Health insurance can be a maze of complex terms that are difficult to understand. Knowing the lingo is essential, whether shopping for insurance or just trying to make sense of your policy. This guide will break down the top 10 health insurance terms that every consumer should understand, such as premium, deductible, copayment, coinsurance, and out-of-pocket maximum. These terms impact your costs and coverage, so knowing them empowers smarter decisions. Presenting our blog on “Health Insurance Terms Explained”, so you can sound like an expert!
Top 10 Health Insurance Terms You Must Know
Here are the top 10 health insurance terms you must know. Premium is the monthly cost of your plan. A deductible is what you pay before coverage kicks in. A copayment is a fixed service fee; the out-of-pocket maximum is the most you’ll pay in a year. Network refers to approved doctors and hospitals. HMO and PPO are plan types with different rules and flexibility. Explanation of Benefits (EOB) outlines what your plan paid. Formulary lists covered prescription drugs.
1. Premium
A premium is the amount you pay, usually monthly, to keep your health insurance active. It’s a regular fee required whether you use medical services or not. Premiums can vary based on the plan type, coverage level, age, and location. Paying your premium on time ensures you stay covered, but it doesn’t count toward your deductible or out-of-pocket maximum.
What It Is:
Think of it as the price of your “subscription” to health coverage. Just like you pay for streaming services to access entertainment, you pay a premium to maintain access to medical care. This payment is required whether or not you use healthcare services during the month. Premium costs can vary based on factors like age, location, and coverage level. Beem’s platform allows you to compare premiums from multiple providers, helping you find the best deal and avoid paying more than necessary for good coverage.
2. Deductible
A deductible is the out-of-pocket amount for healthcare services before your insurance starts to cover costs. Some preventive care may be covered before you meet the deductible. Understanding your deductible helps you plan for medical expenses. Lower deductibles often mean higher premiums, and vice versa.
What It Is
A deductible is the out-of-pocket amount for healthcare services before your insurance starts to cover costs. For example, if your deductible is $1,500, you’ll need to pay that amount toward medical expenses before your insurer begins sharing the cost. Higher deductibles often mean lower monthly premiums, which can be a good option if you don’t anticipate frequent medical needs. Beem helps you explore plans with various deductible options, making finding one that fits your healthcare needs and budget easier.
3. Copayment (Copay)
A copayment (copay) is a fixed amount you pay for specific healthcare services, such as doctor visits or prescriptions, at the time of service. Copays are typically lower than deductibles and are usually required even if you haven’t met your deductible. The amount varies depending on your insurance plan and the type of service you receive.
What It Is
A copayment (copay) is a fixed amount you pay for a covered healthcare service after you’ve paid your deductible. For example, you might pay $20 for a doctor’s visit or $10 for a prescription. Copays are common for routine doctor visits, prescriptions, and specialist consultations. They are generally required even if you haven’t met your deductible. Always check your plan’s copay structure to avoid surprise costs, as some services may have higher copays depending on your coverage.
4. Coinsurance
Coinsurance is the percentage of costs you share with your insurance company after you’ve met your deductible. This continues until you reach your out-of-pocket maximum. Coinsurance amounts can vary by plan and service type. Understanding your coinsurance helps you estimate how much you’ll owe for medical treatments and procedures.
What It Is
Unlike a fixed copay, coinsurance is a shared cost between you and your insurance provider. For example, if your coinsurance rate is 20% and you receive a $1,000 medical service, you’ll pay $200 while your insurance covers the remaining $800. Coinsurance continues until you reach your out-of-pocket maximum. With Beem Health Insurance Marketplace, you can compare coinsurance options across multiple plans to find the most affordable and predictable coverage for your healthcare needs.
5. Network
A network is a group of doctors, hospitals, and healthcare providers that have agreed to work with your insurance plan at discounted rates. Staying in-network typically means lower costs for care. Using out-of-network providers can lead to higher out-of-pocket expenses or no coverage at all. Always check if your preferred providers are in-network.
What It Is
A network is a group of doctors, hospitals, and other healthcare providers your insurance company has contracted to deliver services at reduced rates. When you receive care from in-network providers, you typically pay less because the insurance company covers a larger portion of the cost. Going outside of your network can lead to significantly higher out-of-pocket expenses or limited coverage. Use Beem’s platform to compare insurance plans that offer extensive networks, helping you access quality care while keeping costs down.
