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Sharp Health News

Health insurance 101

Feb. 8, 2016

health insurance 101

The Affordable Care Act (ACA) brought health insurance terminology to your nightly news broadcast and Facebook newsfeed, but all that lingo can still feel confusing. Familiarizing yourself with these terms can help you better understand the ACA and your own personal coverage, as well as make you a more informed consumer. You should always check with your health insurance carrier for their definitions, as these could vary.

"Every profession has its own language, and health care is no different," says Shelley Foster, manager of customer care at Sharp Health Plan." It is easy to get confused. Many health care terms can sound alike, but their meanings are completely different. It's important to understand these words so you can make the best decisions for you and your family."

Definitions
Deductible: The amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1,000, your plan won't pay anything until you've met your $1,000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services.

Out-of-pocket limit: The most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100% of the allowed amount. This limit never includes your premium, balance-billed charges or health care your health insurance or plan doesn't cover.

Allowed amount: Maximum amount on which payment is based for covered health care services. This may be called "eligible expense," "payment allowance" or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference.


Commonly confused terms:

Copay vs. coinsurance
Copay: A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.

Coinsurance: Your share of the cost of a covered service calculated as a percent of the allowed amount for the service. Using a 20% coinsurance example, if your health plan's allowed amount for an office visit is $100 and you've met your deductible, your coinsurance payment of 20% would be $20. You pay coinsurance after you have paid your deductible.

In network vs. out of network

In network: Health care facilities and doctors that participate in your health plan, as indicated on your health insurance card. Most of the medical groups with your plan receive an agreed-upon monthly payment to provide their services to you. This monthly payment is a fixed dollar amount for each member. The payment typically covers professional services directly provided by the medical group and may also cover certain referral services.

Out of network: Health care facilities and doctors that do not have an agreement with your health plan. You typically will pay more out of your own pocket when you receive treatment from out-of-network providers.

Urgent care vs. emergency care
Urgent care: Care for an illness, injury or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.

Emergency services: Evaluation of an emergency medical condition and treatment to keep the condition from getting worse.


Commonly misunderstood terms:

Preventive care: Health care services you receive when you are well, such as checkups, vaccinations and certain screening tests.

Formulary/Preferred drug list: A list of prescription drugs that offer the most value and are chosen for their safety and effectiveness.

Pharmacy tier: Drugs are grouped into tiers, which determine your drug cost. Generally, tier 1 drugs include generic drugs listed on the plan's formulary and have your lowest copayment. Other tiers may include brand name drugs, specialty drugs or non-preferred drugs.

Step therapy: Selected prescription drugs require step therapy. This means that the member must try a safe and cost-effective alternative prescription drug first. However, there may be a situation when it is medically necessary for a member to receive certain medications without first trying the alternative drug. In these instances, your doctor may request prior authorization to bypass the step therapy requirement.

Learn more about common medical terms by visiting the Sharp Health Plan website.

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