Health insurance comes with its own vocabulary, and misunderstanding one term can cost you hundreds of dollars. Samantha Lewis breaks down the terms we get asked about most, each with a short video.
HMO vs. PPO
An HMO (health maintenance organization) usually requires you to use doctors and hospitals in its network and to choose a primary care doctor who refers you to specialists. HMOs generally have lower premiums. A PPO (preferred provider organization) costs more but gives you more freedom: you can see specialists without a referral and get some coverage out of network, at a higher cost.
Copay vs. coinsurance
A copay is a fixed amount, such as $30 for a doctor visit. Coinsurance is a percentage of the cost, such as 20% of a hospital bill, that you pay after meeting your deductible. Copays are predictable; coinsurance depends on how expensive the care is.
Deductible and out-of-pocket maximum
Your deductible is what you pay for covered care before the plan starts sharing costs (preventive care is often covered before the deductible). Your out-of-pocket maximum is the most you’ll pay in a plan year for covered, in-network care. After you reach it, the plan pays 100% of covered in-network costs for the rest of the year.
In-network vs. out-of-network
Insurers negotiate discounted rates with in-network providers. Go out of network and you may pay much more, or the plan may not pay at all, depending on the plan type. Before you book, confirm the specific doctor and facility are in network for your exact plan.
Pre-authorization
Some services, such as MRIs, surgeries and certain medications, need approval from your insurer before you receive them. If pre-authorization is required and not obtained, the claim can be denied. Ask your doctor’s office to confirm it has been approved before the appointment.
“Free” preventive care
Most health plans cover recommended preventive services, such as annual checkups, many screenings and vaccines, with no copay when you use an in-network provider. It isn’t truly free, since your premiums pay for it, but there’s no extra charge at the visit. If a visit turns into diagnosing or treating a new problem, cost-sharing may apply.
Urgent care vs. the emergency room
For a sprain, minor cut, ear infection or flu symptoms, urgent care is usually faster and far less expensive. For chest pain, trouble breathing, severe bleeding, stroke symptoms or a serious injury, go to the emergency room or call 911. Choose based on how serious it is, not on cost.
Still deciding on a plan?
Comparing plans is easier with someone who knows the networks in southeast Michigan. We help individuals, families and self-employed residents choose coverage on and off the Marketplace. Explore health insurance, read the health insurance FAQs, or call (734) 525-9450.