Health Insurance 101

Allowed Amount – The amount your health plan will pay for a service. If your in-network provider bills your health plan at amounts higher than the allowed amount, your health plan will pay the allowed amount and you could be billed the difference, this is called “Balance Billing”. Your provider must disclose if they are billing over the allowed amount. See WA State’s information about “Balance Billing” 

Authorized Representative – Someone who you choose to act on your behalf with the Marketplace, like a family member or other trusted person. Some authorized representatives may have legal authority to act on your behalf.

Broker – A person or business who can help you apply for and enroll on a “Qualified Health Plan”. Brokers can make specific recommendations about which plan you should enroll in. Brokers are licensed and regulated by states and can receive payment for their services. Most are paid by insurance companies, but some charge client fees! 

Deductible – The amount you pay in medical costs before your plan begins to pay. (a “copay” is typically covered before your Deductible, but “coinsurance” is not… in most cases) 

Cost Sharing – The share of costs covered by your insurance that you pay out of your own pocket. This term generally includes deductibles, coinsurance, and copayments, or similar charges, but it doesn’t include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. Cost sharing in Medicaid and CHIP also includes premiums.

Copay – This is a flat fee you pay for a covered service and the insurance company pays the remainder.  Ex: you might pay $25 for your Primary Care office visit, but that doesn’t cover the whole cost. Your Health Plan pays the provider the remaining balance due.

Coinsurance – A percentage of the cost that you must pay to the provider, your Health Plan pays the remaining cost. Typically, you pay 100% of the cost until you’ve met your deductible, then you pay your coinsurance rate until you’ve paid your “Out-of-pocket maximum”. Once you’ve met your Out-of-pocket maximum you pay 0% for the remainder of the year

Creditable Coverage – Health insurance coverage under any of the following: a group health plan; individual health insurance; student health insurance; Medicare; Medicaid; CHAMPUS and TRICARE; the Federal Employees Health Benefits Program; Indian Health Service; the Peace Corps; Public Health Plan (any plan established or maintained by a State, the U.S. government, a foreign country); Children’s Health Insurance Program (CHIP); or, a state health insurance high risk pool. If you have prior creditable coverage, it will reduce the length of a pre-existing condition exclusion period under new job-based coverage.

Formulary – list of covered drugs on your health plan with corresponding coverage level or “Tier” 

Excluded Services – Health care services that your health insurance or plan doesn’t pay for or cover.

Primary Care Provider (PCP) – The doctor or provider you designate to provide and coordinate your care. You can choose a different primary care provider for each family member. Your PCP can be a family practice physician, general practice provider, geriatric practice provider, gynecologist, internist, nurse practitioner, obstetrician, pediatrician, or physician’s assistant. 

Specialist – A physician specialist focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent or treat certain types of symptoms and conditions. A non-physician specialist is a provider who has more training in a specific area of health care. These doctors typically cost a bit more than your PCP

In-Network – Doctors, dentists, pharmacies, hospitals, and other providers that are contracted with your health plan to provide care. 

Out-of-pocket Maximum – The maximum amount of money you will have to pay for covered services in a calendar year. Think of this as your worst-case scenario or stop-loss for your healthcare. Once you’ve met your out-of-pocket maximum, you pay $0 for all covered services until the end of the plan year

Covered in full – A service that your plan will pay for in entirety. Use these benefits as much as possible! 

Virtual Care – Visits with a provider using secure video platforms or phone calls. 

Urgent Care – Conditions that need treatment right away but are not sever or life threatening. These facilities can be used as a cheaper alternative to the Emergency Room if they’re in-network. 

Exclusive provider organization (EPO) – Hybrid between “HMO” and “PPO”. You must stay in network like an HMO, or your plan will NOT cover your services, but you have the freedom to see any in-network provider without a referral. You still should always check with your health plan to see if a service needs prior authorization beforehand! 

Health Maintenance Organization (HMO) – A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness. 

