Change is the only constant thing in the healthcare world. Even though the healthcare system is always changing, many common health insurance terms have stayed the same. As a patient it’s very important to understand the meaning and application of these terms so you can accurately handle your medical expenses and understand your plan’s benefits. Armed with basic health insurance vocabulary you’ll also be in a better position to challenge your carrier when they make a mistake on a claim.
This term is rather uniform across the insurance industry as a whole and its meaning does not differ in the healthcare world. A deductible is a dollar amount that the patient is responsible for satisfying before the designated health plan will provide coverage. This amount can range from hundreds to thousands of dollars depending on the carrier and the policy. Health insurance companies or self insured employers use the deductible as a measure to control costs and force patients to bear greater responsibility for their healthcare expenses. This amount must be met on a yearly basis in order to receive coverage if it is a component of your policy.
The term copayment can be used rather loosely in the healthcare industry. Strictly speaking, it is a fixed amount that you pay for a given service that a provider bills for. The most common service this is associated with is an office visit where patients may have a copayment of $25 or so. Typically a copayment is lowest with a common visit to your primary care doctor and then escalates if you visit a specialist or go to the emergency room. Copayments are common components of both the HMO and POS health plans.
Copayment and coinsurance are two things that commonly get confused and for good reason; they are very similar. The main difference is that coinsurance refers to the percentage of a provider’s rate that you are responsible paying. This number can vary for each provider and is not a fixed dollar amount like a copayment would be. Many PPO plans cover a patient at 70-80% and the patient then has a 20-30% coinsurance due to the provider. This amount will also appear as patient responsibility on the explanation of benefits form you receive from you insurance carrier.
Explanation of benefits
This document is commonly referred to as an EOB and is delivered to you by the health plan when they receive a claim for payment from a provider. It shows the amount charged by the provider, the actual contracted rate your provider has and the amount that was paid. Additionally, there is a column on the right hand side that shows what the patient may be responsible for paying. This document is important because it is the official communication sent to you and the provider regarding what balance is due. It is the only form you should refer to when determining what expenses you need to pay. You may get an erroneous bill from a provider that states you owe more than your EOB shows; this is probably a mistake on your provider’s part. With the knowledge you have from the EOB however, you will know not to mistakenly overpay what’s due.
In every facet of life knowledge is power. That being said, health insurance can be a very complicated facet of our lives. When you understand the terms your doctors and health insurance carrier use, it makes it easier to handle your expenses and understand your benefits. With healthcare costs rising dramatically in recent years, you need all the knowledge you can get help make sure you save money if the opportunity presents itself. Now you’ll be able to take advantage if and when that opportunity does come along.