Insurance Glossary: Decode Your Coverage
Have you ever looked at your insurance paperwork and thought, “What does that mean?” You’re not alone. Here are some of the more common terms, defined.
All the services, medications and health related items your insurance covers are called “benefits.” It’s important to research and know your plan’s benefits in order to get the coverage you need.
Short for the Consolidated Omnibus Budget Reconciliation Act, COBRA is a federal law that allows you to keep health coverage temporarily if your coverage providing employment ends, you lose coverage as a dependent of a covered employee, or another qualifying event occurs.
This one pops up when you visit your doctor. Provided that you’ve met your deductible (see definition below), you will be asked to pay a fee that’s a fraction of the total cost of the medical service you’ve received, and your insurance company covers the rest. That fee is considered the co-payment, or co-pay. There are different co-pays for in-network and out-of-network services (for example, if you go to a doctor who doesn’t take your insurance, you will pay the out-of-network co-pay).
Coinsurance is similar to co-payments. But, instead of paying a flat fee for a service, coinsurance is a percentage of the cost of the service. For example, let’s say your coinsurance is 20% and your health insurance plan covers an office visit of $100. If you’ve paid your deductible, you would be responsible for paying 20% of $100 and the insurance company would pay the rest. Think of it as a form of cost sharing between you and your insurance company.
The deductible is the amount you are responsible for paying before your insurance company begins to cover any medical and, in some cases, prescription costs. After you’ve paid your deductible, you will typically be charged only a co-payment each time you visit a doctor or fill a prescription.
A premium is the amount you’re required to pay each month to maintain enrollment in your insurance plan. This doesn’t replace other kinds of payments, like co-pays and deductibles, but it ensures that you will continue to have coverage.
Prior authorization, or preauthorization, is the process by which your insurance company must determine that a particular service is “medically necessary” before you can receive it even if it’s a service or treatment prescribed by your doctor. This is not the same as the insurer agreeing to cover the service, however, so you may still be responsible for some of the cost.
Qualifying Life Event
A qualifying life event, or QLE, is a major life change that allows you to enroll in a new insurance plan without waiting for the open enrollment period to begin. Qualifying life events can include marriage, losing coverage from a job, aging out of a parental health insurance plan, or having a baby.