Navigating the world of health care can be complex, especially when faced with unfamiliar terms. If you find yourself wondering where to start or how these terms apply to you, begin by gaining a clear understanding of health insurance terminology. This will help you to make informed decisions about your health care and ensure you are well-prepared for any medical expenses that may arise.
Claim
A request for payment submitted by a health care provider to an insurance company or third-party payer for services given to a patient.
- It includes information like the patient’s diagnosis, treatment provided, and the cost of the services.
- The insurance company reviews the claim and determines the amount they will reimburse the provider for the services.
EXAMPLE: After receiving treatment for a broken arm, the health care provider submits a claim to the insurance company. The claim includes details such as the diagnosis, the treatment provided (such as X-rays and a cast), and the cost of the services. The insurance company reviews the claim and determines the amount they will reimburse the provider for the services.
Deductible
The amount of money an individual or family must pay out of pocket for health care services before their insurance coverage begins.
EXAMPLE: If you have a health insurance plan with a $500 deductible, you will need to pay the first $500 of your health care expenses out of pocket before your insurance coverage begins. Once you meet the deductible, your insurance will start covering a portion or all the eligible expenses, depending on your plan.
Coinsurance
A cost-sharing arrangement in health care where the insured individual is responsible for paying a percentage of the covered medical expenses, typically after meeting their deductible.
- The remaining percentage is paid by the insurance company. It is a way to distribute the financial burden between the individual and the insurer.
EXAMPLE: Let’s say you have a health insurance plan with a 20% coinsurance rate. After meeting your deductible, if you receive a covered medical service that costs $100, you would be responsible for paying $20 (20% of the cost), while the insurance company would cover the remaining $80.
Copay
A copay (also called a copayment) is a fixed amount of money that an individual is required to pay out-of-pocket for a specific health care service or medication, typically at the time of service.
- It is a form of cost-sharing between the individual and their insurance provider.
EXAMPLE: When you visit your primary care physician for a routine check-up, you may be required to pay a copay of $25 at the time of the appointment. This fixed amount is a form of cost-sharing between you and your insurance provider. Read more about Cost Share in the next section.
Cost Share
Cost-sharing refers to the division of health care expenses between the individual and their insurance provider.
- It includes various out-of-pocket costs not covered by your health plan – such as deductibles, copayments, and coinsurance.
- Cost-sharing helps distribute the financial responsibility for health care services and medications between the individual and the insurer.
EXAMPLE: Suppose you have a health plan with a $1,000 deductible, a 20% coinsurance rate, and a $30 copay for doctor visits. If you undergo a medical procedure that costs $2,000, you will first pay the $1,000 deductible out of pocket. After that, you would be responsible for 20% of the remaining $1,000 (coinsurance), which amounts to $200. Additionally, if you have a follow-up visit with a copay, you will pay the predetermined $30. These various out-of-pocket costs make up the cost-sharing between you and your insurance provider.
Medical Out‐of‐Pocket Maximum
The maximum amount an individual or family must pay for covered medical expenses each year, after which the insurance company covers 100% of the costs.
EXAMPLE: Let’s say you have a health insurance plan with a Medical Out-of-Pocket Maximum of $5,000. Throughout the year, you will be responsible for paying your deductible, copays, and coinsurance for covered medical services. As you pay these expenses, they will add up towards your out-of-pocket maximum. Once your total out-of-pocket expenses hit $5,000, your health insurance plan will take over and cover all eligible medical expenses. This means you will no longer have to pay any deductibles, copays, or coinsurance for the remainder of the coverage period.
RX Out‐of‐Pocket Maximum
The maximum amount an individual or family must pay for prescription drugs each year, after which the insurance company covers 100% of the costs.
EXAMPLE: Let’s say your health insurance plan has an RX out-of-pocket maximum of $1,500. Throughout the year, you pay for prescription drugs. Once your out-of-pocket expenses reach $1,500, the insurance company covers 100% of the costs for the rest of the year.
Premium
A premium is the amount of money an individual or entity pays to an insurance company for insurance coverage.
- It is typically paid in regular installments – usually monthly or annually. It’s common for individuals to receive health insurance through their employer. In this case, the premium amount is typically deducted from their paycheck before they receive their net pay. This is known as a payroll deduction.
- The premium amount is determined by various factors, including the type of insurance coverage, the level of coverage, the individual’s age and health status, and other risk factors.
- Paying the premium ensures that the insurance policy remains active and provides the agreed-upon benefits and coverage.
EXAMPLE: You have health insurance coverage through your employer and the monthly premium for your plan is $200. Your employer offers a payroll deduction option. Therefore, your employer would deduct $200 from your gross salary each paycheck before you receive your net pay.
Health Network
A health network is a broad organization consisting of multiple facilities, such as hospitals, clinics, and specialty centers. These facilities are often located in different geographic areas and may be owned by different entities. A health network provides coordinated and integrated care to patients across various settings. Health networks often have a central administration that oversees the operations of all the facilities within the network.
Medical Group
A team of health care providers who collaborate to deliver comprehensive care, sharing resources and facilities for integrated services. These physicians may specialize in different areas, such as primary care, pediatrics, or cardiology. Medical groups can be independent or affiliated with a hospital or health network.
VEBA Resources
MyVEBA Portal: Use the MyVEBA app or online portal for your benefits information and updates. Download the app for Apple or Android, or visit the MyVEBA Portal for desktop access.
Benefit Contacts: For assistance with specific carrier benefits or issues, such as claims or coverage details, visit vebaonline.com/benefit-contacts to contact them directly.
Get Support: The VEBA Advocacy Team is here to assist with health care navigation, including appointment scheduling and quality of care. Call 888-276-0250 or visit vebaonline.com/contact for assistance. For urgent requests, use the “Urgent” box on the contact form.
If you find this blog helpful in understanding health insurance terms, be sure to check out the other blogs in this series for more in-depth information and insights into the world of health care.
