If you’ve ever started shopping for health insurance and quickly gotten overwhelmed by the language used to write about or explain policies, you’re not alone. The insurance world seems to have its own specialized language, and while it’s probably not necessary to take a deep dive into understanding all the nuanced language, understanding the basic terms can help you better understand your options and select the right policy for you. Read on to get a crash course in health insurance terminology.
- Premium: This is what you pay each month or year to keep your insurance coverage. Your age, location, and coverage amount all impact your premium price.
- Deductible: This is how much you need to pay out of pocket before your health insurance coverage kicks in. Your deductible price will depend on your coverage, but in general, the higher your deductible, the lower your premium.
- Copayment (Copay): This is a fixed amount you pay for a health service or medication covered under your insurance. For example, a visit to a primary care physician (PCP) for a yearly physical exam is likely covered under your health insurance policy, so you will only have to pay a set amount (the copay) for that visit.
- Network: Not all healthcare providers or medical facilities accept the same insurance. The network includes the providers and facilities that have contracts with the insurance provider and will accept that form of insurance. Staying within your network helps ensure you have fewer out-of-pocket expenses for medical care.
- Out-of-pocket Maximum: This is the maximum amount you would have to pay for a service covered by your health insurance policy in a year. After the out-of-pocket maximum has been reached, your insurance company pays 100% of that service’s cost for the rest of the year.
Understanding your health insurance policy is essential to ensure you have the right coverage for your needs. By learning the basic terms, you can feel more confident in your choices when it comes to health insurance policies.
