Medical Insurance Glossary - Common Terms You'll Need To Know

In order to get the right health insurance policy, you'll need to do your homework. No one can make that informed decision but you. But, there is lots of tricky terminology that you have to understand first.

Here are some of the most common terms you'll need to know in order to choose the right insurance plan.

Premiums and Deductibles - Your premium is how much you pay each month. If you are getting group insurance through your employer, this is how much they will take out of your paycheck for insurance. The deductible is what you pay when you go to the doctor, hospital or use your insurance to buy prescription drugs or supplies.

Coinsurance - This is what you have to pay after the deductible. The deductible will be a fixed amount after which you split the cost with your insurance company. Coinsurance is usually expressed as a percentage. For example, you might have a rate of 10%. That means that you pay 10% and the company gets the rest.

Copayment - You might have heard of "co-pay." This means a system where you pay a certain amount of each doctor visit and your company gets the rest. For example, your co-pay might be $10. Each time you go to the doctor, you pay $10 and then the insurance company gets the rest. This is a common feature of group health insurance plans.

Out-Of-Pocket Expenses - Most simply put, this is what you are required to pay in deductions and coinsurance or co-payment when you get medical care of some sort. Some insurance plans offer a "maximum out-of-pocket" rate, meaning that if out-of-pocket expenses reach a certain level, they will pay the rest.

Health Insurance Savings Account, or HSA - This is a tax-free savings account you can put money into. You can access and use this money when you have to pay for the doctor or other medical expenses. Many carriers use an HSA and pick a plan with a low premium and high deductible; this way, when they go to the doctor and have to pay that high deductible, they can use this extra cash, and it saves them money.

Pre-existing Conditions - These are illnesses or medical conditions that you have before you take out the policy. In general, anything you have sought medical attention for in the past, especially the last five years, is considered a pre-existing condition. You have to tell them about it in detail, and they will use it to assess the risk of insuring you. Technically, if you had a health condition when you signed on with an insurance company that you didn't know about, it is not considered a pre-existing condition.

Exclusions - This is a really important part of your health insurance policy. These are things that your insurance will not cover. With individual plans, you will have more exclusions. An exclusion might include a carrier's pre-existing conditions, or a certain type of illness.

Primary Care Physician - Some health plans such as HMOs require you to choose a doctor as your Primary Care Physician. In this case, you must go to this particular doctor for check-ups and treatment, or it will not be covered by your insurance. Your doctor can refer you to a specialist or hospital if necessary and you can keep your coverage.

When you're looking for a health insurance plan, make sure you know all the things you need to know. Understand these terms and concepts, and ask whatever questions you need to.