Common Health Insurance Terms You Need To Know

Although the exact dates might vary depending on your provider, Open Enrollment for 2017 health care started on Nov. 1, 2016 and runs until Jan. 31, 2017. That means you might be one of many people shopping around for a new insurance plan right now. But because many people find insurance confusing, there are a few common health insurance terms that are worth familiarizing yourself with to make the process easier. If you don't, you'll end up doing what I do: Spend five minutes trying to decode all the fine print before quitting and switching to Pinterest. (Don't do that to yourself. Insurance is importance.)

I find that picking an insurance plan is kind of like ripping off a bandage: If you drag it out, it's torture. If you do it in one fell swoop, it's much less of a pain. Either way, you won't get very far if you don't even know what you're looking into. You don't need to be an expert to decipher the various plan options. All it takes is a little vocabulary lesson, and you're on your way to health insurance. Knowledge is power; and when it comes to tossing away a couple hundred dollars a month minimum on something you'll likely never use (kidding! Maybe...), you want to have a handle on the situation.

So, here are some of the basics.

Deductible

This is the amount of money you must spend in order for your insurance plan to start covering medical bills. For example, if your deductible is $5,000 a year, you must pay the first $5,000 of medical costs.

Copayment

This is a flat fee you pay when you're sharing a medical cost with your insurance plan. For example, your primary care physician might require a copay of $10, and your insurance plan will cover the rest. Copays may kick in before or after you've hit your deductible, depending on the plan or premium. And speaking of which...

Premium

The premium is your monthly payment for your health insurance. Very often, the higher the premium, the lower the deductible, and vice versa.

Claim

A claim is a request made by you (or your health care provider) for the insurance company to pay for a medical cost.

Dependent

If you have a dependent, it's a person that is covered by your insurance plan. This could be your spouse or child.

Drug Formulary

This is the list of prescription medication that your plan will cover.

Appeal

An appeal is a request you make to your insurance company to review a payment that they initially denied.

Benefits

These are the items or services that your plan will cover.

Excluded Services

These are the items and services that your plan will not cover.

Grace Period

This is a brief period (commonly 90 days) after your monthly premium is due. During this time, you're allowed to make your payment while avoiding losing your coverage.

Exemption

Typically, people must have health insurance, or they pay a fee. However, people who qualify for an exemption don't have to pay the fee.

Generic Drugs

A generic drug is a prescription medication that has the same active-ingredient formula as its similar brand name drug. Generics usually cost less than name brands.

Group Health Plan

This is the plan offered by an employer to provide coverage to employees and their families.

Benefit

A benefit is the amount of money an insurance company will provide to you for a medical cost. (Not to be confused with benefits, mentioned above.)

Provider

Any person or institution that offers medical care, such as a doctor or hospital.

Coinsurance

This is the amount of money you pay when you're sharing medical costs with your insurance after you've met the deductible. For example, insurance might cover 80 percent of a bill, and you pay the remaining 20.

Medicare

Medicare is a health care program for people 65 years of age and older.

Network

If a doctor is in your network, this means that your insurance plan has a contract with them and you will likely pay less. If a doctor is out of network, plan to pay more.

Allowable/Allowed Amount

This is the amount of money your insurance company considers reasonable for a service or item you might need.

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