6. Out-of-Pocket Maximum
You’ll have to pay the most out-of-pocket maximum for covered healthcare services in a policy year. It protects you from extremely high medical expenses. After hitting this cap, you won’t pay anything more for in-network services. Knowing this number helps you plan for worst-case medical scenarios.
What It Is:
You’ll have to pay the most out-of-pocket maximum for covered health services during a single plan year. This total includes your deductible, copayments, and coinsurance. Once you reach this limit, your health insurance pays 100% of the costs for any additional covered services for the rest of the year. Choosing a plan with a manageable out-of-pocket maximum is essential for financial protection. Beem allows you to compare out-of-pocket maximums across various plans, helping you choose smartly and safeguard your finances.
7. Health Savings Account (HSA)
A Health Savings Account (HSA) is a tax-advantaged account that allows you to save money for medical expenses. You can contribute pre-tax dollars and the funds grow tax-free. HSAs are available with high-deductible health plans (HDHPs) and can be used to pay for qualified medical costs. Unused funds roll over year-to-year, and the account is portable.
What It Is
A Health Savings Account (HSA) is a tax-advantaged savings account that allows you to save money specifically for medical expenses. Contributions to an HSA are tax-deductible and the funds grow tax-free. To open an HSA, you must have a high-deductible health plan (HDHP). HSAs offer financial flexibility, as unused funds roll over year to year and are portable. If you’re looking to save on taxes and healthcare, Beem can help you find HDHPs that pair well with HSAs for maximum savings.
8. PPO (Preferred Provider Organization)
A PPO (Preferred Provider Organization) is a type of health insurance plan that offers flexibility in choosing healthcare providers. You can see any doctor or specialist without a referral, even out-of-network providers, though it may cost more.
What It Is
A PPO (Preferred Provider Organization) is a type of health insurance plan that allows you to see any doctor or specialist without needing a referral. PPOs offer more flexibility, as you can choose healthcare providers both in and out of your network, though out-of-network care typically comes with higher costs. While PPO plans tend to have higher premiums, they provide greater freedom in choosing healthcare providers and managing your care. Beem helps you explore PPO plans with the best provider access and flexible benefits, making finding coverage that suits your needs easier.
9. HMO (Health Maintenance Organization)
An HMO (Health Maintenance Organization) is a type of health insurance plan that requires you to choose a primary care physician (PCP) and get referrals to see specialists. HMO plans generally have lower premiums and out-of-pocket costs but offer less flexibility in choosing healthcare providers.
What It Is
An HMO (Health Maintenance Organization) is a type of health insurance plan that requires you to get care from a network of providers. To see a specialist, you typically need a referral from your primary care doctor (PCP). While HMO plans often come with lower premiums and out-of-pocket costs, they offer less flexibility compared to PPO plans. An HMO might be a good choice if you prefer lower premiums and don’t mind limited flexibility. Beem makes it easy to compare this option.
10. Pre-Existing Condition
A pre-existing condition is any health condition or illness you had before applying for health insurance. This can include chronic conditions like diabetes, heart disease, or asthma. It’s important to disclose these conditions when applying for insurance to ensure you receive appropriate coverage for your health needs.
What It Is
A pre-existing condition is a health condition that existed before your health insurance coverage started. Under the Affordable Care Act (ACA), insurance providers cannot deny coverage or charge higher premiums based on pre-existing conditions. This ensures that everyone has access to necessary care, regardless of their health history. Beem helps you compare plans that cover pre-existing conditions at fair rates, ensuring you receive the coverage you need without overpaying for care.
How Beem’s Health Insurance Marketplace Simplifies the Process
Beem’s Health Insurance Marketplace simplifies the process of finding the right plan by providing a user-friendly platform where you can compare multiple insurance options in one place. It allows you to filter plans based on your specific needs, like coverage for pre-existing conditions, low premiums, or flexible networks. Beem also offers detailed information about each plan’s costs, coverage, and benefits, helping you make an informed decision.
Compare Plans from Trusted Providers
Beem’s platform allows you to compare health insurance plans from trusted providers, making evaluating different options easy. You can quickly compare key details such as premiums, deductibles, out-of-pocket maximums, and coverage for essential services like prescriptions, preventive care, and specialist visits. Beem’s transparent approach helps you understand each plan’s terms and benefits, ensuring you find the right coverage at the best price.
