You wouldn't try to navigate a foreign country without knowing at least something about the culture before you visited, would you? Health insurance is a foreign subject for a lot of people and understanding the basics can help you navigate your coverage.

Learn these terms to boost your foundation.

• The amount charged is what your provider charges for a service-and it can be whatever amount he or she wants. But a health insurer can establish the amount allowed, or the maximum it will pay for a given covered service. This is often less than the charged amount. Contracting or “in-network” providers agree to accept the allowed amount (also called the maximum allowance) as payment in full for a covered service. They also agree not to bill you the difference between the allowed and charged amounts. So staying in-network saves you money.
• Coinsurance is a percentage of the allowed amount you pay for a healthcare covered service. It applies after you meet your deductible.
• Your copayment is the fixed dollar amount (for example, $20) that you pay for certain covered services such as a doctor’s office visit. It applies every time you receive that service.
• A deductible is a set amount you must pay for covered services, before your health insurance kicks in and starts paying benefits. Deductibles are reset each year.

Your out-of-pocket maximum is the fixed amount that is the most you will pay in deductibles and coinsurance for most covered services during a benefit period. Once you have met the maximum, your insurance pays for most covered services at 100 percent of the allowed amount.

Published 8-19-2011