Defining Terms in Health Insurance

Defining Terms in Health Insurance

Health insurance communications are filled with a vocabulary that isn't always intuitive. To add to the confusion, acronyms are commonly used. What you're left with is a nondigestible alphabet soup that contains important information for your out-of-pocket cost as a patient. In this blog, we hope to shed light on some important health insurance terms. We will list several commonly used terms with their acronyms and provide some context and transparency to the language of health insurance.

Out-of-pocket (OOP):

Out-of-pocket: (OOP) is the term used to indicate the total amount due from the patient. It is their financial responsibility for the processed claim. The final OOP amount is determined by the health plan after any copayments, coinsurance, and unmet deductible amounts are calculated into the amount to be paid to the provider. Patient OOP, plus insurance payment, results in the total amount due to the provider.

Claim:

A claim is a term for a healthcare bill from a provider to an insurance company for a member’s services. A claim contains important information describing the services rendered and the diagnosis information justifying the services. An insurance company will only pay on “clean” claims, meaning claims that have all required fields accurately completed by the provider’s billing office.

Copayment:

A copayment is a flat rate fee due from the patient directly to the provider at the time of service. Copayment amounts vary by type of service and are predetermined by a health plan at the time you elect your health plan benefits.

Coinsurance:

Coinsurance denotes the percentage of the amount due (as determined by the health plan), which is the financial responsibility of the patient. Like copayments, the coinsurance percentages vary by type of service and are predetermined by a health plan at the time you elect your health plan benefits.

Deductible:

A deductible is the amount a patient must pay out-of-pocket for healthcare services before health insurance benefits kick in. Deductibles usually come in two amounts, one for in-network services and one for out-of-network services. As motivation to steer patients to contracted providers, the in-network deductible is typically lower than the out-of-network deductible amount.

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