Coinsurance is a financial arrangement in healthcare where the insured individual shares a predetermined percentage of the costs of covered healthcare services with the insurance company after the deductible has been met. It’s a form of cost-sharing between the insured and the insurer, designed to help distribute the financial burden of medical expenses.
The deductible is the initial amount of money that an insured person must pay out of pocket for covered healthcare services before the insurance company begins to pay. Once the deductible is met, coinsurance typically kicks in.
This is the maximum amount an insured person is required to pay during a policy period (usually a year) for covered healthcare services. Once this limit is reached, the insurance company covers 100% of covered healthcare expenses for the remainder of the policy period.
Covered services are healthcare services or treatments that are included in an insurance policy and for which the insurance company agrees to pay a portion of the cost.
Non-covered services are healthcare services or treatments that are not included in an insurance policy, meaning the insured person is responsible for paying the full cost out of pocket.
A provider network is a group of healthcare providers, such as doctors, hospitals, and clinics, that have contracted with an insurance company to provide services to its members at negotiated rates.
In-network refers to healthcare providers or facilities that have agreed to provide services to members of a particular insurance plan at negotiated rates. Using in-network providers typically results in lower out-of-pocket costs for the insured person.
Out-of-network refers to healthcare providers or facilities that do not have a contract with a particular insurance plan. Insured individuals may still receive care from out-of-network providers, but they often face higher out-of-pocket costs compared to in-network services.
Preauthorization, also known as prior authorization, is the process of obtaining approval from an insurance company before receiving certain healthcare services or treatments. This requirement helps ensure that the services are medically necessary and covered by the insurance policy.
An Explanation of Benefits is a document sent by an insurance company to an insured person after a healthcare claim has been processed. It outlines the services provided, the amount billed by the healthcare provider, the portion covered by insurance, and any remaining balance owed by the insured individual.
A Health Savings Account is a tax-advantaged savings account that allows individuals to set aside money to pay for qualified medical expenses. Contributions to an HSA are tax-deductible, and funds in the account can be used to pay for coinsurance, deductibles, and other out-of-pocket healthcare costs.
A High-Deductible Health Plan is a type of health insurance plan with higher deductibles and lower premiums compared to traditional health insurance plans. HDHPs are often paired with Health Savings Accounts (HSAs) to help individuals save for and cover out-of-pocket healthcare expenses.