A recent meeting with a client reminded me that while the vocabulary of our industry may be second nature to those of us in the industry, it may feel like a foreign language, creating the first barrier to understanding, for those of you trying to navigate the health insurance arena. Therefore, today we will offer a user-friendly listing of the terms you may encounter.
PREMIUM – The money you pay to have an insurance product. Similar to when you check out at the grocery store and pay for your sacks of groceries, premium is what you pay for the product you purchased.
DEDUCTIBLE – Deductible is the amount of money you will pay out of your pocket before the health insurance plan starts to pay. Deductibles can vary by carrier, and plan. The Medicare Part A (Hospital coverage) deductible in 2014 is $1,216 per benefit period. The Medicare Part B (Medical IE: Doctor appointments etc) deductible in 2014 is $147 per year. If your current health insurance is through an employer, you may have a deductible as low as $250 or as high as $5,000. Most deductibles these days are per calendar year.
COBRA - Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that may allow you to temporarily keep health coverage after your employment ends, you lose coverage as a dependent of the covered employee, or another qualifying event. If you elect COBRA coverage, you pay 100 percent of the premiums, including the share the employer used to pay, plus an administrative fee.
CO-PAY – (Copayment) - An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor's visit, hospital outpatient visit, or prescription drug. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor's visit or prescription.
COINSURANCE - An amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage (for example, 20 percent).
EOB – Explanation of Benefits. The Explanation of Benefits (EOB) is the insurance company’s written explanation regarding a claim, showing what they paid and what the client must pay. The document is sometimes accompanied by a benefits check.
MSN – Medicare Summary Notice. Medicare Summary Notice (MSN) A notice you get after the doctor or provider files a claim for Part A or Part B services in Original Medicare. It explains what the doctor or provider billed for, the Medicare-approved amount, how much Medicare paid, and what you must pay. It is the same concept as an EOB, but is the notice you receive from Medicare.
COVERAGE GAP – relative to Medicare Part D (also known as the "Donut Hole") A period of time in which you pay higher cost sharing for prescription drugs until you spend enough to qualify for catastrophic coverage. The coverage gap (also called the "donut hole") starts when you and your plan have paid a set dollar amount for prescription drugs during that year.
PRIOR AUTHORIZATION – The definition from the Medicare website for this term reads as follows: approval that you must get from a Medicare drug plan before you fill your prescription in order for the prescription to be covered by your plan. Your Medicare drug plan may require prior authorization for certain drugs. However, from a non-Medicare insurance site we see the following definition: Prior authorization is a decision by your health insurer or plan that a health-care service, treatment plan, prescription drug, or durable medical equipment is medically necessary. Sometimes called pre-authorization, prior approval, or pre-certification. Your health insurance or plan may require prior authorization for certain services before you receive them, except in an emergency. Prior authorization isn’t a promise your health insurance or plan will cover the cost.