Many Americans possess health insurance, yet not everyone understands their coverage effectively. This guide offers an introduction to key terms and concepts to assist individuals in making informed decisions regarding how best to utilize their health care coverage.
While numerous services exist to treat illness and maintain wellness, this guide primarily covers services provided by licensed health care professionals such as doctors, nurses, pharmacists, dentists, psychologists, social workers, therapists and dietitians. It does not address non-health care services such as over-the-counter medications or self-care activities such as monitoring blood pressure.
A Consumers Guide to Understanding Health Insurance Options includes an in-depth glossary of terms with definitions designed for an accessible audience spanning high schoolers to adult readers. They also feature examples that show how these terms are being applied within context.
There are three general types of health plans, typically administered by HMOs, EPO/ PPOs or commercial insurers: traditional plans administered by HMOs or EPO/ PPOs; Medicare Advantage plans managed by private companies; and Medicaid plans administered by state governments.
Health insurance premium – This monthly fee paid to use the services provided by a health care plan is often taken out of an insured person’s paycheck. Out-of-pocket limit – An annual maximum that must be spent before an insurer begins covering costs; not including premium. Out-of-network charges – Charges that result from receiving services outside the approved network of providers within an insurance plan’s network that are more costly or require prior authorization by that same provider may need prior approval before receiving treatment.
Coinsurance – Coinsurance refers to the percentage of health care costs an insured person is responsible for after their deductible has been met. For example, if an outpatient provider bills $2,000 with 20% coinsurance applied, and their policyholder pays $500 in their portion before having it covered by their health plan for $1500 of that expense.
Pre-authorization or prior approval – An authorization granted from a health care plan that specifies which procedures and services a patient is eligible to receive with what level of coverage. This may include procedures, prescriptions and hospitalizations.
Majorities of insured adults across types of health coverage give positive evaluations to their coverage, but there are notable variations between types. For instance, more Marketplace plans and those enrolled in ESI reported having difficulty understanding what their policy covers and owe out-of-pocket for care costs, how to locate provider networks or what their explanation of benefits (EOB) statements mean.
KFF will soon publish additional reports that explore the insurance experiences and attitudes of adults across different types of health coverage, with special attention paid to people experiencing problems.
