Finding a health plan that’s right for you may seem daunting, especially if you feel like you don’t speak the language.
If you’re a first-time insurance shopper or just looking for a refresher, this may be a good time to brush up on the key concepts of health insurance plans, so you’ll be ready to sign up for coverage.
Here’s a quick guide to help decode some common terms:
- Premium: This is the amount you and/or your employer must pay for your health insurance or plan every month, quarter or year.
- Covered service or expense: This is the portion of a medical, dental or vision expense that your health insurance or plan has agreed to pay for or reimburse.
- Deductible: This is the amount you may owe during a coverage period (usually one year) for covered health care services before your plan begins to pay. An overall deductible applies to all or almost all covered items and services. A plan with an overall deductible may also have separate deductibles that apply to specific services or groups of services.
- Coinsurance: This is your share of the cost of a covered health care service, calculated as a percentage of the allowed amount for the service. You generally pay coinsurance plus any deductibles owed.
- Copayment or copay: This is the fixed amount you pay for a covered health care service. However, after you’ve reached your out-of-pocket limit, the copayment is no longer charged.
- Annual out-of-pocket limit: This is the most money you would have to pay for covered expenses in a plan year.
- Flexible Spending Account (FSA): This is a special account that lets you set aside money during the plan year to help pay for certain out-of-pocket costs. There are two types of FSAs. One is for medical expenses and the other is for dependent/childcare expenses. You don’t pay taxes on FSA dollars, but you generally must use the money within the plan year or risk losing it.
- Health Savings Account (HSA): Like an FSA, a health savings account (HSA) lets you set aside money, tax-free, to save and use to pay for health care expenses. Unlike an FSA, funds in your HSA roll over year to year if you don't spend them, and are yours to keep even if you leave your job or retire. HSAs are paired with high-deductible health plans, and the accounts can create interest or other earnings.
For more help decoding health insurance terms, check out justplainclear.com, an online glossary of health care vocabulary.
To learn about different health insurance options, visit uhc.com.