Sage
Insurance terms, in plain language
The words on your plan, explained the way a person would explain them. No account, no jargon inside the definitions.
Back to Sage- Deductible also: annual deductible
The amount you pay for covered care out of pocket before your plan starts paying its share. Ask your provider for an in-network cost estimate, and you can expect that cost to be the amount you pay towards your deductible. Some services, like preventive care, are covered before you meet it. HSA and FSA funds can pay for the bills that go towards your deductible.
With a $1,500 deductible, you pay the first $1,500 of covered care. In-network and out-of-network care usually have separate, different deductibles.
- Copay also: copayment
A fixed dollar amount you pay for a covered service, known up front. On many plans it does not depend on your deductible.
A $30 copay to see your doctor means you pay $30 at the visit, no matter what the full bill is.
- Coinsurance
Your share of a covered service written as a percentage, usually after you have met your deductible. Because it is a percentage of the plan's negotiated price, the exact dollar amount is not known until the care is billed.
20% coinsurance means if the plan's allowed amount for a service is $200, you pay $40 and the plan pays the rest.
- Out-of-pocket maximum also: out-of-pocket limit, OOP max
The most you have to pay for covered care in a plan year. Once you hit it, the plan pays 100% of covered services for the rest of the year. Premiums and non-covered care do not count toward it.
After your deductibles, copays, and coinsurance add up to your out-of-pocket maximum, you pay nothing more for covered in-network care that year.
- Allowed amount also: negotiated rate, eligible expense
The price your plan has agreed to pay an in-network provider for a service. Your coinsurance is calculated from this number, not the provider's sticker price.
A provider may bill $300, but if the plan's allowed amount is $200, your 20% coinsurance would be $40, based on the $200. The 20% coinsurance applies after the deductible has been met.
- Network
The doctors, hospitals, and pharmacies that have agreed to your plan's negotiated prices. Staying in the network is how you keep your costs predictable.
Your plan's network is tied to your plan prefix. You can look up who is in it in the provider directory.
- In-network also: participating provider
A provider that is part of your plan's network and bills at the plan's negotiated rate. Your cost-sharing is lower, and you are protected from balance billing.
An in-network specialist might be a $60 copay. The same visit out-of-network could be 40% coinsurance after a much higher deductible.
- Out-of-network also: non-participating provider
A provider that has not agreed to your plan's rates. You usually pay more, often a higher deductible and higher coinsurance, and you can be balance billed for the rest.
Out-of-network care often runs against a separate, higher deductible. Confirm a provider is in-network before you book to avoid a surprise bill.
- Balance billing also: surprise bill
When an out-of-network provider bills you for the difference between their full charge and what your plan paid. In-network providers cannot do this.
If an out-of-network provider charges $300 and your plan's allowed amount is $200, they may bill you the extra $100 on top of your coinsurance.
- Plan prefix also: alpha prefix, member ID prefix
The first three letters of your member ID. It identifies your specific plan and network, and it is what a provider directory uses to show who is in-network for you.
Enter your plan prefix and ZIP code in the provider directory to see only the providers in your network.
- Referral
An okay from your primary care doctor to see a specialist. Some plans require one before they will cover the specialist visit; many PPO plans do not.
If your plan does not require referrals, you can book a specialist directly. If it does, the specialist visit may not be covered without one.
- Claim
The bill your provider sends your plan for a service. The plan processes it, pays its share, and tells you what you owe.
One visit can create several claims, for example the doctor and the lab bill separately, which is why you might see more than one charge.
- Explanation of Benefits also: EOB
A summary your plan sends after a claim. It is not a bill. It shows what the provider charged, what the plan paid, and what you owe.
If your EOB and your provider's bill do not match, that is worth checking before you pay, sometimes the EOB is still processing.
- Coordination of benefits also: COB
The rules that decide which plan pays first when you are covered by more than one, so the plans do not both pay for the same thing.
If you have your own plan and are also on a spouse's plan, coordination of benefits sets which one is primary.
- Medically necessary
Care your plan considers appropriate and needed to diagnose or treat a condition. Coverage of some services depends on the plan agreeing it was medically necessary.
A service can be covered in general but still be denied for a specific claim if the plan does not consider it medically necessary, which a Health Navigator can help appeal.
- Preauthorization also: prior authorization, pre-auth, prior auth
Approval your plan requires before it will cover certain services or drugs. Getting it does not guarantee the claim is paid, but skipping it when it is required usually means you pay in full, plus a 50% pre-cert penalty.
Some imaging, surgeries, and medications need preauthorization. Your provider's office usually requests it before the service.
- Formulary also: drug list, preferred drug list
The list of prescription drugs your plan covers, sorted into tiers that set what you pay. A drug not on the formulary may not be covered.
Checking the formulary tells you a drug's tier, and therefore its cost, before you fill it.
- Drug tier also: formulary tier
The cost level a drug sits in on the formulary. Lower tiers (usually generics) cost less; higher tiers (brand and specialty drugs) cost more.
A Tier 1 generic might be a $10 copay while the Tier 3 brand version of the same drug is $70. Same medicine, very different cost.
- Generic vs. brand also: generic drug, brand-name drug
A generic has the same active ingredient as the brand-name drug and works the same way, but sits in a lower tier and costs much less.
Asking your doctor or pharmacist whether a generic exists is one of the easiest ways to lower a prescription cost.
- Specialty pharmacy also: specialty drug
A pharmacy that handles complex, high-cost drugs (often injectables or biologics). Plans usually require these drugs to be filled there, or they are not covered.
A biologic for an autoimmune condition typically must go through the specialty pharmacy and often needs preauthorization.
- Step therapy also: fail first
A rule that you try a preferred, usually lower-cost drug first, and only move to the more expensive one if the first does not work for you.
Your plan may cover the brand drug only after you have tried the generic, unless your doctor documents a reason you need the brand.
- Mail-order pharmacy also: home delivery, 90-day supply
Getting a longer supply (often 90 days) of a regular medication delivered by mail, usually at a lower cost per month than picking it up monthly.
For a maintenance drug you take every day, a 90-day mail-order fill often costs less than three monthly retail fills.
- PPO also: preferred provider organization
A plan type that lets you see specialists without a referral and use out-of-network providers at a higher cost. You save the most by staying in-network.
On a PPO you can book a specialist directly, but going out-of-network still means higher cost-sharing.
- High-deductible health plan also: HDHP
A plan with a higher deductible and lower premium. Most care is coinsurance after you meet the deductible rather than a flat copay, and it can be paired with an HSA.
On an HDHP, a doctor visit is usually a percentage after your deductible, not a fixed copay, so the cost depends on the visit.
- Health savings account also: HSA
A tax-advantaged account you can pair with a high-deductible plan to pay for care. The money is yours, rolls over each year, and is not taxed when used for eligible care.
You can use HSA dollars to pay toward your deductible or coinsurance, which softens the higher deductible of an HDHP.
- Preventive care also: preventive services
Routine care meant to keep you healthy or catch problems early, like annual checkups, screenings, and vaccines. In-network preventive care is usually covered at no cost to you, even before your deductible.
Your annual physical is typically $0 in-network. If the doctor also treats a specific complaint during it, that part may be billed separately.
- Urgent care vs. ER also: emergency room, urgent care
Urgent care handles non-life-threatening problems that still need attention today, usually at a much lower cost than the emergency room. The ER is for true emergencies and carries a far higher copay.
For a sprain or a fever, urgent care may be a $60 copay while the ER is a $350 copay. For chest pain or trouble breathing, the ER is the right call regardless of cost.
Prototype. General definitions, not advice about your specific plan. Not affiliated with any insurer.