Deductible? Max Out-of-Pocket? Medicare-Covered services? Guaranteed Issue?
What do all these terms mean and how do they affect your coverage?
We all know what it’s like to discuss insurance options and quickly become confused over the endless terms. Here we have a simple guide to these words, their definition, and how they work in your policy.
Allowable Charge: This is the dollar amount allowable to be considered payment-in-full by an insurance company and an associated network of healthcare providers, or by Medicare, known as the Medicare Allowable. The Allowable Charge is typically a lower, contractually negotiated rate that the provider agrees to accept. If your doctor is Out-of-Network or does not accept Medicare Assignment as a contracted provider, you may be billed the full amount, or Actual Charge.
Coinsurance: The amount that you are obligated to pay for covered medical services after you’ve satisfied any copay or deductible required by your health insurance plan. Coinsurance is often assessed as a percentage of the allowable charge for a service rendered by a healthcare provider. For example, many health insurance plans require that you pay 20% of the allowable charge for Ambulatory Surgery procedures like a stint or a hernia repair.
Copay: A specific cost-sharing payment that your health insurance plan requires that you pay for a specific medical service, drugs, or supplies. You often will pay this prior to receiving the service. An example would be a $25 copay you pay as you check in for your appointment with your primary care doctor.
Covered Services: A health care service to which an insured person is entitled under the contract terms. This also includes any Medically Necessary service, drugs or supplies, and services outlined in the ACA Minimum Essential Coverage, including Preventive Services. Other types of coverage for healthcare services may be required as well, and are defined in legislation and required to be covered by federal and state laws.
Deductible: A specific dollar amount that your health insurance company may require that you pay out-of-pocket each year before your health insurance plan begins to pay claims for services. For example, if you have a $1216.00 deductible under Original Medicare and go to the Hospital, you will be billed for this amount first, then Medicare will come in and pay their agreed cost-sharing for the remainder of your visit.
Guaranteed Issue: Insurance coverage that must be issued regardless of health status. In Medicare, a supplement policy that is Guaranteed Issue must not only issue your policy, but is also required to provide coverage for pre-existing medical conditions, and they cannot charge you more for your policy because of past or present health problems.
Max-Out-of-Pocket (MOOP): An annual limit on all cost-sharing for which patients are responsible under a health insurance plan. This limit does not apply to premiums, balance-billed costs from out of network health care providers or non-covered services.
Minimum Essential Coverage: The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage.
Open Enrollment Period: A time period during which eligible persons or eligible employees are required to review, change or choose their health insurance coverage.
Premium: The total amount paid to the insurance company for health insurance coverage. This is often paid on a monthly basis.
Underwriting: Each insurance company has its own set of underwriting guidelines to determine whether or not the company will accept the risk of insuring an applicant. The applicant’s health status, age, and occupation are also considered in Life, Health & Annuities Insurance. The insurer then calculates the monthly premium based on projections of the risk of insuring the applicant.