As you prepare to choose a health insurance plan, it is important to understand some of the terminology that is commonly used. The definitions of more common terms listed below come from the Employee Benefits Security Administration.
A contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium.
Health insurance exchange
An exchange is a Marketplace. Wisconsin makes use of an exchange established by the federal government.
Maximum amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance” or “negotiated rate.” If your provider charges more than the allowed amount, you may have to pay the difference (See Balance billing).
When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.
Your share of the costs of a covered health service, calculated as a percent of the allowed amount for the service. You pay co-insurance plus any deductibles you owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your co-insurance payment of 20 percent would be $20. The health insurance or plan pays the rest of the allowed amount.
A fixed amount you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care.
The amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible. The deductible may not apply to all services.
Health care services that your health insurance or plan doesn’t pay for or cover.
A complaint that you communicate to your health insurance or plan.
The facilities, providers and supplier your health insurer or plan has contracted with to provide health care services. Typically your co-insurance and co-payments will be less when you receive care from in-network providers. Expenses will usually be higher if you get care from an out-of-network provider.
The most you pay during a policy period before your health insurance or plan begins to pay 100 percent of the allowed amount. This limit never includes your premium or balance-billed charges or health care your insurance or plan doesn’t cover. Some health insurance or plans don’t count all of your co-payments, deductibles, co-insurance payments, out-of-network payments or other expenses towards this limit.
A decision by your health insurance or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.
A provider who has a contract with your health insurance or plan to provide services to you at a discount. Check your policy to see if you can see all preferred providers or if your health insurance or plan has a “tiered” network and you must pay extra to see your providers. Your health insurance or plan may have preferred providers also contract with your health insurer or plan, but the discount may not be as great, and you may have to pay more.
Primary Care Provider (PCP)
A physician, nurse practitioner, clinical nurse specialist or physician assistant, who directly provides or coordinates or helps a patient access a range of health care services.
Usual, customary and reasonable (UCR)
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.
More information can be found at healthcare.gov.