If you have recently started exploring health insurance policies for you and your family, you may find few unfamiliar words. Knowing the terms would help you to make an informed decision and choose your insurance policy wisely.
Below is the list of definitions and terms that would help you understand the terms and conditions of the insurance policy documents better.
What is a Health Insurance policy?
The insurance policy where you pay a certain sum periodically so that your medical expenses are fully covered in the future. To avail the claim you would need to pay a premium and on claim remittance from the care provider the insurer pays the claim.
Before the health insurance plan begins to pay for the costs incurred for medical treatments, you owe a certain amount that needs to be paid during this period of coverage. The deductible varies according to the services and is not applicable for all. The coverage period is usually one year in most of the cases.
Premiums are the amount that you need to pay periodically towards your insurance policy irrespective to whether you use the services or not.
Co-payment or co-pay is a fixed payment that is given by the beneficiary every time they take some service. The insurance company pays the remaining amount. Co-pays also vary depending upon the service type.
There is a difference between the deductible and co-pay, while deductibles are paid only till the insurance company begins to cover the cost, Co-pay is paid every time you avail of any service.
This is the percentage of medical cover that you share with your insurance company after the deductible is met. For instance, if you have chosen an 80:20 ratio plan, your insurance company covers 80% of the medical expenses while you pay 20% of the insurance company.
Out of Pocket Limit:
This is the limit beyond which your health insurance plan covers 100% of your medical costs for the remaining years. The amount you spend on deductibles, co-pays and coinsurance adds to your out-of-pocket limit. However, the premiums paid are excluded from the limit and so are the spending on the services that are not included in the coverage.
Your health care providers have a contract with a network of health care providers. These networks have a negotiation with the health care providers who have agreed to pay better rates for the services offered. If you choose to take services from these networks, you eventually pay less for the services availed.
Health management Organisation (HMO)
This type of plan offers you services from only the network hospitals and one need not pay for any charges as the insurance provider directly settles it. But the insurance plan does not provide any coverage for outside the network hospitals.
Preferred provider Organisation (PPO)
PPO plans do not restrict the insured to receive services from in-network Hospitals. In case the insured receives services from outside network hospitals, the insured can claim for reimbursement. And in case of network the amount is directly settled by the insurance company.