Health Insurance Terms That Everyone Should Know

Understanding what a health insurance cover says can be compared to trying to understand a language that is totally foreign for your classes. The fact of the matter is that the insurance industry loves using sophisticated terminologies for a very basic concept. However, in order to make an educated decision before buying the cover, you have to comprehend these words to avoid the shock bill next time you visit the physician.

This article will help us to understand some of the terminologies commonly used in health insurance covers.

1. Premium

The premium is the money you pay for having insurance. It is a fixed sum which you must pay to the insurance company regularly, usually monthly or yearly.

Think about it as your phone bill or a Netflix payment. You pay a certain amount every month, irrespective of whether you use the service or not. If you stay healthy and do not visit a doctor during the year, you still need to pay your premium. However, if you stop paying, your insurance no longer works effectively immediately.

2. Deductible

In simple terms, a deductible can be defined as the amount of money that a person pays personally for his/her health until the insurer begins its part.

Let's say that your plan has a ₹15, 000 deductible and you get a hospital bill for ₹20, 000, then you need to pay the first ₹15, 000 out of your pocket. Once you reach that amount, the insurance company takes care of the remaining amount of ₹5, 000. It can be concluded here that the plan which has low premium rates will have high deductibles, and the plan that comes with high premium rates has low deductibles.

3. Copay

As far as the definition of copay is concerned, it refers to a nominal amount of cash that you pay directly from your pocket at the time of purchasing medication or seeing a doctor.

Imagine your policy includes a ₹500 copay when you do a regular doctor checkup and a ₹200 copay when you buy a medicine. You pay this amount at the reception when you have a doctor's appointment, and your health insurance company takes care of the rest of the doctor's fee for that particular visit.

4. Coinsurance

Coinsurance resembles a copay a lot. But instead of a fixed amount in rupees, it is a percentage of the total bill. It often comes into play after you have exhausted your deductible for the year.

If your coinsurance is 20 percent, then you will be responsible for covering 20 percent of your medical cost, while the rest will be covered by the insurance firm in the ratio of 80 percent. Therefore, if a certain treatment costs you ₹10, 000, then you will be required to pay ₹2, 000 only.

5. Network

Network refers to a group of healthcare professionals, including doctors, hospitals and even clinics, who have made a contract with your insurance company to provide services at a lower, reduced price.

In-Network: Your bill will be substantially covered when you seek treatment from this approved group, and thus, you will save some amount of money through this process.

Out-of-Network: You will either get no coverage at all or will receive a minimal payment when seeking treatment from a healthcare professional outside this approved list.

6. Out-of-Pocket Limit

This is the maximum amount of money that you will have to lay out for your healthcare in a year. It is meant to be a kind of financial protection that shields you from depleting all your savings in case you have a serious accident or a long illness.

All your deductible, copays, and coinsurance spends count towards this limit. When your total personal spending reaches this level, you no longer have to pay. The insurance company will cover 100% of all your medical expenses they cover for the rest of that year.

7. Claim

A claim simply means a formal communication to the insurance firm, wherein you request payment for your medical treatment.

If you happen to visit a doctor who is on the approved list of the network, the reception at the clinic will handle the task of submitting the claim to the insurance provider on your behalf. You will not have to fill out any forms. However, if you consult a physician outside the network, you may have to pay the entire bill first, and then submit the claim documents by mail to the insurance company for reimbursement.

Summary

Mastering these few health insurance terms can be a significant step towards making the process of choosing a plan a lot less nerve-wracking for you. Also, when you understand perfectly well what words such as premium, deductible, and network stand for, you will be far less likely to be caught unawares by the surprise costs.

It is a matter of selecting a policy that fits well within your financial means and is also able to take care of your health with confidence.