Flexible Payment Plans and Quick Access to Emergency Cash
Beem provides fast approval for cash advances with no credit checks, giving you quick access to the funds you need. Borrow between $10 and $1,000 instantly, with flexible repayment options that cater to your unique financial situation. Beem Everdraft™ offers a flexible repayment structure and the ability to borrow without the need for a credit check to ensure that it’s available to a wider range of individuals, even those with less-than-perfect credit.
Risks and Limitations
While health insurance provides essential financial protection, there are risks and limitations. Not all services may be covered, and some plans restrict which doctors or facilities you can use. Out-of-network care can lead to higher costs or denied claims. High deductibles or copayments may still result in significant out-of-pocket expenses. Coverage may also vary depending on the insurer and policy. It’s important to review the details of any plan carefully.
Misunderstanding Terms Can Lead to Poor Coverage Choices
Misunderstanding health insurance terms can lead to poor coverage choices and unexpected expenses. Believing myths or misinterpreting key terms like deductible, coinsurance, or out-of-pocket maximum may result in choosing a plan that doesn’t meet your needs or costs more in the long run. Use Beem’s easy-to-understand breakdowns of these terms to confidently compare plans and choose coverage that truly fits your healthcare needs and financial situation.
Best Places to Find Health Insurance
Government-run marketplaces like HealthCare.gov offer ACA-compliant plans with subsidies based on income. State exchanges may also have unique options. Private insurance companies provide direct access to various plans, though they may not offer subsidies. Employers often offer group health plans with cost-sharing benefits. Beem’s Health Insurance Marketplace lets you compare trusted providers in one place, helping you easily find affordable, personalized coverage that fits your budget.
Beem’s Marketplace vs Traditional Insurance Brokers
Beem’s Marketplace offers a modern alternative to traditional insurance brokers by providing a more transparent and user-friendly platform. Unlike brokers who may promote limited options or prioritize certain providers, Beem allows you to compare various health insurance plans side-by-side, without pressure or hidden agendas. You get instant access to detailed information about premiums, deductibles, networks and coverage, all in one place. Use Beem to explore unbiased options and find a plan that truly matches your healthcare needs and budget.
Other Health Insurance Options
Short-term health plans offer temporary coverage and lower premiums but often have limited benefits and don’t cover pre-existing conditions. High-deductible health plans (HDHPs) typically come with lower monthly premiums and can be paired with Health Savings Accounts (HSAs) for tax advantages. These are ideal for healthy individuals who don’t expect frequent medical care. Beem helps you explore these alternative options, making obtaining coverage that aligns with your financial and health priorities easy.
Conclusion
Knowing the difference between premiums, deductibles, copays, coinsurance, and other critical terms helps you avoid costly surprises and choose a plan that truly fits your needs. With the Beem Health Insurance marketplace, you can easily compare different plans, understand important terms clearly, and find the right health coverage and budget coverage.
Beem’s user-friendly platform simplifies the process, giving you the confidence to select a plan that offers the best value and protection for you and your family. Its Everdraft™ feature provides fast approval for cash advances with no credit checks, giving you quick access to the funds you need. Borrow between $10 and $1,000 instantly, with flexible repayment options.
FAQs for Health Insurance Terms Explained
What does “network” mean in health insurance?
In health insurance, a network refers to the group of doctors, hospitals, and other healthcare providers contracted with your insurance plan to offer services at lower rates. Using in-network providers usually means lower out-of-pocket costs. Going out-of-network can lead to higher expenses or no coverage.
Can I change my health insurance plan mid-year?
You can change your health insurance plan mid-year, but only under specific circumstances. Typically, changes are allowed during the Open Enrollment Period. However, if you experience a qualifying life event like marriage, birth, job loss, or moving, you may be eligible for a Special Enrollment Period.
What is the difference between PPO and HMO?
The main difference between PPO and HMO health insurance plans lies in flexibility and cost. PPOs (Preferred Provider Organizations) provide more flexibility; you can see any doctor, including out-of-network providers, and don’t need referrals to see specialists. HMOs (Health Maintenance Organizations) require you to choose a primary care doctor and get referrals to specialists, but they usually have lower premiums and out-of-pocket costs.
