Millions of Americans are facing open enrollment season, choosing health care plans from ones offered by their employers, sifting through new Medicare options, or deciding which Obamacare options plans fit their needs on the state exchanges.
The problem? Many people don’t understand commonly used health insurance terms. And that makes it difficult to select the best plan for themselves and their families.
Almost a quarter of people said they knew what a deductible was, but, in reality, only half identified the correct definition, according to a recent survey from PolicyGenius, which offers an app that compares health plans. Half could define co-pay (though 83 percent said they understood it); 42 percent knew what out-of-pocket maximum was; and only one in five correctly understood coinsurance.
The worst stat? Only 4 percent of Americans could correctly define all four terms.
“For consumers, finding a good health insurance plan starts with understanding the various trade-offs involved with different types of plans and benefits,” said PolicyGenius CEO Jennifer Fitzgerald. “Americans will need to weigh competing priorities, understand the apples-to-apples difference between plans, and understand how decisions may impact their total out-of-pocket costs.”
Here are 36 health care terms that can help you figure out the best health care plan for you and your family.
Related: A Big Problem for Obamacare: How Much Americans Can Afford to Pay
Accountable Care Organization (ACO)
An ACO is a network of doctors and hospitals that provides coordinated health care services for its patients. The network shares financial and medical responsibility for its patients’ care with the goal of curbing unnecessary spending.
Advance premium tax credit (APTC)
This is a tax credit you can take in advance to reduce your health insurance premium on the plan you get from the health insurance marketplace. The tax credit is based on your expected income for the year.
Affordable Care Act (ACA)
Also known as Obamacare, the ACA aims to increase the quality and affordability of health insurance, lower the uninsured rate by expanding public and private coverage, and reduce health care costs for individuals and the government. The law requires insurance companies to cover all applicants within new minimum standards and offer the same rates to every applicant.
Co-insurance
Health insurance plans with coinsurance require the person who is insured to pay a percentage of covered medical services after the deductible has been paid. For example, if the coinsurance is 20 percent, then you’re required to pay 20 percent of a $100 doctor visit (or $20), only after you have reached your deductible.
Community Rating
This pricing system prohibits health insurers from using medical underwriting to set premium prices and instead requires them to offer plans at the same price for all people in the same geographical area, regardless of their medical history.
Related: The Simple Reason So Many Americas Are Opting Out of Obamacare
Co-payment
The co-payment is a fixed amount that you must pay for specific covered medical services, such as $100 for an ER visit. The insurance provider is responsible for the rest, and the amount varies by the type of service.
Cost sharing
This is the share of covered medical costs that you pay out of pocket such as co-payments, coinsurance and deductibles. It doesn’t include premiums, balance billing for non-network providers, and non-covered health services or procedures.
Deductible
This is the fixed amount that you pay for health care services before your insurer begin to pay for covered medical services.
Essential Health Benefits
Under the ACA, the federal government requires health insurance plans to cover 10 specific service types: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative services and devices; lab work; preventative and wellness services; and pediatric services including dental and vision care.
Excluded Services
Health care services that your insurer or plan doesn’t cover or pay for.
Fee-for-Service
This payment model is when doctors and hospitals are paid for each service they provide. Bills are either paid by the patient, who then submits them to their insurer, or are submitted by the provider to the patient’s insurance carrier for reimbursement.
Flexible Spending Account (FSA)
Some employers offer FSAs that allow employees to set aside pretax dollars from their paychecks to pay for certain out-of-pocket health care expenses such as copayments, deductibles, some medications and other costs. Employers can also contribute to FSAs, but are not required to. Generally, you must use the funds in a FSA within the plan year.
Related: Prescription Drug Prices Headed for Double-Digit Increases in 2017
Health Care Cooperative (CO-OP)
A Health Care Cooperative is a non-profit, member-run health insurance organization run by a board of directors elected by its members. Co-ops provide insurance coverage to individuals and small businesses and can operate at state, regional, and national levels.
Health Insurance Exchange/Marketplace
This is an online marketplace where insurers offer health care plans that must conform to ACA regulations and where consumers and small employers can compare plans and purchase coverage. There are both private and state-run exchanges.
Health Maintenance Organization (HMO)
This is a type of healthcare plan where you select a primary care physician from a network of doctors. That PCP will coordinate your care and refer you to in-network specialists or hospitals when necessary.
