Image of a woman with a phone

THE BASICS OF INSURANCE

When you’re sick or injured, or you or your child have a chronic illness, health insurance pays part of the cost of care. Many times, you get insurance through your employer, who shares part of the payments. Otherwise, you can get health insurance on your own.

It’s important to have health insurance because it can cover a sizable portion of the cost of unexpected health problems or accidents. Having insurance keeps you from being financially responsible for expensive medical care that can leave you deeply in debt without coverage.

Annual Limit

The annual limit is the maximum benefit amount your insurance will cover in a year. These limits can be placed on services, prescriptions, or hospitalizations and can involve dollar amounts or number of visits for a service. You are responsible for additional payments after you reach your annual limit.

Appeal

When your health insurance company denies a benefit or refuses to make a payment, you may ask for an appeal in an effort to get that decision reversed.

Benefits

Healthcare provider visits, prescriptions, services, or other things covered under your insurance plan are called your benefits.

Benefit Year

A year of benefits coverage under an individual health insurance plan is called your benefit year. Each plan has a start and end date; yours may not line up with a calendar year.

Claim

A claim is the request for payment that you or your healthcare provider submit to your insurance company.

COBRA

A COBRA plan helps you keep the health insurance coverage you have through your employer if you lose that job. With COBRA (Consolidated Omnibus Budget Reconciliation Act), you pay the entire premium plus a small administrative fee.

Coordination of Benefits

Coordination of Benefits (COB) is the process of determining which of two or more insurance policies will have the primary responsibility of processing/paying a claim and the extent to which the other policies will contribute.

Copay

A copay (or copayment) is the amount you pay for a covered service or prescription above what your insurance plan pays. The amount of your copay can change depending on whether you have met your deductible for the year or not.

Deductible

Your insurance company requires you to pay a certain amount of your covered medical bills first, before they will cover cost. This is called your deductible.

Family plans often have a deductible that applies to each person, plus a deductible that applies to your family as a whole.

Dependent Coverage

Dependent coverage is coverage for the policyholder’s dependent family members such as spouses, children, or partners.

Excluded Services

Excluded services are services your health insurance won’t cover.

Explanation of Benefits

The Explanation of Benefits (EOB) is a written form from your insurance company that explains what they have paid and what you must pay on a specific claim. An EOB is not a bill; a bill for final payments owed will follow.

Formulary

The list of prescription drugs that are covered by your insurance policy’s drug plan is called a formulary.

Grievance

A complaint that you have or file with your health insurer is called a grievance.

Letter of Medical Necessity

A letter written by a healthcare provider and submitted to your insurance company to help obtain coverage for costs they may not typically cover such as a wheelchair or a new medication. A letter of medical necessity is very important in obtaining adequate reimbursement for treatment of rare diseases like Duchenne.

Medicaid

The program that lets low-income people, families and children, pregnant women, the elderly, and people with disabilities get free or low-cost federal health insurance.

Medicare

The federal health insurance program for people aged 65 or older and certain younger people with disabilities.

Out-of-Pocket Maximum

Out-Of-Pocket Maximum (OOP) is the most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance, your health plan pays 100% of the costs of covered benefits.

Payer

Payer is another word for insurance plan.

Premium

Your insurance premium is the amount of money the insurance company charges you for your insurance policy; in other words, the cost of your insurance. If you get your insurance through your employer, it pays part of that premium.

Primary Care Provider

A primary care provider is the main healthcare provider, nurse practitioner, or other medical professional who provides general care and coordinates their patients’ access to other services or specialists.

Primary Insurance

Some people are covered by more than 1 health insurance plan. In this case, their primary insurance will pay on a claim first before their secondary insurance (such as Medicare) pays their amount of a covered claim.

Secondary Insurance

When people are covered by more than 1 health insurance plan (for example, the first through their employer and the second being Medicare), their primary insurance will pay on a claim first before secondary insurance pays on a covered claim. NOTE: See Coordination of Benefits.

Specialist

A physician who specializes in one certain area of medicine or group of patients such as a neurologist (who treats the nervous system) or a pediatrician (who treats only children) is called a specialist.

Subsidized Coverage

Health coverage available at reduced or no cost for people with incomes below certain levels is considered subsidized coverage such as Medicaid or the Children’s Health Insurance Program (CHIP).

TRICARE

A healthcare program for active-duty and retired uniformed service members and their families.