Although many industries make use of terminology that’s not exactly common, health plan providers sometimes seem to take this to extremes. If you’re having trouble deciphering your health insurance options, here’s what some of the confusing jargon means.
Types of Plans
Whether you’re getting coverage through your employer or searching for your own on a website like healthplans.com, you likely have questions about the types of plans that are offered. Most health insurance falls into one of two categories, either Health Maintenance Organization Plans or Preferred Provider Organization Plans. Here are brief explanations of both:
- HMO Plans – These plans tend to be less expensive because they require you to coordinate all of your care through a single physician or practice. This helps insurance companies keep costs down.
- PPO Plans – These plans typically allow you to seek treatment on your own from a wider range of physicians. Because this is generally more costly for your insurance company, PPO plans are usually more expensive.
When it comes to sorting out how much you’ll pay for your coverage, appointments, and procedures, you’ll likely encounter another set of unfamiliar terms. Here are some that you should try to understand:
- Premium – This is the amount you will pay to subscribe to a plan. If you are insured through your job, the total premium will often be shared by you and your employer.
- Deductible – If your plan has a deductible, that’s the amount that you will pay for health care before your insurance starts paying. Typically, the higher the deductible, the lower your premiums will be, because insurance companies won’t have to pay the cost of your care until it reaches a certain level.
- Co-Pays – This is a fixed amount that you may be required to pay each time you see a doctor, undergo a procedure, or fill a prescription. Another way that your premiums can be lower is if your plan has higher co-pays since, like deductibles, co-pays reduce how much an insurance company pays for your care.
Other Key Terms
To get a clearer picture of your options, it can be helpful to know these terms, as well:
- PCP – This is your primary care provider. Having one is generally required with an HMO, but you may even have one if you have PPO insurance, so that there is a single physician tracking your overall care.
- Co-Insurance – Similar to a co-pay, co-insurance is what you might pay for a certain health service. It’s calculated as a percentage of the cost of the service rather than as a fixed amount.
- Open Enrollment – This is the time of year that you are permitted to sign up for or change insurance plans. Both employers and private insurance providers usually only have one open enrollment period annually, although certain life events may allow you to sign up at other times.
If you’re trying to obtain health insurance, you may find the terminology confusing. Hopefully, this information will help when it comes to understanding your choices.