Knowing 6 Useful Health Insurance Terms Can Save You Money

6/24/2008

            If you or someone in your family has ever been sick or injured, you probably know how important it is to have quality health coverage.  So often, Oklahoma customers are baffled by the multitude of products being offered and advertised that they do nothing out of pure frustration.  Don’t lose faith…there is hope and it is much simpler than one might think.  By knowing some important health insurance terms, you will understand more and be more prepared to tackle the world of health insurance in Oklahoma.

• Deductible-A set dollar amount that you pay before the plan begins to pay for your care.  Each plan varies; some have a deductible per illness or injury while others offer a yearly deductible.  At AASK Insurance, we encourage our customers to buy medical insurance with a yearly deductible because these plans offer less risk and out-of-pocket expenses.

Questions you should ask:

Is the deductible per person or per family?

Is the deductible per cause (illness or injury) or per year?

How many deductibles per family must be met each year?

Is there a separate deductible for the prescription drugs?

• Co-Insurance- The percentage of covered medical expenses you partner with the insurance company after you have met your policy deductible.  The companies we represent at AASK Insurance offer several options such as an 80/20 plan meaning the insurance company will pay 80% and the patient will pay 20% after the yearly deductible is met.  Some plans pay 100% of allowable costs after the yearly deductible has been met.  It is also important to understand the term “stop loss” which simply means an out-of-pocket maximum.  Think of it this way…once you have paid a set amount for medical care, your deductible plus co-insurance, the company pays 100% of allowable costs.

Questions you should ask:

Is the co-insurance per person or per family?

How much co-insurance per family must be met each year?

What is the “stop loss” amount each year per person or per family?

• Co-Pay- The set amount you pay to the doctor for visits and services provided in his office. The doctor visit can be because of sickness, injury, or your yearly physical.  There are usually limits on what the co-pay will cover.  Some plans have different co-pay amounts for specialists. 

This set amount can also apply to prescription drugs.  Prescription drug co-pays may be  a fixed amount or a percentage such as $15 for Generic drugs and 50% for name brand drugs.

Questions you should ask:

What does the co-pay cover?

Is there a limit to the number of doctor visits each year?

Is there a limit on what is covered by the co-pay? (For Example- Up to $300 a year for a physical)

• PPO Networks- “PPO” stands for Preferred Provider Organization and it means that a group of medical service providers, doctors, hospitals, and other facilities, have agreed to charge lower rates to policy holders in exchange for being put on a preferred provider list.  This does not mean that you cannot see a certain doctor anymore; it just means that you pay more if you do.  Therefore, it is vital to know beforehand who is in your “network” and what penalties you may incur if you go outside the network.  The question to ask when going to the doctor or hospital is Do you accept my PPO? The wrong question often asked is Do you accept my insurance company?  The patient thinks he is asking is if the doctor or hospital is in his PPO and the doctor or hospital may be saying they will file a claim with any insurance company.   By asking the wrong question the rate of payment for services can be dropped by 20% or more.  This means added out of pocket expenses for you.  Examples of PPO networks in Oklahoma are; First Health, Private Health Care Systems, United Health Care, etc.

Questions you should ask:

Are the doctors and hospitals you want to use part of the network?

What deductible and co-insurance do I have to pay if I choose to go to an out-of- network doctor or hospital?

What PPO networks are available in my area for the plan I have chosen?

Will the PPO cover me if I am in another state and need to go to the doctor or hospital?

• Limitations and Exclusions- The state of Oklahoma has allowed insurance companies to exclude or limit certain services because they are not considered to be a necessity.  Also, some services (mental health, substance abuse treatment) may be limited.  Not all plans are equal and they limit different services.  At AASK Insurance, we will make sure to thoroughly explain these to you so you know what will and won’t be covered before you buy. 

Some examples of things that may be excluded are foot problems such as bunions, hammertoe, and spurs which may not be covered.  Neck, back, and spine care, out- patient services or testing may have limits.

Questions you should ask:

What are the limits and exclusions? 

(They can vary from company to company)

• Pre-Existing Condition- This is a broad subject and varies by company, but generally a pre-existing condition is anything that you have been treated for over the past 12 months.  When we are helping Oklahomans shop for health insurance, we take special time helping customers complete the application, including a thorough medical history, which makes this process simpler in the long run.  Often times, if you have been given a clean bill of health from a doctor regarding a certain condition, the insurance company will pay as normal or with limitations instead of excluding the service all together.  Some conditions may have a waiver or rider.  This means that it is excluded from coverage.  This can be for a certain length of time such as 2 years or indefinite.

Questions you should ask:

What is considered a pre-existing condition?

(If the condition is listed on the application some companies may cover them.)

How long before the condition will be covered?

Once you gain some familiarity with the health insurance lingo, you will be better prepared to purchase the best plan for yourself and your family.  Having an agent that you trust can make all the difference in the world.  As independent health agents in Oklahoma, we are able to shop from numerous companies and find a plan specific to your needs.  We feel confident we can make the world of Oklahoma health insurance seem less complicated and overwhelming.

Example;

Bob Smith broke his leg.  His policy is a PPO Plan with a $1000 deductible and coinsurance of 80/20% to $5000 then the plan pays 100% of allowable costs.

$20,000 Claim

$ 4,000  PPO discount ( discount depends on procedure and PPO)

----------

$16,000 

-$1,000  Deductible (you pay)

---------

$15,000

$ 1,000  Coinsurance 80/20 (20% of $5000) Partner together with Insurance company

_______

$14,000  Insurance company pays

$2,000  Client pays ($1000 deductible plus $1000 coinsurance)