BROKER BLOG

Demystify health insurance language for clients

May 01, 2017
Enrolling in a health plan is a good first step, but it’s not enough. That’s why it’s so important to educate consumers about how health insurance works. Many people do not understand the complex language of health insurance. In a survey by ConnectedHealth, only 61 percent of survey respondents could correctly define the term “deductible.” (And among millennials, this percentage drops to just over half.)
 
By using plain language and walking through examples, you can help clients understand what these terms mean and how they affect the costs they pay. Here’s a quick list of health insurance terms defined in plain language:
 
1. Premium. The premium is the amount you pay each month for your health plan. Premiums depend on the type of plan. Premiums are usually more expensive for platinum and gold plans, and lower for silver and bronze plans. Plans with higher premiums usually have lower costs when you receive care. Plans with lower premiums usually have higher costs when you receive care. Some people who enroll in a health plan through New Mexico’s Health Insurance Exchange, are eligible for premium subsidies.
2. Deductible. This is the amount you must pay out-of-pocket before your health insurance will start paying for covered services. For example, if your plan has a deductible of $750, then you have to pay $750 of your own money before the plan will start covering your costs. There are some exceptions. Annual exams and some screening tests are usually covered right away and are not subject to the deductible.
3. Copayment. Usually called a copay, this is the amount you may have to pay when you go to the doctor or get a prescription. It is usually a flat amount. For example, if your plan has a copay of $20 for doctor visits, you would have to pay $20 each time you see a doctor. If you have a copay of $12 for prescription drugs, then you would usually pay $12 whenever you fill a covered prescription. Again, there are certain exceptions. Check your plan to find out.
4. Coinsurance. This is a percentage of the cost of care that you may have to pay. For example, suppose you have a plan that charges 20 percent coinsurance for a hospital stay. If your hospital bill is $2,000, the plan would pay $1,600 (80 percent) and you would pay $400 (20 percent).
5. Out-of-pocket costs. These include any costs that you would have to pay for health care services, including copays and coinsurance.
6. Out-of-pocket maximum. Your plan protects you by placing a limit on how much you have to pay yourself. Once you reach the plan’s out-of-pocket maximum, it will pay for covered services at 100 percent. You will no longer have to pay any copays or coinsurance. However, you will still need to pay your monthly premium.
 
To learn more about health care terms, check out the Healthcare Glossary at beWellnm.com.