Many terms on your health plan directly affect how much you pay for care. As such, it’s helpful to learn insurance language to better navigate your benefits and stay on top of health care spending.
Essential Terms to Know
Understanding common health insurance terms can help you avoid unexpected costs:
Premium
The amount you pay to a health insurer to maintain active coverage. Premiums may be paid monthly, quarterly or annually, and are often deducted from your paycheck.
Cost Sharing
The portion of covered services that you’re responsible for paying. Also called “out-of-pocket costs,” this includes copayments, coinsurance and deductibles.
Deductible
The amount you must pay for a covered service before health insurance pays its share of the bills. Some services, such as immunizations or health screenings, may be covered before you meet your deductible.
Copayment
A flat fee that you pay upfront for every covered healthcare service. The amount can vary depending on the type of service.
Coinsurance
A percentage of the cost that you must pay after you’ve met your deductible. For example, a specialist bills you $100. If your plan has 20% coinsurance and you’ve already met your deductible, you pay $20, while your insurance covers the remaining $80.
Out-of-pocket Maximum (OOPM)
The highest amount you’ll pay for covered health care services in a plan year. The OOPM amount varies by plan and typically includes coinsurance, copayments and deductibles.
Explanation of Benefits (EOB)
A statement from your health insurer breaking down what they paid, what you still owe and why. The EOB is not a bill, but can be used to verify charges.
Allowed Amount
The maximum amount that your health plan may pay for a covered service, and the figure used to calculate your share of the cost. In your EOB, it may also be called “eligible expense,” “negotiated rate” or “payment expense.”
What’s Next?
Review your health plan, note your costs and compare your EOB with the provider’s bill. Contact us with questions related to your healthcare costs.