Understanding Insurance Policy Terminology
How well do you know your insurance policy terminology? This month is dedicated to going back to the basics of insurance information. Not everyone is well versed in the terms used in their insurance documents. Ultimately, this makes reading a policy daunting and confusing. Today, we are breaking down the most common insurance policy terms misunderstood by consumers.
When was the last time you read you insurance policy? Did you understand all of it or did you have to give something a Google? Don’t feel bad. Most companies write insurance policies with the expectation that the reader understands insurance policy terminology. It’s the equivalent of reading a contract that explains everything in legal terms you’ve never seen before. Common terminology includes basic principles like a deductible, copayment and more. You can treat this article like a mini-course on your insurance policy.
Each insurance policy is different. This article does not cover all terms, and definitions could change from policy to policy. For a full explanation of a policy, or if you are in need of insurance, please call us at National Health Insurance Agencies. One our policy service members would be happy to assist you.
Common Insurance Policy Terminology
The following terms are fairly standard across the board for coverage of health insurance, life insurance and dental insurance. However, this list is not exhaustive and may not apply to your policy. It is important to understand your policy and its contents. There is no one better to explain it to you than an insurance expert, but we’re defining what we can. Let’s break down the common insurance policy terminology.
-
Copayment
The copayment, also known as copay, is the set amount that you pay at the desk when you go to the doctor. For instance, if you pay $35 each time you visit the doctor, that is typically your copayment. Copayments can change for different services. However, this is the amount due at the time of service for policy benefits.
-
Deductible
As far as insurance policy terminology goes, this is probably the most confusing to understand. A deductible is the set amount of money the you must pay each year before your insurance pays for certain services. This amount and how it refers to your plan is specific. As a rule, have your insurance provider detail this information for you.
-
Premium
Where would insurance policy terminology be without the premium. Your premium is what you pay each month for your insurance. Sometimes companies include other factors in the premium. However, it usually boils down to what insurance customers charge customers each month.
-
Out Of Pocket
Out-of-pocket anything is what you pay or are expected to pay regardless of what your policy pays.
Out-of-pocket Costs are your regular charges such as your copayments and deductibles. It also includes the parts of your bill that insurance won’t cover. This is the amount you pay your service provider or doctor.
Out-of-pocket Estimates attempt to provide you an estimate of what your out-of-pocket costs will be prior to processing claim information or providing services. Think of this as a quote.
Out-of-pocket Maximum is the highest that you have to come out of pocket for the year. After you pay this amount, insurance should cover everything else.
-
Plan
Plan information in regards to insurance policy terminology also has specific definitions. A plan is part of employer benefits or offered as a benefit through other sources. This could be a negotiated insurance coverage that only they can offer you. Subsequently, this is why you pay them and they pay the insurance coverage provider.
Plan Type refers to whether you have an HMO, PPO, or something else. This is the category of plan that you have. Insurance companies include this information on your insurance card.
Plan Year details the 12-month stretch of time in which those benefits apply to you.
More information about insurance policy terminology can be found here. At National Health Insurance Agencies, we care about your health and safety. For assistance finding your best coverage, contact us today. Afterhours? Request a free quote!
