When you buy an insurance plan, you join a group of other people to combine your healthcare purchasing power. That way, everyone shares the cost of staying healthy. You also agree to pay a monthly fee in exchange for a variety of benefits. 

Here are several of the most common terms you’ll come across. Becoming familiar with them will make it easier to understand the details and total cost of the plan: 

Benefits.

 

Benefits are payments the plan makes to cover all or part of covered medical expenses. They vary according to the plan you choose and usually include a portion of the cost of doctors’ visits, prescription medicine, hospital charges, ER visits, and more. 

Premiums.

 

These are the payments you make for your insurance. How do insurance companies figure out what your premium will be? Rates are affected by many things, including the cost of the various medical services they will cover and how likely their policyholders, or customers, are to need those services.

 

PPO

• Usually includes an annual deductible and coverage begins after it has been fully paid. Coverage is sometimes available prior to meeting that deductible for services such as doctor visits (which require a low Co-pay).

• Includes a network of physicians, hospitals, and specialists that have agreed to offer services at a reduced fee. 

• No referral from a primary care physician is required to see a specialist.

• Allows the flexibility to visit providers outside the network for a slightly higher fee and a separate deductible.

• Often requires a claim to be filed before your benefit reimbursement can be made.

• Co-pays and monthly premiums are typically higher than that of an HMO plan (see below) due to the flexibility.

 

HMO

• HMO plans usually have co-pays and monthly premiums that are lower than those of a PPO plan. 

• There is a network of physicians, hospitals, and other specialists offering services at a reduced fee. 

• The patient chooses a primary care physician who helps coordinate the patient’s care. This physician must provide a referral for the patient to see an in-network specialist.

• No coverage for providers outside of the HMO network of physicians, hospitals, and specialists, meaning you’re charged the full fee if you choose to visit them, with the exception of medical emergencies.

• Few or no claims to be filed, since the insurance company pays the provider directly.