Glossary Section 2-Understanding Your Costs

Navigating the healthcare system can feel like learning a new language. Knowing the right terms matters. It can help you

• Understand what your insurance will and won't cover.
• Know what questions to ask about your health insurance, financial assistance, or income.
• Avoid unexpected costs.
• Get financial help.
• Advocate for yourself or your patients when insurance companies deny coverage or when bills don't add up.

This glossary is a tool you can use whenever you aren't sure about a word or term. It covers health insurance basics, prescription drug coverage, billing, the approvals and appeals process, financial assistance, and income support.

Remember, health policy, program eligibility, and insurance rules change all the time. It is a good idea to check with your insurance company, job, healthcare providers, or other federal/state agencies about your specific needs or questions about your coverage.

Key Terms

Allowed Amount: The maximum amount your health insurance plan will pay for a covered service. This is usually a rate that is agreed upon between your insurer and your in-network provider. Your copay, coinsurance, and deductible are based on the allowed amount. If your provider charges more than the allowed amount, you do not have to pay the difference if they are in-network. But if you go out-of-network, you may have to pay the difference. Sometimes this is called “eligible expense,” “payment allowance,” or “negotiated rate” on your explanation of benefits (EOB).

Balance Billing: When an out-of-network provider bills you for the difference between what they charge and what the insurance pays (allowed amount). Sometimes, this can lead to large, unexpected medical bills. The No Surprises Act protects you from balance billing when you are getting emergency care or have no other choice in providers.

Coinsurance: The percentage of costs for care and procedures you are responsible for after meeting the deductible. Your insurance company pays the rest. Coinsurance payments do count toward your maximum out-of-pocket (MOOP). Once you reach your MOOP, you are covered at 100%.  For example, if your plan has a 20% coinsurance, you pay 20% of the allowed amount, and your insurance pays 80%.

Co-pay: A fixed fee for a covered service you pay. Co-pays are set by your insurance plan and can vary depending on the type of service or provider you see. You can have co-pays to see a doctor, have a test, or fill a prescription. They are usually due at the time of your visits. It is important to check with your plan to see if your co-pay counts towards your deductible and maximum out-of-pocket (MOOP).

Deductible: The amount you must pay before your insurance begins to cover healthcare costs. Your deductible resets at the start of each new benefit period. Preventive services are covered before you meet your deductible. You may have a separate deductible for your prescription drugs. Deductible payments count toward your MOOP. If your family is covered under your plan, there can be an individual and a family deductible. For example, if your individual deductible is $1000 and the family deductible is $3000, once one family member pays $1000 in covered costs, insurance starts paying for that person. Once the whole family (as a unit) has paid $3000, insurance starts paying for everyone, even if some family members haven't met their individual deductible.

Facility Fee: An extra charge added to your bill that covers the cost of using the facility’s building, equipment, and staff support. These fees are charged separately from the provider’s fee for the service, and different insurance plans cover facility fees in different ways. Before your visit, ask about facility fees.

Maximum Out-of-Pocket (MOOP): The most you will pay out-of-pocket for covered healthcare services in a benefit period. Once you reach your MOOP, you are covered at 100% for the rest of the benefit period. You can have more than one MOOP - one for in-network, out-of-network, and/or pharmacy costs. There may also be separate MOOPs for an individual and a family. Your deductible, coinsurance, and co-pays may count toward your MOOP. Premiums do not count toward your MOOP.

Premium: The amount you pay for your health insurance coverage. You pay your premium if you use your insurance or not. Premiums do not count towards your deductible or your MOOP. If you don’t pay your premium, your coverage can be cancelled. Sometimes, you will have more than one premium. For example, Medicare Part B, D, and Medigap premiums are all separate.

Self-Pay: When you pay for healthcare services directly out of pocket without using insurance. This may be because you are uninsured, your insurance doesn’t cover a service, or you choose not to use your insurance because the self-pay rate may be lower (often seen with prescription medications). Sometimes, self-pay rates are discounted. Ask about these rates before your visit.

Sliding Scale: A way of charging for healthcare services where the cost is based on your income. The less you earn, the less you pay. This is often used at federally qualified health centers (FQHCs) and some behavioral health providers. You may need to provide proof of income to qualify. Sliding scale fees can be used with insurance coverage.