HEALTH INSURANCE

TERMINOLOGY

Balance Bill

Balance billing is when a provider bills you for the difference between what your provider billed (e.g., $1,000) and what your insurance paid (e.g., $450) + your ‘out-of-pocket’ responsibility (e.g., $50).  The balance in this scenario would be $500.  Providers are not always allowed to balance bill you.

Covered Services

Most medically necessary services are included in most health plans’ coverage.  There may be limits in coverage (e.g., maximum of 50 visits per year), and sometimes referrals may be required before insurance will pay.  Services that are not considered medically necessary (e.g., cosmetic surgery), or are experimental may be disallowed.  Prior to receiving services, determine what your health plan will cover.

Estimate of Cost

This is an estimate of your anticipated out-of-pocket costs provided by your specialist or insurance company prior to receiving surgical or other high cost services.

Explanation of Benefits (or EOB)

This is the insurance company’s summary of what they paid, what you’re responsible for paying and why.  The ‘explanation’ part of ‘EOB’ can sometimes be anything but.

Maximum Allowable Payment.

This is the maximum amount that your insurance company will pay to a participating provider.  Your ‘out-of-pocket’ responsibility plus your health plan’s ‘maximum allowable payment’ is the total payment amount that a participating provider is eligible for.  Sometimes non-participating providers’ reimbursement is limited to the ‘maximum allowable payment’, as well. 

Non-Participating Provider

Synonymous with 'out-of-plan', 'non-par', or 'out-of-network' provider.  Any provider with whom your health plan does not contract.  Sometimes non-participating providers can balance bill for uncompensated charges.  Know your health coverage and state statutes concerning balance billing before you pay.

Out-of-Pocket Costs

These are the costs that you, the patient, are responsible for paying.  Your health plan is responsible for paying the ‘Maximum Allowable Payment’ minus your ‘out of pocket’ costs.

Out of Pocket Costs include:

o   Deductible: The amount that you are required to pay annually before your health plan begins to make payments for claims.  In 2016 and 2017 maximum deductibles for HDHPs is $6,550 for individuals, and $13,100 for families.   

o   Copayment (or copay): The amount your health plan requires that you pay for a specific medical service or supply.  For example, your ‘copay’ might be $0 for some services, or it might be $15 an office visit, or $200 per hospital day.  Your benefit plan defines all of your copayments.

o   Coinsurance:  The percentage of your plan’s ‘maximum allowable payment’ that you are required to pay for services after you have satisfied your ‘deductible’ and ‘copay’.  For some plans (e.g., PPO), your plan might cover 75% of the ‘maximum allowable payment’, and you would be required to pay the remaining 25% as ‘coinsurance’.

Participating Provider

Synonymous with ‘in-plan’, ‘par’, or ‘network’ provider.  If your provider is participating with your health plan, he/she has agreed to accept your insurer’s maximum reimbursement amount.  Your payment responsibility covered services is your plan’s Maximum Allowable Payment minus Out-of-Pocket Costs.

REFERENCE PRICING

A cost containment strategy in which plan sponsors base provider reimbursement upon comparative cost for a service within a network or region.  A member who chooses a more costly provider for a particular service will pay more out of pocket than if that member chooses a lower cost provider within the network.