Understand Health Insurance Terminology
Health insurance can feel complicated, but knowing a few key terms makes it easier to manage your care and costs.
Common Health Insurance Terms and Their Meaning
- Copay: A fixed amount you pay for a covered service, such as a doctor’s visit or prescription.
- Preexisting Condition: A health issue you had before your coverage began. Preexisting conditions are covered under COBRA.
- Deductible: The amount you pay out of pocket before your insurance starts covering costs. Plans with higher deductibles often have lower monthly premiums, while plans with lower deductibles usually cost more each month. Your deductible rolls over on COBRA.
- Coinsurance: The percentage of costs you share with your insurance company after meeting your deductible. For example, if your coinsurance is 20 percent, you pay 20 percent of the bill and your insurer pays 80 percent.
- Out-of-Pocket Maximum: The most you’ll pay for covered services in a year. Once you reach this limit, your insurance covers 100 percent of eligible costs.
- Premium: The amount you pay each month for your health insurance plan. Premiums do not count toward your deductible. COBRA costs $400 to $700 per month.
- Network: A group of doctors, hospitals, and other providers that have agreed to work with your insurance plan. Staying in-network usually costs less than going out-of-network.
- Formulary: A list of prescription drugs your insurance plan covers. Drugs not on the formulary may cost more or may not be covered at all. Prescriptions that were covered before remain covered while on COBRA.
- Prior Authorization: Approval from your insurance company before you receive certain services or medications. Without prior authorization, your plan may not cover the cost.
- Qualified Beneficiary: A person who is eligible to continue health insurance coverage under COBRA after a qualifying event, such as job loss or reduction in work hours. This can include the employee, their spouse, and dependent children.