We all know how con­fus­ing and com­plex ben­e­fits and health­care terms can be- the dif­fer­ence between deductible and co-insur­ance is a com­mon ques­tion for many and there are plen­ty of oth­ers like it.  When you are com­fort­able and con­fi­dent in how your plan works, you can make an informed deci­sion on HOW to use and take advan­tage of your benefits!

We have cre­at­ed a list and expla­na­tion of the most com­mon terms to help you under­stand and bet­ter uti­lize your health benefits:

  • Co-pay­ment:  An amount you pay as your share of the cost for a med­ical ser­vice or item, like a doc­tor’s vis­it.  Co-pays are most com­mon for emer­gency room, urgent care and pre­scrip­tion drugs. In some cas­es, you may be respon­si­ble for pay­ing a co-pay as well as a per­cent­age of the remain­ing charges.
  • Co-insur­ance:  Your share of the cost for a cov­ered health care ser­vice, usu­al­ly cal­cu­lat­ed as a per­cent­age (like 20%) of the allowed amount for the ser­vice. For exam­ple, if your plan has a 30% co-insur­ance rate, the car­ri­er will pay 70% of the allowed amount while you pay the balance.
  • Deductible: The amount you owe for cov­ered health care ser­vices before your health insur­ance or plan begins to pay.  For exam­ple, many plans require an indi­vid­ual to pay $1,000 in cumu­la­tive deductibles before they begin pay­ing out.
  • Depen­dent cov­er­age:  Health insur­ance cov­er­age extend­ed to the spouse and unmar­ried chil­dren up to age 26 who are total­ly or sub­stan­tial­ly reliant on their par­ents for sup­port, there­by defined as “depen­dent children”.
  • Expla­na­tion of Ben­e­fits (EOB): Every time you use your health insur­ance, your health plan sends you a record called an “expla­na­tion of ben­e­fits” (EOB) or “mem­ber health state­ment” that explains how much you owe. The EOB also shows the total cost of care, how much your plan paid and the amount an in-¬network doc­tor or oth­er health­care pro­fes­sion­al is allowed to charge a plan mem­ber (called the “allowed amount”).
  • In-Net­work Provider: A provider who has a con­tract with your health insur­er or plan to pro­vide ser­vices to you at a dis­count. In-Net­work Providers have con­tract­ed with the insur­ance car­ri­er to accept reduced fees for ser­vices pro­vid­ed to plan mem­bers. Using in-net­work providers will cost you less mon­ey. When con­tact­ing an In-Net­work Provider, remem­ber to ask, “are you a con­tract­ed provider with my plan?” Nev­er ask if a provider “takes” your insur­ance, as they will all take it. The key phrase is contracted.
  • Open Enroll­ment: A peri­od dur­ing which a health insur­ance com­pa­ny is required to accept appli­cants with­out regard to health history.
  • Out-of-Net­work Provider: A provider who doesn’t have a con­tract with your health insur­er or plan to pro­vide ser­vices to you at a pre-nego­ti­at­ed dis­count. You’ll pay more to see an out-of-net­work provider, some­times referred to as an out-of-net­work provider.
  • Out-of-Pock­et Max­i­mum: The lim­it or most you’ll pay out of your own pock­et for ser­vices dur­ing your insur­ance plan peri­od (usu­al­ly one year).
  • Pre­mi­um: The amount you pay for your health insur­ance or plan each month.
  • Qual­i­fy­ing Life Event (QLE): A change in your life that allows you to make changes to your ben­e­fits’ cov­er­age out­side of the annu­al open enroll­ment peri­od. These changes include a change in mar­i­tal sta­tus (mar­riage, divorce, death of spouse), a change in the num­ber of eli­gi­ble chil­dren (birth, adop­tion, death, aging-out), and a change in a fam­i­ly member’s ben­e­fits eli­gi­bil­i­ty under anoth­er plan (los­ing a job, Medicare or Med­ic­aid eli­gi­bil­i­ty, etc.)

In addi­tion to under­stand­ing these com­mon terms, there are oth­er ways to uti­lize your ben­e­fits, save mon­ey and make an informed deci­sion based on your spe­cif­ic needs.

  • Flex­i­ble Spend­ing Account (FSA): Fund­ed through pre-tax pay­roll deduc­tions, an FSA is a cost-sav­ings tool that allows you to pay for qual­i­fied health­care-relat­ed expens­es with pre-tax dol­lars. Funds deposit­ed in an FSA must be spent in the same year in which they are set aside, or they are for­feit­ed. This rule is often referred to as “use it or lose it”.
  • Health Reim­burse­ment Account (HRA): An employ­er-fund­ed sav­ings plan that will reim­burse you for out-of-pock­et med­ical expens­es. Unlike an FSA, how­ev­er, you don’t “use it or lose it” – unused bal­ances will roll over and accu­mu­late over time, though the account can­not be “cashed-out.”
  • Health Sav­ings Account (HSA): A sav­ings prod­uct that serves as a sub­sti­tute for tra­di­tion­al health insur­ance. HSAs enable you to pay for cur­rent health costs. They also allow you to save for future med­ical and retiree health costs tax-free. Unlike an FSA, how­ev­er, you don’t “use it or lose it” – unused bal­ances will roll over and accu­mu­late over time and can be “cashed-out.”

Under­stand­ing all of the terms and acronyms can feel like learn­ing a new lan­guage, so it’s help­ful to have a basic ref­er­ence chart.  With a good under­stand­ing of what some health­care “ben­e­fits lin­go” means, it will be eas­i­er to find a plan that meets your needs and bud­get. To explore more health­care terms, vis­it https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/common-health-benefit-terms-glossary.aspx