ALLOWED AMOUNT

The insurance carrier’s predetermined dollar amount for a specific service, based on reasonable and customary charges.

BALANCE BILLING

An out-of- network healthcare provider billing a patient for the difference between what the patient’s health insurance reimbursement amount is and what the provider charges.

Explanation:

The most important advantage of having health insurance is the ability to benefit from cost negotiations between the insurance company and the provider. When seeing an in-network provider, the patient pays an amount that has previously been negotiated and discounted with the insurance company (via a provider contract). These savings can result in hundreds to thousands of dollars. When seeing a provider that does not participate with the insurance company (aka out-of-network), there is no contract between the insurance company and the provider. This means that the amount the provider is permitted to bill the patient has not been negotiated or discounted in any way. If the patient's plan has out-of-network benefits, the insurance company will still pay a portion of the out-of-network claim, but their payment is based on the amount they would pay an in-network provider (known as the "allowed amount"), not the provider’s total billed amount. Since there is no contract in place, the provider is not required to write off the cost difference between what the insurance company pays and what the provider charges and can bill the patient the difference. This is balance billing.

Here is an example: Monica has knee surgery and decides to use a surgeon that is not participating with the insurance company. Monica has insurance coverage through her employer, and the plan pays 80% of the allowed amount. Monica's share will be 20% according to the benefit plan.

• Provider bills $2,800 for the service
• The Insurance company's allowed amount for this service is $1,800
• The insurance company pays the claim according to the benefits on Monica's plan which is 80% of the allowed amount of $1,800 = $1,440. Monica is responsible for 20% of $1,800 = $360.
• Because Monica chose to see an out of network provider, the provider can balance bill her the difference between their total billed amount for the surgery and the insurance company’s allowed amount ($2,800 - $1,800 = $1,000 in balanced billing charges)

In this example, Monica will owe the provider the balanced billed amount as well as the 20% coinsurance from the benefit plan, which is a total of $1,360. If Monica had seen a provider that was in-network with the insurance company, she would only owe $360. An in-network provider is required by contract to disregard the difference between the amount billed and the amount allowed.

COINSURANCE

The percentage of costs of a covered health care service you pay after you’ve paid your deductible. For example, if you pay 5 percent of an in-network covered charge, the plan pays 95 percent.

Important Note: Coinsurance percentages are based on the insurance carrier’s allowed amount, not the provider’s total amount billed

CO-PAYMENT

A fixed amount you pay for a covered health care service after you’ve paid your deductible.

DEDUCTIBLE

The amount you pay for covered health care services before your insurance plan starts to pay.

Embedded deductible means that any member of a family will not have to pay more than the individual deductible before he/she begins to pay coinsurance.

Non-embedded deductible means that the entire family deductible must be satisfied before any member of the family begins to pay coinsurance.

EMERGENCY SERVICES

Evaluation of an emergency medical condition and treatment to keep the condition from getting worse.

FORMULARY

A list of prescription drugs that are covered by your health insurance plan. The formulary is separated into cost levels called tiers, which affects how much you pay for each drug. Also known as a Prescription Drug List (PDL).

HEALTH SAVINGS ACCOUNT | HSA

A tax advantaged savings account that is owned by you and can be funded with tax free contributions for the purpose of paying for qualified health care expenses today and in the future. HSA’s can only be funded by those who are enrolled in a Qualified High Deductible Health Plan (HDHP).

NON-PREFERRED PROVIDER

A provider who doesn’t have a contract with your health insurer or plan to provide services to you; also known as an out-of-network provider. You’ll pay more to see a non-preferred provider. Check your policy to see if you can go to all providers who have contracted with your health insurance or plan, or if your health insurance has a tiered network and you must pay extra to see some providers.

OUT-OF-POCKET MAXIMUM

The most you could pay during a plan year for your share of the costs of covered services. After you meet this limit, the plan will pay 100% of the allowed amount. There are separate in- and out-of-network out-of-pocket maximums. All copays, deductibles, and coinsurance accrue to the out-of-pocket maximums. Your out-of-pocket maximum is on a contract year basis. Refer to your healthcare plan summaries for more information.

PRE-AUTHORIZATION

A decision by your health insurer or plan that a health care service, treatment plan, prescription drug is medically necessary.

PREMIUM

The amount that must be paid for your health insurance or plan each month. This amount is shared by you and your employer.

PRIMARY CARE PHYSICIAN

A physician who directly provides or coordinates a range of health care services for a patient.

SPECIALIST

A physician specialist focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent, or treat certain types of symptoms and conditions.

UCR (USUAL, CUSTOMARY AND REASONABLE)

The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical services. The UCR amount sometimes is used to determine the allowed amount.

URGENT CARE

Care for an illness, injury or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.