Houston Health Insurance Dictionary by Selected Benefits
Premium: Premium is the insurance payment amount; the premium quoted is the monthly cost for coverage. You will normally pay the premium via automatic bank draft or be billed monthly for it. Some insurance carriers offer Quarterly payment options as well. Choosing the automatic draft is the best option because this option prevents any chance of insurance coverage lapse due to late payments. In case of coverage lapse, you may request reinstatement, but if it has been more than 30 days, you will have to reapply and pay the new rates.
Co-payment: Co-payment or as it is called 'Co-pay' is the set amount that the insurance company requires you to pay for services such as doctor visits, prescriptions or emergency room visits.
The co-pay amount varies by insurance companies or for the same company by insurance plans. A co-pay example is Blue Cross Blue Shield of Texas / Select Choice individual plans charges $25 for unlimited doctor visits. Therefore, you will pay $25 for each doctor consultation and Blue Cross Blue Shield of Texas will pay the remainder of the doctor’s consultation bill.
Deductible: This is the set amount that you select and agree to pay out-of-pocket before the insurance company starts to pay any part of certain medical charges. Each plan has a deductible amount; for example, if you choose BCBSTX Select Choice 1500 deductible then you are agreeing to pay $1500 out-of-pocket in a calendar year before BCBSTX starts to pay their portion of the 80% co-insurance for laboratory or hospital charges. All plans have set deductibles and depending on the plan, you may have to satisfy the deductible before the insurance company pays for anything. The deductible may also apply to certain medical charges and others may be covered with co-pay such as the doctors consultation fee under the Select Choice plans.
Coinsurance: This is the amount that the health insurance companies require you to pay as your portion of the medical charges. For example, with the 80/20 coinsurance requirement, after you have satisfied the deductible, if the hospital bill is $1000, then you are responsible for 20% ($200) and the insurance companies pays the balance 80% or $800.
Out of pocket maximum: This is the maximum amount you will pay out of pocket for covered medical expenses per year after your deductible has been satisfied.
Using the above example: After you have satisfied your deductible, BCBS of Texas pays 80% and you pay 20% until you spend another $3,000. The insurance company pays 100% thereafter. Even with a $50,000 hospital bill, after the maximum out of pocket, the insurance company will pay 100% of the bill. The only limitation for covered medical expenses will be the lifetime maximum. If you’ve selected the BCBS of Texas Select Choice 1500, your total out of pocket would be $4,500 including your deductible ($1,500 for deductible and then another $3,000 to satisfy your co-insurance).
Lifetime maximum: This is the total that the insurance company will pay over the individual's lifetime. With the $5,000,000(five million) lifetime maximum, the insurance company has agreed to pay a maximum of five million dollars over the customer's lifetime.