Your helpful guide to understanding insurance terms and how they impact you so you can make the best choice for you and your families.
Health Insurance Terms & Definitions
Premium: The amount you pay for your health insurance every month, regardless of whether you use any medical services.
Deductible: The amount you must pay out of pocket for covered healthcare services before your insurance starts to pay.
Copayment (Copay): A fixed amount you pay for a specific healthcare service or prescription, usually at the time of service (example: you pay $25 every doctors visit or $15 every prescription you fill). The copayment amount is paid regardless of whether your deductible has been fully paid.
Coinsurance: The percentage of costs you share with your insurance after you've met your deductible. For example, if you have 20% coinsurance, you pay 20% of the cost of covered services while your insurance provider pays 80%. So if you have met your deductible and you receive a $2500 hospital bill you would pay $500.
Out-of-Pocket Maximum: The maximum amount you will pay for covered healthcare services in a plan year. After reaching this limit, your insurance will cover 100% of the costs for covered services.
Network: The group of doctors, hospitals, and other healthcare providers that have agreed to provide services at reduced rates to members of the insurance plan.
Out-of-Network: Healthcare providers or facilities not included in your insurance plan’s network. You may have to pay more for services from out-of-network providers depending on your plan type.
High-Deductible Health Plan (HDHP): A plan with a higher deductible and lower monthly premiums, often paired with a Health Savings Account (HSA).
Health Savings Account (HSA): A tax-advantaged savings account that can be used to pay for qualified medical expenses, often used in conjunction with a high-deductible plan (HDHP).
Other Helpful Definitions
Health Insurance Marketplace:
The Health Insurance Marketplace is an online platform where individuals, families, and small businesses can compare and purchase health insurance plans. It was established under the Affordable Care Act (ACA) to provide a centralized place for consumers to find and enroll in insurance plans that meet their needs and budget. There are federal and state-based marketplaces, each offering a variety of plans with different coverage levels and costs.
Through benefitbay's shopping tool, we populate data for you to shop a marketplace plans without having to leave our platform to do so.
Individual Coverage Health Reimbursement Arrangement (ICHRA):
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is a type of employer-funded benefit that provides employees with tax-free reimbursement for individual health insurance premiums and, in some cases, other qualified medical expenses. Unlike traditional group health insurance plans, which offer a single plan to all employees, an ICHRA allows employees to use the funds to purchase their own individual health insurance plans that meet their needs.