Essentially, you’ll have to:

• Establish a Primary Care doctor to coordinate your care with other providers

• Use your PCP as your referral “gatekeeper” 

• STAY IN-NETWORK – there is almost NEVER any coverage out-of-network 

Preferred Provider Organization (PPO) – A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

Point of Service Plan (POS) – A type of plan in where you pay less if you use in-network providers. POS plans also require you to get a referral from your primary care doctor to see a specialist. Very similar to HMO plans but you can usually see out-of-network providers. 

Qualified Health Plan (QHP) – An insurance plan that is: 

1. Certified by the Health Insurance Marketplace® 
2. Provides essential health benefits 
3. Follows established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts)
4. Meets other requirements under the Affordable Care Act. 

All qualified health plans meet the Affordable Care Act requirement for having health coverage, known as “minimum essential coverage.”

COBRA – A federal law that may allow you to temporarily keep health coverage after your employment ends, you lose coverage as a dependent of the covered employee, or another qualifying event. If you elect COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, you pay 100% of the premiums, including the share the employer used to pay, plus a small administrative fee.

Basically, you get to keep your employer’s plan for 18 months, but you pay 102% of the premium to a 3rd party administrator

Federal Poverty Level – For Individual and Family plans purchased through the Exchange only. A measure of household income that is set by federal guidelines each year. The FPL is used to calculate your Advance premium tax credits to make health insurance more affordable throughout the year. 

Advance Premium Tax Credit (APTC) – A great way to lower your Health Plan premiums if you qualify! When you and your family meet state requirements regarding your household size, zip code, age, and adjusted gross income, you can lower you premiums. Check if you’re eligible here: KFF TAX CREDIT CALCULATOR 

Plan Year – A 12-month period of benefits coverage under a group health plan. This 12-month period may not be the same as the calendar year. To find out when your plan year begins, you can check your plan documents or ask your employer. (Note: For individual health insurance policies this 12-month period is called a “policy year”).

Policy Year – A 12-month period of benefits coverage under an individual health insurance plan. This 12-month period may not be the same as the calendar year. To find out when your policy year begins, you can check your policy documents or contact your insurer. (Note: In group health plans, this 12-month period is called a “plan year”).

Prior Authorization – Approval from a health plan that may be required before you get a service or fill a prescription for the service or prescription to be covered by your plan.

Qualifying Life Event (QLE) – A change in your situation — like getting married, having a baby, or losing health coverage — that can make you eligible for a Special Enrollment Period, allowing you to enroll in health insurance outside the yearly Open Enrollment Period. Loss of health coverage

• Losing existing health coverage, including job-based, individual, and student plans
  • Losing eligibility for Medicare, Medicaid, or CHIP
  • Turning 26 and losing coverage through a parent’s plan
• Changes in household
  • Getting married or divorced
  • Having a baby or adopting a child
  • Death in the family
  • Changes in residence
• Moving to a different ZIP code or county
  • A student moving to or from the place they attend school
  • A seasonal worker moving to or from the place they both live and work
  • Moving to or from a shelter or other transitional housing
• Other qualifying events
  • Changes in your income that affect the coverage you qualify for
  • Gaining membership in a federally recognized tribe or status as an Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder
  • Becoming a U.S. citizen
  • Leaving incarceration (jail or prison)
  • AmeriCorps members starting or ending their service

Self-Insured Health Plan – Type of plan usually present in larger companies where the employer itself collects premiums from enrollees and takes on the responsibility of paying employees’ and dependents’ medical claims. These employers can contract for insurance services such as enrollment, claims processing, and provider networks with a third party administrator, or they can be self-administered.

Medically Necessary – In order to get your Health Plan to pay a claim, your doctor needs to let the insurance company know that the services & care you need is to prevent, diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine. If not, you’ll probably pay out of pocket. 

UCR (Usual, Customary and Reasonable) – The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the “allowed amount”. 

Emergency Medical Condition – An illness, injury, symptom, or condition so serious that a reasonable person would seek care right away to avoid severe harm.