How to Decipher Health Insurance’s Perplexing Terminology

How to Decipher Health Insurance’s Perplexing Terminology
November 24 01:00 2015

Deciphering the terminology used by health insurance companies can be confusing and vexing.

The sea of gimmicky marketing buzzwords is piling on each year, resulting in making consumers do more research before they sign up for a plan. Ensuring that the plan you chose will cover all your health care needs is critical or you could be stuck without your favorite doctor for a year or an expensive prescription drug plan that you rarely use. Open enrollment ends on January 31, 2016.

Here’s guide to help you wade through all the buzzwords.

Copayment: The copay is the amount you have to pay when you see a doctor or pick up a prescription drug. Here’s the catch and why you need to read the small print. Insurance companies are aware that too many people examine plans by looking at the deductible and primary visit copay only, said Jack Hooper, CEO of Take Command Health, an online health insurance exchange based in Dallas. Now it’s become popular to use copays to help market plans, but “consumers should beware,” he said.

Some plans offer “two visits for $40 copay,” but the coverage behind it is limited. The copay only covers the office visit and since all your preventive visits are free, if you see a doctor to trigger the $40 copay, it’s likely you are ill or injured. Consumers will have to pay for strep tests and other diagnostics that are not covered under the office visit copay, he said. The “two” just means you get two office visits for $40 and then pay full price for the third and subsequent visits.

“Don’t be shocked when you walk out with a big bill,” Hooper said. “I think people will be mad when they get a $100 or higher bill.”

Copays can come in various forms, so it might cost you more than you believed. An office visit might have a $20 copay, a prescription drug could have a $25 copay and ambulance rides or ER care might require a copay of $100 to $250, said Nate Purpura, vice president of consumer affairs at, an online health insurance exchange based in Mountain View, Calif.

Another factor to consider is that a full-price office visit is usually between $80 to $120, he said. A $40 copay may not be that helpful for your budget since your premiums will be higher each month.

Instead of paying $200 more a month for a plan with a lower copay, go for a high deductible plan with “no charge after deductible,” Hooper said.

“Remember, your preventive visits are free and you’ll pay more if you’re sick,” he said. “It stinks to pay $120 when you visit the doctor for a cold or minor injury, but you’re saving $200 a month. Unless you’re going to the doctor every month, you’re wasting money focusing on the deductible and not the actual out of pocket cost and maximum out of pocket cost.”

Many consumers do not realize copays do not count toward the deductible. This might be a minor issue if you have to see your doctor a few times, but some plans include a $500 copay for ER visits. This does not mean a visit to the ER will only cost $500. If you chose one of these plans with a $4,000 deductible and sprain an ankle and need X-rays and head to the ER, the average cost is $1,500, Hooper said. The visit will cost $500 and the rest will go toward the deductible. A consumer will wind up paying the full $1,500 and only $1,000 will go towards your deductible, which means you still have $3,000 to go, he said.

“This isn’t a big deal for $20 office visits and $40 labs, but we’re starting to see plans this year, particularly from Blue Cross Blue Shield that have the $500 copays for the emergency room,” Hooper said. “You’re going to get a bill for three times what you’re expecting.”…

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