical expenses can begin. They are usually charged on an annual or contract year basis.
In Network – Typically refers to physicians, hospitals, or other health care providers who contract with the insurance plan to provide services to its members. Coverage for services received from In Network providers will typically be greater than for services received from out of networkproviders, depending on the plan.
Out of Network – Typically refers to physicians, hospitals, or other health care providers who do not contract with the insurance plan to provide services to its members. Depending upon the insurance plan, expenses incurred for services provided by out of networkproviders might not be covered, or coverage may be less than for In Network providers.
Out of Pocket Maximum – The total amount paid each year by the member for the deductible and coinsurance. After reaching the out of pocket maximum, the plan pays 100% of the allowable charges for covered services the rest of that calendar year.
Preferred Provider Organization (PPO) – A type of managed care plan in which doctors and hospitals agree to provide discounted rates to plan members. Patients are typically reimbursed 80-100% for treatment received within the network, versus 50-70% outside the network.
Reasonable and Customary Charges – The commonly charged or prevailing fees for health services within a geographic area. If charges are higher than what an insurance carrier considers reasonable and customary, the carrier will not pay the full amount and instead will pay what is deemed appropriate for the particular service. The remaining charges then are the responsibility of the patient.