Health Reimbursement Account (HRA)
AN HRA is an account owned and funded by employers fund so that employees can be reimbursed tax-free for qualified medical expenses up to a fixed amount each year. Any unused funds can be rolled over to the next year.
Health Savings Account (HSA)
Funds from this tax-exempt savings account can be used to pay for qualified medical expenses. To open an HSA, an individual must have an HSA-qualified high-deductible health plan.
High-Deductible Health Plan (HDHPs)
HDHPs have higher deductibles but lower premiums than traditional health plans. HDHPs can be combined with a health savings account (HSA) or a health reimbursement account (HRA) to help save for qualified out-of-pocket medical expenses.
In-Network
If a doctor, hospital or other health care facility you visit is part of your insurer’s network of medical providers, then you will receive care at lower prices.
Lifetime Maximum
This is the maximum amount a health plan will pay in benefits to you during your lifetime. Obamacare eliminated lifetime benefit maximums for essential health benefits.
Mandated Benefits
Each state has laws that require health insurers to cover specific benefits and medical services. The number and type of these mandatory benefits vary across states.
Metal Plans
There are four categories of health insurance plans offered through Obamacare that are named after a metal (Bronze, Silver, Gold, and Platinum). The categories indicate how you and your plan share costs.
- Bronze Plan
The bronze plan has the lowest monthly premium of the four metal plans, but requires you to pay a higher percentage of out-of-pocket costs for medical services. The plan is designed so that insurance company pays 60 percent of covered healthcare expenses with the remaining 40 percent to be paid by you.
- Silver Plan
The silver plan has the second-lowest monthly premium. It is designed so that the insurance company pays 70 percent of covered healthcare expenses, while the remaining 30 percent is paid out-of-pocket by you.
- Gold Plan
The gold plan has the second-highest monthly premium. It is designed so that the insurance company pays 80 percent of covered healthcare expenses, while the remaining 20 percent is paid out-of-pocket by you.
- Platinum Plan
The platinum plan has the highest monthly premium, but you cover the smallest percentage of medical costs. It is designed so that the insurance company pays 90 percent of covered healthcare expenses, while the remaining 10 percent is paid out-of-pocket by you.
Out-of-pocket costs
These are health care cost that you pay yourself and aren’t reimbursed by your insurer. This includes deductibles, copayments, and coinsurance plus any costs for non-covered that are not covered by insurance. Out-of-pocket costs don’t include premium costs.
Out-of-pocket maximum/limit
The out-of-pocket maximum or limit is the max amount of money that you are required to pay yourself during the plan year. After you spend this amount on deductibles, copayments and coinsurance, your insurance provider pays for all covered expenses in full.
Preferred Provider Organization (PPO) plan
This is a type of health care plan that works with a network of hospitals and doctors. You pay less when you see health care providers within the plan’s network, but face larger costs—such as higher deductibles and coinsurance rates or non-discounted charges--from out-of-network medical providers.
Premium
This is the amount of money that a person pays monthly for health insurance. The cost of the premium may be shared between employers or government purchasers and individuals.
Preventive Care
This is health care that emphasizes the early detection and treatment of diseases to keep people healthier longer and reduce health care costs over the long term. Most health plans must cover a set of preventive services at no cost to the individual.
Primary Care Physician (PCP)
A PCP is your main doctor within your healthcare plan and provides basic healthcare services, coordinates and, sometimes, authorizes referrals to specialists and hospitals.
Qualifying Life Event (QLE)
This is a major change in your life that triggers a special enrollment period so you can adjust your healthcare selections without waiting for the yearly open enrollment period. Life events include marriage, divorce or separation; birth or adoption of a child; death of dependent; child who is no longer eligible for coverage due to age; change in employment (loss or gain) for you, your spouse or dependent; change in work schedule; change in residence or work site; or if you or your dependents lose eligibility for subsidized care.
Out-of-Network
If the doctor, hospital or health care facility you visit is not part of your insurer’s network of medical providers, you'll get your health care at higher prices.
Subsidized Coverage
This is health coverage that is available at no cost or at a reduced cost for people with incomes below certain levels, such as Medicaid or the Children’s Health Insurance Program (CHIP).
Usual, Customary and Reasonable charges (UCR)
This is the amount paid for a medical service in a geographic area based on what doctors and other healthcare providers in the area typically charge for the same service.
