Health insurance can be a puzzle. For many of us, understanding insurance jargon is just one missing piece — albeit a big one.
To make health insurance a little less confusing, we’ve rounded up some of the most common terms you’ll come across.
The most your insurance plan will pay for a covered health care service is known as the “allowed amount.” If your health provider charges more than your plan’s allowed amount, you may have to pay the remainder.
These are the health care items and services covered under your insurance plan.
Coinsurance is the percentage of the costs you’ll pay (for example, 20%) for covered health care services once you’ve paid your deductible. For instance, if your plan’s allowed amount for an in-person office visit is $100, and your coinsurance is 20%, expect to pay $20. That is, provided you’ve met your deductible. If not, you’ll pay the full $100.
A copayment is a fixed amount you pay for a health care service once you’ve taken care of your deductible. You may also hear this called a “copay.”
This is the amount you’ll pay for covered health care services before your insurance plan takes over. Some plans will pay for services like yearly check-ups before you’ve paid your deductible. Meanwhile, family plans often have an individual and a family deductible.
Flexible spending account (FSA)
An FSA is a healthcare spending account that can only be set up through your employer. You decide how much money to put in an FSA, up to a certain limit. You aren’t taxed on this money, and you can use it only to pay for out-of-pocket healthcare costs. Examples include copays, deductibles, some prescription drugs, and medical devices.
Health reimbursement account (HRA)
HRAs are employer-funded group health plans that reimburse you for out-of-pocket healthcare costs. You can only be reimbursed up to a fixed dollar amount per year.
Health savings account (HSA)
An HSA is a type of savings account. You use it to set aside money on a pre-tax basis to pay for healthcare costs like deductibles, copays, and coinsurance. Typically, HSA funds can’t be used to pay premiums. You can only add money to an HSA if you have a health plan with a high deductible.
Also known as the “exchange,” the marketplace is an online venue where you can shop for and sign up for insurance. In most states, the federal government runs the marketplace. However, some states manage their own marketplaces.
This is a healthcare provider who doesn’t have an agreement with your insurance company to provide services to you. You may have to pay more to visit a non-preferred provider.
Open enrollment period
This is the yearly period when you can sign up for a health insurance plan through the marketplace.
This is how much you’ll pay for healthcare expenses that aren’t covered by insurance. Examples include deductibles, coinsurance, and copayments.
The amount you pay for your health insurance every month is known as a “premium.”
Special enrollment period
This is a time outside of the open enrollment period when you can sign up for health insurance. You may qualify for a special enrollment period if you’ve had a life event like getting married, losing health coverage, moving, or having a baby. Depending on your situation, you may only have 60 days before or after the life event to sign up for a plan. Job-based plans only have to give you a minimum of 30 days. You may enroll in government-funded programs like Medicaid at any time, if you qualify.
To learn more about common health insurance plans and programs, click here.
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