The ABCs of Health Insurance Lingo

Health Insurance lingo has always been somewhat complicated and confusing, but with the passage of the Affordable Care Act it is increasingly important for the average Joe six-pack American (borrowing from a famous Alaskan governor) to understand this terminology. As the Affordable Care Act continues to be implemented, these terms will be used to define certain components of the bill.  Here’s a break-down of some of the most commonly used terms:

Premium: The monthly cost of your health insurance plan.

Co-payment: The set amount you pay each time you visit the doctor, pick up a prescription or visit the emergency room.

Deductible: The amount you have to pay before your insurance “kicks in”. Let’s say you have a $1,000 deductible. That means you must pay $1,000 before your insurance will begin to pick up any of the tab. If you have a higher deductible, your monthly premium will typically be lower.

Co-insurance: The percentage of the bill your insurer will pay after your deductible has been met. A typical co-insurance is 80-20. The insurer will pay 80% and you will be responsible for the remaining 20%.

Maximum Out of Pocket: The maximum amount you will personally pay for rendered health services during a year. This amount figures in your deductible and your portion of the bill.

Lifetime Benefit: The total amount of coverage you are eligible to receive over the course of your lifetime.

*Prior to the Affordable Care Act, insurers could place a lifetime limit on your coverage. Luckily that is no longer the case.  An estimated 105 million Americans have benefited from this new provision according to the U.S. Department of Health and Human Services.

Stay tuned for an upcoming segment on tackling the concepts behind various health insurance plans.

Contributed by Stephen Duckett, Health Policy Intern, Children’s Defense Fund and graduate student at the University of Texas Health Science Center at Houston, School of Public Health.

 

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