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Health Insurance Terms 101

So many times we are asked to explain health insurance terms to our clients and their employees.  Thought we would share the most commonly used terms and explain how it works!

Health Insurance Glossary

Prescription Drugs:

Drugs come in 3 tiers, below are the details:

A tiered formulary offers its lowest copay for generic drugs (Tier 1), charges you a little more for brand-name drugs (Tier 2) still under patent (that is, you have no option but to take them if you need them) and a lot more for what formularies call “non-preferred” drugs or  non-formulary brand named drugs (Tier 3) most often, they are brand-name drugs you choose to purchase in spite of available generics), and new drugs whose cost is higher than alternative therapies (though these may eventually become tier two drugs).

Deductible:  The deductible is the amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.  For Prescription Drugs, you have a one-time annual Deductible that has to be satisfied for Tier 2 and Tier 3 Drugs only.

Major Medical In Network:

Deductible:  The deductible is the amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.

Coinsurance: refers to money that an individual is required to pay for services, after a deductible has been paid.  By definition it is the split between the Insurance Company and the Insured.  Coinsurance is always specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the insurance company pays 80 percent.

Out-of-Pocket Maximum:  The dollar amount of claims filed for eligible expenses at which point you’ve paid 100 percent of your out-of-pocket and the insurance begins to pay at 100 percent. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.

Copayment: is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some plans require a $30 copayment for each office visit, regardless of the type or level of services provided during the visit.

DXL:  Stands for – Diagnostic X-ray and Lab, when you see this, it will give you the amount of the copayment associated with these services.

Lab Fees:  The copayment associated with lab fees.

 

Hospital Benefits In Network:

Hospital In-Patient:  Copay associated with hospitalizations where you are admitted for overnight stays.

Hospital Out-Patient:  Copay associated with hospitalizations where you are admitted, but you do not have an overnight stay.

Emergency Room:  Copay associated with Emergency Room visit, this is waived if you end up being admitted.

Surgical Benefits In Network:

Surgical In-Patient:  Copay associated with an in hospital surgical procedure where you are going to be admitted for an overnight stay.

Surgical Out-Patient:  Copay associated with an in hospital surgical procedure where you are admitted, but you do not have an overnight stay.

Mental Health & Substance Abuse In Network:

Mental Nervous In-Patient:  Copay associated when admitted to a facility for overnight stays.

Substance Abuse In-Patient:  Copay associated when admitted to a facility for overnight stays, aka rehab.

Mental Nervous Out-Patient:  Copay associated with visit aka therapist visit

Substance Abuse Out-Patient:  Copay associated with visit aka Out Patient Program

Out of Network Services:

All Out of Network are treated the same, the deductible has to be satisfied first, then a percentage of the Allowable Charges are covered until an Out of Pocket Maximum is reached, then 100% of the Allowable Charges are covered.  Keep in mind, if you go to an Out of Network Doctor that charges over the Allowable Charge Amount, then you will be balance billed.


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