Health Insurance Dictionary Terms

Premium:Premium is the insurance payment amount; the premium quoted is the monthly cost for coverage. You will normally pay the premium via automatic bank draft or be billed monthly for it. Choosing the automatic draft is the best option because this option prevents any chance of insurance coverage lapse due to late payments. In case of coverage lapse, you may request reinstatement, but if it has been more than 30 days, you will have to reapply and pay the new rates.

Co-payment: Co-payment or as it is called 'Co-pay' is the set amount that the insurance company requires you to pay for services such as Doctor visit, prescription or emergency room visit.

The co-pay amount varies by insurance companies or for the same company by insurance plans. A co-pay example is Blue Cross Blue Shield of Texas-Select Choice individual plans charges $25 for unlimited dr visits. Therefore, you will pay $25 for each Dr consultation and Blue Cross Blue Shield of Texas will pay the remainder of the Dr's consultation bill. Deductible: This is the set amount that you select and agree to pay out-of-pocket before the insurance company starts to pay any part of certain medical charges. Each plan has a deductible amount; for example if you choose BCBSTX Select Choice 1500 deductible then you are agreeing to pay $1500 out-of-pocket in a calendar year before BCBSTX starts to pay their portion of the 80% co-insurance for laboratory or hospital charges. All plans have set deductibles and depending on the plan, you may have to satisfy the deductible before the insurance company pays for anything or the deductible may apply to certain medical charges and others may be covered with co-pay such as the Dr's consultation fee under the Select Choice plans.

Coinsurance: This is the amount that the health insurance companies require you to pay as your portion of the medical charges. For example with the 80/20 coinsurance requirement, after you have satisfied the deductible; if the hospital bill is a $1000, then you are responsible for 20% ($200) and the insurance companies pays the balance 80% or $800.

Out of pocket maximum: This is the maximum amount you will pay out of pocket for covered medical expenses per year. Using the above example; With a $3000 out of pocket maximum; you will be pay your 20% coinsurance till you have satisfied the first $3000 per year. The insurance company pays 100% after you have paid out your maximum out of pocket. Even with a $50,000 hospital bill, after the maximum out of pocket, the insurance company will pay 100% of the bill, the only limitation for covered medical expenses will be the Lifetime maximum.

Lifetime maximum: This is the total that the insurance company will pay over the individual's lifetime. With the $5,000,000 (five million) lifetime maximum, the insurance company has agreed to pay a maximum of five million dollars over the customer's lifetime.