Whether you are familiar with health plans or are shopping for one for the first time, deciphering different plans cans be confusing. Understanding the right terms is especially helpful when considering which plan is right for you, as many have cost implications associated with them. Here’s a rundown on the terms you’ll need to know to keep it all straight:
Affordable Care Act (ACA): The federal healthcare reform law passed in March 2010. Also known as Obamacare or healthcare reform.
Allowable charge: Also referred to as an ‘allowable amount’. The negotiated amount for which an in-network provider agrees to provide services. This amount is usually lower than the amount you would pay for the same service if you did not have health coverage.
Coinsurance: Your share of the fee for a service after you’ve met your deductible and before you’ve reached your out-of-pocket maximum. If your plan’s coinsurance share is 20%, you pay 20% of the allowable charge, and your plan pays the other 80% of the allowable charge.
Copay: A flat fee you pay at the time of service, such as an office visit. Copays apply toward out-of-pocket maximum.
Cost shares (or out-of-pocket costs): Costs that you pay for out of your own pocket for medical services, even if you have health coverage. Cost shares include deductibles, copays, and coinsurance.
Covered in full: Services your health plan pays for in full, at 100% of the allowable charges, and not subject to your deductible or coinsurance. For example, most preventive care is covered in full by many health plans.
Deductible: The amount you pay every year before the plan begins to pay for most services. This is similar to the deductible you pay for your car or homeowners insurance.
Exchange or marketplace: Another way to shop for health insurance, with a government (state or federal) website where you can compare plans from multiple companies and find out if you qualify for financial assistance. You can purchase your health coverage through the exchange or directly from Premera.
Formulary: A list of drugs for specific uses that the health plan covers.
Health savings account (HSA): Certain plans with higher deductibles allow you to open a special savings account to pay for many of your health care expenses. The money contributed to your account, by you or your employer, is not subject to federal income taxes when used for allowable healthcare costs, so the accounts offer tax advantages to some people. You generally have higher cost shares with these types of plans, so you should make sure you understand how they work before you consider them.
Network: A group of doctors, dentists, hospitals, and other healthcare providers that contract with your health plan to provide healthcare services at negotiated amounts, which are called allowable charges. Your costs are almost always lower when you get care from in-network providers.
Open enrollment period: The annual time period when you can apply for a new individual health plan or make changes to your current health plan. The open enrollment period for 2015 individual coverage is November 15, 2014 through February 15, 2015. If you experience certain life events, such as getting married, having a child, moving, or losing your employer’s health coverage, you can apply for coverage outside these dates.
Out-of-pocket maximum: A preset limit after which your plan pays 100% of the allowable charge.
Preferred provider organization (PPO): A health plan contracts with specific medical providers, such as doctors and hospitals, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use providers outside of the network, but you’ll pay a greater share of the cost.
Premium: The amount you and/or your employer pay (usually each month) for health coverage, regardless of whether you use any medical services.
Primary care physician (PCP): Your main or regular doctor or other healthcare provider. Some plans offer lower office visit copays if you notify them of your designated PCP.
Producer: A person or business that can help you shop for and choose health coverage. Often referred to as a broker or agent.