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Health Literacy 101
Let’s face it: Understanding health and benefits terms is like learning a foreign language.
Knowing the difference between co-insurance and co-payment can be confusing. And deciphering an EOB from COB shouldn’t require a PhD. Fortunately, you don’t need a foreign language professor or CIA codebreaker to understand all of these terms.
That’s what we're here for. We want to equip you to make the best choices for you and your family.
Learn the language of health care
PPO plan
A health plan that covers care provided both inside and outside the plan’s provider network. Preferred provider organization (PPO) members typically pay a higher percentage of the cost for out-of-network care. Seeing in-network providers can help members see significant savings.
HMO plan
A health plan that covers care provided by doctors and hospitals inside the HMO’s network. Health maintenance organizations (HMOs) often require members to get a referral from their primary care physician in order to see a specialist.
High deductible plan
A health plan with lower premiums and higher deductibles than a traditional health plan. Being covered by an HDHP is also a requirement for having a health savings account. Some HDHP plans also offer additional “wellness” benefits provided at no cost to you.
Indemnity plan
A health plan that allows you to direct your own health care and visit almost any doctor or hospital you like. Your insurance company then pays a set portion of your total charges.
Indemnity plans are also referred to as fee-for-service plans. An indemnity plan may also require you to pay for services up front and then submit a claim to your insurance company for reimbursement.
Health savings account (HSA)
Member-owned, tax-free savings you never lose. This type of savings account lets you set aside money on a pretax basis to pay for qualified medical expenses. An HSA can be used only if you have a high deductible health plan.
Flexible spending account (FSA)
Planned pretax dollars for qualified health expenses that must be used within a calendar year. This type of savings account lets you set aside money on a pretax basis. You decide how much to put in an FSA, up to a limit set by your employer. If money is left at the end of the year, your employer can offer one of two options:
• You get 2.5 more months to spend the leftover money
• You can carry over up to $500 to spend the next plan year
Health reimbursement account (HRA)
100 percent employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over and used in subsequent years. The employer funds and owns the account.
Health incentive account (HIA)
Account to receive incentive deposits to pay for qualified medical expenses. Your remaining balance rolls over each year as long as you remain enrolled in an eligible medical plan and you do not participate in an HSA. Unused funds are forfeited if you leave your job or if you lose eligibility.
Deductible
The amount you have to pay before your plan pays for specified services. Deductibles are usually an annual set amount. A deductible may apply to all services or just a portion of your benefits. It depends on your benefits plan.
Co-insurance
A set percentage of costs that are covered by your plan after your deductible has been paid. Your plan pays a higher percentage. You pay a lower percentage.
Co-payment
A small set fee. It is paid each time you have an office visit, outpatient service or prescription refill. The fee is determined by your health plan. Co-payments don’t vary with the cost of service.
Out-of-pocket expense
The amount you pay during a coverage period (usually one year) for your share of the costs of covered services. After you meet your maximum, the plan will usually pay 100 percent of the amount. This limit helps you plan for health care costs.
In-network
A doctor, health care professional or facility that is part of your health plan’s network of providers with which it has negotiated a discount. You usually pay less when using an in-network provider, because those networks provide services at a lower cost to your health plan.
Out-of-network
A doctor, health care professional or facility that isn’t part of your health plan’s network. If you use an out-of-network provider, your out-of-pocket costs (like co-payments, co-insurance and deductibles) are usually higher because out-of-network providers do not have a contract with your health plan to provide services at lower rates.
Coordination of benefits (COB)
Many families are covered by more than one health plan. The coordination of benefits (COB) process determines which plan pays first. It also determines if the second plan will pay any remaining charges not covered by the first plan. The process makes sure your doctor doesn’t get paid twice for the same service, and that you maximize your benefits.
Explanation of benefits (EOB)
An EOB is simply the statement explaining your benefits activity. It is not a bill. It includes the services provided, the amount billed and the amount paid, if any. You should review your EOBs carefully. Visit umr.com or call the number on your ID card if you have questions about an EOB.
