Medical Insurance Terms to Know

The language used in medical bills, health care forms and other paperwork can be very confusing. Here are some plain language explanations of some of them.

Allowed Amount – what the insurance company believes should be the price for the medication or service

Balance Billed – the difference between what the provider believes should be the price for the medication or service and the insurer’s allowed amount – you will have to pay this amount

Coinsurance – after you have paid the deductible, coinsurance is the percentage of the cost of the allowed amount you will have to pay

Copay – a fixed amount you will have to pay for covered prescription medications and medical services, due when you receive the service

Deductible – your insurance won’t pay anything until you have paid this amount total for the year

Evidence of Coverage – an explanation of your insurance plan, including what is covered and how much you pay

Explanation of Benefits - Not a bill! This is a summary of charges, insurance payments, and your payments for a month.

Formulary – lists the medications your insurer will pay for

In-Network Providers – providers or facilities with a contract with your insurer. It usually will cost you less to use an in-network provider than to go to an out-ot-network provider.

Step Edits (Step Therapy) – requirements to be met before your insurer will pay for a medication. You may have to try using less effective medications before they will authorize what your doctor prescribes.

Read all insurance-related text carefully. Look up or ask for an explanation of any term you do not understand.