Understanding Health Insurance Terms Made Simple

Do health insurance jargon have you scratching your head? If yes, you’re not the only one. Terms like “premium,” “deductible,” and “out-of-pocket maximum” can seem like a lot to learn, but they don’t have to. We’ve created this simple, easy-to-follow guide to help you decode the most common insurance terms, so you can feel more in control of your health and your budget.  

Why Understanding These Terms Matters 

Understanding these insurance terms helps you: 

• Avoid unexpected medical bills 

• Choose the right plan for your health needs and budget 

• Make informed decisions about your care 

• Take full advantage of the benefits your insurance offers 

Now, you know why they matter. Here are the insurance terms you need to understand: 

1. Premium
   Your premium is the amount you pay every month for your health insurance plan, just like a subscription. Whether you use your health insurance or not during the month, the premium stays the same. If you have job-based insurance, your employer may cover part of this cost. 
2. Deductible
   A deductible is the amount you have to pay out of your own pocket each year before your insurance starts covering certain services. For example, if your deductible is $1,000, you’ll need to spend that much on covered healthcare services before your plan begins to pay its share.Some services, like preventive care, may be covered even before you meet your deductible.
3. Copayment (Copay)A copayment (or copay) is a fixed amount you pay for a specific healthcare service. For instance, your plan might require a $30 copay for a doctor’s visit or $10 for a prescription. Copays are usually due at the time of service and can vary depending on the type of visit or medication.

   Read more: Navigating Insurance Options for Health Services: What You Need to Know

4. CoinsuranceCoinsurance is a percentage of the cost of a healthcare service that you pay after you’ve met your deductible. For example, if your coinsurance is 20%, and your doctor’s bill is $100, you would pay $20, and your insurance would cover the remaining $80
5. Out-of-Pocket Maximum
   This is the most you’ll have to pay during a policy year for covered services. Once you hit your out-of-pocket maximum, your insurance will cover 100% of covered healthcare costs for the rest of the year. This includes money spent on your deductible, copays, and coinsurance, but not your monthly premium.
6. Network
   A network is a group of doctors, hospitals, and other healthcare providers that your insurance company has partnered with. Visiting providers in-network usually means lower costs. Going out-of-network may result in higher bills or even no coverage, depending on your plan.Always check whether a provider is in-network before scheduling a visit.
7. Prior Authorization
   Some health plans require prior authorization (also called pre-approval) before they’ll cover certain services or medications. It’s the insurance company’s way of making sure the treatment is medically necessary. If you don’t get prior authorization, your insurance might not pay.Read more: Affordable Healthcare Options Without Insurance
8. Formulary
   A formulary is a list of prescription drugs that your health plan covers. It’s usually divided into tiers, with each tier representing a different cost level. Knowing which tier your medication falls into can help you understand your copay or out-of-pocket cost.
9. Explanation of Benefits (EOB)
   After you receive care, your insurance company sends an Explanation of Benefits (EOB). It’s not a bill, but a summary of what services were provided, what the provider charged, what your insurance paid, and what you may still owe.Review your EOBs carefully to ensure everything looks correct.
10. Preventive Services
    Preventive services include check-ups, screenings, and vaccines meant to catch health problems early or prevent them altogether. Most insurance plans cover preventive services at no cost to you, even if you haven’t met your deductible.

Need Help Navigating Health Insurance? We’re Here for You

At C.W. Williams Community Health Center, we know that understanding health insurance can feel overwhelming, but it doesn’t have to be. Whether you’re trying to make sense of a new plan or just want to know what’s covered, our friendly team is here to help.

We accept a range of private insurance plans, making it easier for you to get the care you need. If you’re uninsured or worried about costs, we also offer a sliding scale fee based on your income and family size, because quality care should be accessible to everyone.

Have questions about your coverage or need help with enrollment? Give us a call (866-299-4968) or visit our centers today. We’ll work with you to find the best care and payment options that fit your needs.

Please follow and like us: