Common Health Insurance Terms You Need to Know

Shopping for a health insurance plan can be overwhelming, especially if you aren’t familiar with some of the more common health insurance terms. These seven definitions will help you gain a better understanding of basic health insurance terminology.

Premium

A premium is the amount you or your employer pays periodically to an insurance company for them to provide you with insurance coverage for a defined period of time. The cost of your premium is determined by your location, age, family size, tobacco use, and the plan category.

Copayment

Also commonly referred to as copay, a copayment is a fixed amount that you pay in addition to your premium for covered healthcare services, including doctors’ visits, specialists’ visits, or prescription drugs. The amount of your copay can vary depending on the type of healthcare service.

Here is a sample of what your copayments might looks like:

• Doctor’s Visits: $30
• Specialist Visits: $60
• Prescriptions: $20

Deductible

A deductible is the amount you owe for covered healthcare services before your health insurance plan will begin to pay. For example, let’s say you need a covered procedure that costs $3,000. Your deductible is $1,000. In this scenario, your health insurance plan won’t pay anything until you’ve met your $1,000 deductible for this covered procedure.  Keep in mind: The deductible may not apply to all services.

Coinsurance

With a coinsurance plan, you and your health insurance company each pay a percentage of covered services costs once you meet your deductible. A common example is an 80/20 coinsurance plan. For example, if your health insurance plan’s allowed amount for an eligible office visit is $100 and you’ve met your deductible, your coinsurance amount of 20% would be $20. Your health insurance plan would pay the remaining 80%, or $80. Other common splits include 70/30 and 90/10.

Out-of-pocket Maximum

The out-of-pocket maximum is the most you may have to pay for covered services during a year. Once this limit is reached, your plan pays 100% of the costs. It does not include premiums, expenses not covered by your plan, out-of-network care, or expenses for a service that are higher than the allowed amount. For 2022, the out-of-pocket limit for an ACA plan is $8,700 for individuals and $17,400 for families.¹

Metal Levels

Metal levels are four different categories used to classify health insurance plans based on their costs. Each metal level category represents how the ACA plan’s costs are divided between you and the insurance company. Here’s a look at how these tiers work.

• Bronze: The plan pays 60% of the cost. You pay the remaining 40%.
• Silver: The plan pays 70% of the cost. You pay the remaining 30%.
• Gold: The plan pays 80% of the cost. You pay the remaining 20%.
• Platinum: The plan pays 90% of the cost. You pay the remaining 10%.

PPO Insurance Plan

A PPO plan, or “Preferred Provider Organization” plan, is a type of health insurance plan that gives you a choice to get care within or outside of a specific provider network. Preferred providers are considered “in-network,” and you may pay less than if you went to out-of-network providers. You still have the freedom to receive care anywhere you’d like, but you will pay more for out-of-network providers. With a PPO plan, you are not required to choose a primary care physician (PCP), and you can see other providers in your network without a referral. If you’re shopping for a new health insurance plan and are considering a PPO plan, check to see if your current doctors and specialists are a part of the PPO network for that plan.

HMO Plan

With an HMO plan, or “Health Maintenance Organization” plan, you are usually required to choose a primary care physician (PCP). This doctor is responsible for working with you to coordinate your healthcare. Doctors and other healthcare providers who take part in HMOs become part of a group that can provide services to patients who participate in this HMO plan. If you have an HMO plan and want your plan to pay for your healthcare costs, you will have to choose a doctor who is considered in-network.

HSA

A health savings account, or HSA, is a medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan (HDHP). An HSA allows people with HDHPs to save money for medical expenses. Contributions are made to the account by you or your employer and are limited to a maximum amount each year. The funds in your HSA account can be invested over time and can be used to pay for qualified medical expenses. The money you put into your HSA is tax deductible and grows tax free. Certain withdraws are tax free if they are for qualified medical expenses. In addition to doctors’ visits and prescription drugs, over-the-counter drugs and other health-related items may also qualify. If you don’t spend your HSA funds, they’ll roll over each year.

For 2022, you can contribute up to $3,650 for individuals and up to $7,300 for families into your HSA.²

Learn More About Your Health Insurance Options

HealthMarkets can help you understand common health insurance terms and evaluate your health insurance options. Find and compare ACA plans that fit your needs online, at no cost to you. You can also call (800) 827-9990 to speak to a licensed insurance agent.