Nobody plans to get sick or injured, but accidents and illnesses can happen to anybody at any time. When you have insurance, you have the peace of mind of knowing that you can get the care you need when you need it without having to worry about huge medical bills.
And you can get preventive care too, which means you’re better able to catch small issues before they become big problems—and even bigger bills. Whether it’s cancer or diabetes, the earlier the health issue is detected, the better. And health insurance can help make that a reality.
When it comes to health insurance, there are a few terms you will come across that might be confusing. Here are some definitions to help you understand what they mean:
Insurer – A company that provides health insurance.
Health Care Provider – Sometimes shortened to "provider," this is your doctor, nurse, other health care professional or the place where you get health care services. For example: Planned Parenthood, your local hospital and Dr. Smith are all health care providers.
HMO – HMO is one type of health insurance plan and stands for "Health Maintenance Organization." HMO plans typically have a lower premium, but patients can only use their insurance to receive care at in-network health care providers. An HMO plan may offer fewer options in providers as well. If you have an HMO, and you visit a health care provider that is out-of-network, you will not be able to use your insurance, and you will have to pay the full cost of your services on your own.
PPO – PPO is one type of health insurance plan and stands for "Preferred Provider Option." This type of plan allows a patient to receive services from out-of-network providers, but usually the patient pays more than if they received the same services from an in-network provider.
Premium – The money you pay your insurer for your health insurance plan. The cost varies depending on the plan you choose and is usually paid monthly.
Deductible – The amount of money you need to pay each year for certain health care services before your insurer starts to help cover the costs. Plans with lower premiums tend to have higher deductibles, and plans with higher premiums tend to have lower deductibles. Some plans have no deductible at all. For example: If your plan has a $1,000 deductible, and your first health care cost of the year is a hospital bill for $1,500, you will have to pay the first $1,000 to reach your deductible, then your insurer will pay the remaining amount covered by your plan.
Copay – Short for "copayment," this is what you pay when you get care; like visiting the doctor or getting a prescription medication, to share the expense with your insurer. For example: You may have a $30 copay to visit the doctor, and then your plan will pay your doctor for the rest of the cost of your visit.
Coinsurance – Your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. You pay coinsurance plus any deductibles you owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your coinsurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.
In/out of network – Every insurance company has a "network," a list of specific health care providers where you can use your insurance. If you visit an “in-network” provider, your insurance company will cover the cost of your care according to your plan. If you visit an “out-of-network” provider, you will likely have to pay much more for your health care – or pay for all of the cost yourself at the time of service. And some insurance plans don’t cover any of the costs for out-of-network providers.
Out-of-pocket maximum – This is the total amount of money you would ever have to pay in one year for health care, no matter how much care you need. For example: If you have an out-of-pocket maximum of $6,000 and you have a very expensive surgery or treatments, your plan will pay everything after $6,000.