If you are looking for an HMO type plan for your health coverage, it is important to understand the terminology that you will find in your policy and the explanation of benefits. By learning what these terms mean, you will be prepared to select the plan that best suits your individual needs.
Assignment of Benefits - This refers to the process of allowing a hospital or doctor to collect your benefits for the services that they provide right from the insurance company. This can be useful in cutting down on paperwork, and reducing your out-of-pocket expenses. Once you have selected to assign your benefits, the doctor or hospital will send the bill for your treatments to the insurance company.
Claim - A claim is similar to a bill. It is a notice that is sent to the insurance company, either from yourself, or from your doctor or hospital once you have had services performed. This claim will include the amount that your insurance company must pay for these covered services.
Co-Insurance - A co-insurance type plan means that you will need to provide a percentage of the total amount for health care that you receive. For example, if you visit a doctor and the total bill is 50.00, and you have an 80/20 co-insurance plan, you would pay 20% of this 50.00 and your insurance company would pay the remaining 80%.
Co-Payment - A co-payment is typically due before you leave a doctor’s office or hospital. This amount can be anywhere from $25 to $75. Co-pays may also apply for prescription benefits. For example, if your prescription is $100 and you have a co-pay of $30, your insurance company would pay $70 for the prescription and you would pay $30 when you pick up your prescription from the pharmacy.
Deductible - Health insurance plans have a minimum deductible. This amount can be as low as $250 or more than $5000. Your insurance company will typically require that your deductible be met before coverage is provided. As an example, let’s look at what would happen if you have a $500 deductible, and 100% coverage for medical services after this deductible is met. You require inpatient treatment that costs $750. You would need to pay, out-of-pocket, $500 for this treatment and your insurance company would make the rest of the payment. One month later, you require another $750 treatment. Your insurance company will pay for 100% of this fee, as long as it is in the same calendar year that your deductible was met.
Grace Period - A grace period is the time that an insurance company will give you to pay on a premium before the policy is cancelled. If your insurance premium is due on the 15 th of the month, and you have a ten day grace period, your payment would not be considered late until after the 25 th of that month.
Limitations or Exclusions - Insurance companies may refer to specific treatments, medications or services as a limitation or exclusion. This means that you will not receive any insurance coverage for a treatment that falls into this classification.
Medically Necessary - An HMO will typically only provide coverage for a service or treatment that has been classified as “medically necessary" by your primary physician or a specialist that you have been referred to as a patient.
Primary Physician - Your primary physician is the only physician that you may see and have your visits covered by an HMO. An HMO has a network of physicians that have agree to provide services to policy holders of an insurance company at a set rate. This is also referred to as “in-network." If you visit a doctor that is out-of-network, or a physician that has not contracted with your insurance company, your insurance company may not provide coverage for this treatment. When you sign up for a policy, you will be given a list of primary physicians in your area and you will need to select one from this list.
Referral - If you need to see a specialist, you will need to get a referral slip from your primary physician so that your treatments from this specialist will be covered.
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