INTRO
Navigating health insurance terminology can often feel overwhelming, especially when understanding these terms is crucial for making informed decisions about your healthcare coverage. Whether you’re choosing a new policy, managing existing coverage, or trying to understand the benefits and limitations of your health insurance plan, knowing the language of health insurance can empower you to take control of your medical and financial health.
Similar to how Baylor Genetics’ comprehensive Whole Genome Sequencing or Whole Exome Sequencing tests can improve health outcomes through personalized care, you need an equally comprehensive guide to the more common—and often more confusing—health insurance terms like “deductibles” and “co-pays” to “out-of-pocket maximums” and “premiums,” to guide your understanding of the cost associated with the genetic testing your provider is recommending for you and your family. Continue reading to learn how this guide can help you translate the complex language of health insurance policies into straightforward, actionable insights.
DEFINING TERMS IN HEALTH INSURANCE
Health insurance communications are filled with a vocabulary that isn’t always intuitive. To add to the confusion, acronyms are commonly used. What you’re left with is a nondigestible alphabet soup that contains important information for your out-of-pocket cost as a patient.
In this blog, we hope to shed light on some important health insurance terms. We will list several commonly used terms with their acronyms and provide some context and transparency to the language of health insurance.
Out-of-pocket (OOP):
Out-of-pocket (OOP) is the term used to indicate the total amount due from the patient. It is their financial responsibility for the processed claim. The final OOP amount is determined by the health plan after any copayments, coinsurance, and unmet deductible amounts are calculated into the amount to be paid to the provider. Patient OOP, plus insurance payment, results in the total amount due to the provider.
Claim:
A claim is a term for a healthcare bill from a provider to an insurance company for a member’s services. A claim contains important information describing the services rendered and the diagnosis information justifying the services. An insurance company will only pay on “clean” claims, meaning claims that have all required fields accurately completed by the provider’s billing office.
Copayment:
A copayment is a flat rate fee due from the patient directly to the provider at the time of service. Copayment amounts vary by type of service and are predetermined by a health plan at the time you elect your health plan benefits.
Coinsurance:
Coinsurance denotes the percentage of the amount due (as determined by the health plan), which is the financial responsibility of the patient. Like copayments, the coinsurance percentages vary by type of service and are predetermined by a health plan at the time you elect your health plan benefits.
Deductible:
A deductible is the amount a patient must pay out-of-pocket for healthcare services before health insurance benefits kick in. Deductibles usually come in two amounts, one for in-network services and one for out-of-network services. As motivation to steer patients to contracted providers, the in-network deductible is typically lower than the out-of-network deductible amount.
In-Network v. Out-Of-Network (OON):
In-network and out-of-network denotes the contracted status of a provider with a health insurance company. In-network means the provider is a fully contracted and credentialed participating provider with a health plan’s provider network. Health plans may have different provider networks for different types of benefit plans. For example, a health plan may have different contracted providers in their health maintenance organization network v. their participating provider organization network. Or, they may have different contracted providers in their Medicare Advantage (senior) network v. their Medicaid health plan offering.
Out-of-network (OON) means a provider is not directly contracted to the health plan. OON providers are not part of the health plan’s provider network, but some benefit plans (i.e., participating provider organization) provide health plan payments for OON providers. Patients generally pay more out-of-pocket cost when receiving services from an out-of-network provider.
Health Maintenance Organization (HMO):
Health Maintenance Organization (HMO) is a health plan type that limits access to a defined network of providers. The advantages of an HMO are lower premium costs to enrollees and higher coordination of care within the tighter provider network. The disadvantages of an HMO are limited access to specialty providers and the fact that referrals usually require a referral from the patient’s primary care provider.
Participating Provider Organization (PPO):
Participating Provider Organization (PPO) is a health plan type where patients may access a broad network of providers. The advantages of selecting a PPO are self-referral to specialists and a greater choice of providers including in-network and out-of-network providers. The disadvantages of a PPO are more out-of-pocket costs to patients and higher premium costs.
Explanation of Benefits (EOB):
Explanation of Benefits (EOB) is a document the health plan sends the patient after a provider claim has been filed for that patient. The EOB outlines that services are covered and what amounts might be owed by the patient. The EOB is not a bill.
Verification of Benefits (VOB):
Verification of Benefits (VOB) is a service some providers offer to their patients that predicts the coverage and payment of the services a patient is considering. The VOB process examines a patient’s health insurance benefits for any copayments, coinsurance, and unmet deductible amounts that will be the patient’s financial responsibility. The VOB may include an investigation of whether the insurance plan requires a “prior authorization” for services to be rendered or if the insurance plan considers the prospective service to be a “covered service”.
Prior Authorization:
Some services require permission from the health plan for the provider to be paid for its services. Services requiring “prior auth” are generally related to newer technology and are higher in cost. Genetic testing often requires prior authorization from a health plan.
Covered v. Non-Covered Services:
Covered or non-covered services refer to the insurance plan’s determination of whether a service is considered a covered medical benefit for the patient. Covered services are reimbursable to the provider whereas non-covered services may not be the responsibility of the insurance plan. Non-covered services may still be performed. Payment, however, may not be provided by the insurance plan.
Medical Necessity:
Medical necessity indicates a health plan’s determination of whether a medical service is considered appropriate and necessary. Services considered medically necessary are usually supported by well-understood scientific evidence and are part of medical practice standards.
Investigational:
Sometimes insurance companies deem a test investigational. This does not mean the test is not an appropriate test. It does mean that the insurance company does not believe that there is enough evidence to consider the testing “medically necessary,” and therefore it’s often a non-covered service.
For more information on health insurance terminology, please visit:
- Centers for Disease Control and Prevention, National Center for Health Statistics, Managed Care
- HealthCare.gov Glossary
Conclusion
As we wrap up this exploration of health insurance terminology, remember that understanding these terms is more than a matter of vocabulary—it can be a step toward making empowered decisions about your health. With the insights gained from this guide, you can be equipped to navigate the nuances of your health insurance policy, communicate effectively with your insurance providers, and make informed choices that optimize your coverage.
Feel free to revisit this guide whenever you encounter unfamiliar insurance language or when you’re evaluating your health plan options. Knowledge is power, especially when it comes to managing your health and financial well-being. Feel free to share this resource with friends and family, so they too can benefit from a clearer understanding of health insurance terms.
If you have any questions or would like to get in touch with Baylor Genetics, click here to contact us: https://www.baylorgenetics.com/contact/
For more information on health insurance terminology, please visit:
- Centers for Disease Control and Prevention, National Center for Health Statistics, Managed Care
- gov Glossary
At Baylor Genetics, we empower patients, healthcare providers, and partners with trusted insights, translating scientific innovations into accessible clinical solutions. As a pioneer of precision diagnostics for more than 45 years, we’re a leading diagnostic genomics partner offering a full spectrum of clinically relevant genetic testing spanning family planning, pregnancy, neonatal and pediatric testing, oncology, and specialized test options.
