A Beginner's Guide To Deciphering Confusing Health Insurance Jargon

With so many unknowns in the near and distant future, having a good health insurance plan is more important than ever. Beyond the obvious benefit of providing you with reliable medical care, health insurance also protects you from unexpected, staggeringly high medical costs — yet a shocking 26.1 million Americans had no health insurance at any point in 2019. That’s like driving a car without car insurance, and just hoping you don’t get unexpectedly rear-ended on the highway — a dangerous idea in theory and in practice.

But just getting health insurance doesn't mean a whole lot if you don't understand your plan, which — let's be honest — is something a lot of us experience. The first step in demystifying the subject is defining the insurance-related terms we hear thrown around all the time... but still aren't quite sure what they actually mean. That's why Elite Daily teamed up with Florida Blue to provide readers with a straightforward glossary of commonly used health insurance words and phrases.

Read on to educate yourself and take the intimidation factor out of the process of getting insured once and for all.

Allowed Amount

This is the maximum payment the plan will pay for a covered health care service. Also called “eligible expense,” “payment allowance,” or “negotiated rate.” If a healthcare provider charges more than the allowed amount for a service, you may have to pay the difference, unless the insurer has negotiated the rate with the provider, meaning they are considered “participating.”

To put it simply, you pay less when you get treatment from a participating provider.

Appeal

If your health insurer refuses to pay a claim (either in whole or in part), you have the right to request an appeal. This is a formal request for your health insurer to review their decision.

Balance Bill

This is the bill you’ll receive from a healthcare provider for the difference between their actual billed amount and the allowed amount covered by insurance, copay, coinsurance, and deductible payments. Basically, it’s a bill for any charges left unpaid. Using in-network providers typically protects you from incurring a balance bill because their contractual agreements with insurance plans limit total payments for covered services.

Benefit Period

This is the period of time that your coverage is effective. Your benefit period depends on your policy type, insurer, and policy premium.

Claim

This isn’t a bill, but rather an itemized statement of health care services and their costs provided by a hospital, physician’s office, or another provider. Claims are submitted to the insurance company, which will then process the claim according to the benefits outlined in your health plan.

Coinsurance

Coinsurance refers to your share of the costs of a covered health care service, usually calculated as a percentage of the allowed amount for the service. Total costs for a service include your coinsurance, plus any deductibles you owe. So, if your plan’s allowed amount for a routine physical is $100 and your coinsurance is 20%, after you’ve met your deductible your coinsurance payment would be $20. Your plan will pay for the rest of the allowed amount ($80).

Copay

A copay is a flat fee associated with a covered health service, due at the time of the appointment. (Think: the $20 you might pay your gynecologist when checking out).

Deductible

This is the amount you must pay out of your own pocket for covered health care services before your health insurance starts covering you. For example, you may have to meet a $1,000 deductible before your plan begins to pay.

Effective Date

The effective date is the first day your coverage becomes effective under your plan.

Excluded Services

Simply put, an excluded service is a health care service that your insurance just doesn’t pay for or cover. You can call the information number on the back of your card to confirm whether or not your service will be covered, and any additional costs that you might incur.

In-Network

This is a group of doctors, medical providers, and facilities that your insurance company has contracted with to provide health care services— typically meaning they’re less expensive than visiting out-of-network providers.

This can also mean that you will not get balance-billed for the difference in the provider's billed amount and the insurer's allowed amount, which comes out to big savings.

Open Enrollment

A yearly window of time when people can enroll in a health insurance plan. When open enrollment ends, you’re only eligible to change health insurance companies under certain circumstances — like if you take a new job or get married.

Out-Of-Network

A healthcare provider that isn’t contracted with your insurer to provide health care services. With some health plans, you can still visit these doctors, but you will pay more. For other health plans, if the provider is out-of-network, you will pay the entire bill.

Out-Of-Pocket Maximum

The most you could pay for your portion of health care covered by your plan over the course of your policy period (usually one year), before your health insurance plan begins to take over and pay 100% of the allowed amount. This limit excludes your premium, balance bill charges, and care your plan doesn’t cover, but it’s still a cap limiting total costs.

Some things to note: If you're insuring a family, the out-of-pocket maximum for one member is different from the out-of-pocket maximum for the whole family. Additionally, the out-of-pocket maximum often varies between medical care provided by an in-network (participating) provider versus an out-of-network (non-participating) provider.

Premium

The amount is costs to have health coverage, usually paid monthly, either by an individual, an advanced tax credit (subsidy) from the government, or a combination of the two.

Tax Credit

This is a refundable credit that some individuals and families qualify for that helps pay their health insurance payments.

Under the new American Rescue Plan Act of 2021, many people will be eligible to receive a higher tax credit to reduce their payments than they’ve had in the past. Additionally, the new law will make tax credits available to some individuals and families who did not previously qualify.

Telehealth

A safe, contactless way to receive health care at home. Many providers provide the option to meet with your doctor virtually via a video conferencing service so you can get the clinical care you need from home.

Now that you know the basics of health insurance jargon, take the next step by contacting Florida Blue who can help you find a plan that works for you.

This post is sponsored by Florida Blue.

Florida Blue is a trade name of Blue Cross and Blue Shield of Florida, Inc., an Independent Licensee of the Blue Cross and Blue Shield Association. These policies have limitations and exclusions.

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