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10 Terms You Need to Know Before Purchasing Health Insurance

Terms You Need to Know Before Purchasing Health Insurance

10 Terms You Need to Know Before Purchasing Health Insurance

When you are planning to get an insurance plan, the main challenge lies in understanding the terminology and acronyms associated with it. To shop smart, here are the top 10 terms explained to you.

1. PPO Network

PPO means Preferred Provider Organization and often comes with a comprehensive health insurance plan. A plan with PPO Network means you can get access to any hospitals, clinics, and physicians within the network at a lower rate. Through this network, the insurance company has a negotiated rate with the healthcare providers thereby lowering cost.  Plus, you don’t have to commit to a single physician. You have the complete freedom to change physician without needing a referral.

2. Premium

Premium is the amount you pay every month for the plan’s coverage. It can be considered as the cost price of the policy for you to be insured.  While you are researching the plan for your travel, you will come across limited and comprehensive plans. If you purchase the latter, you need to pay a higher premium for better protection, whereas the former has a lower premium due to lesser protection and coverage. The premium is calculated based on the various factors like policy maximum, deductible, age of the traveler, and trip length.

3. Limited Benefit plans

Limited benefit plans are plans that have pre-defined limits on all the benefits the plan provides. These plans are typically cheaper in comparison to a comprehensive plan.  After you meet your deductible, the plan pays these pre-defined amounts  after which the insured individual is required to pay the difference between the actual amount and the predefined medical expenses out of  pocket.

4. Comprehensive plans

Comprehensive plans can cover for hospitalization, surgery, intensive care, etc. to the policy maximum you opt for. They offer better coverage and maximum protection but are comparatively more expensive. As there is no pre-defined limit, for a covered illness/injury you don’t have to pay money from your pocket once you meet your deductible and co-insurance.

5. Deductible

A deductible is an amount you pay to a healthcare provider before the insurer begins to pay. Deductible can be either annual where you need to meet the deductible only once per year or they could be per injury sickness where a new deductible has to be met for every new injury and illness you see a doctor. This can significantly affect your premium because lower deductibles come with higher premium costs. However, the structure of deductible differs for each plan, such as one plan can have the same deductibles for all covered services, while another plan may have separate deductibles for different healthcare services like emergency care, prescription drugs, dental care, and more.

6. Copayment

Copayment is the first payment that you have to pay to your healthcare provider for a covered service. Not all plans have co-pay’s. Copay varies depending on the service you’re getting like you may have to pay $30 copay for every visit to your physician, or $10 for a prescription refill, or $60 for a specialist visit. However, you need to read your plan to know how your copay works.

7. Coinsurance

Coinsurance is the percentage of covered health care services that you have to pay after your deductible has been met. For instance, if your health insurance plan says the coinsurance is 80/20, the insurance covers 80% of the charge, you have to pay the rest 20%. For most visitor insurance plans coinsurance is typically up to the first $5000 after which the plan pays 100%. Remember that if your deductible isn’t met, you have to pay 100% of the charges.  

8. Out-of-pocket maximum

An out-of-pocket maximum is the total amount of money that you have to pay for covered services and doesn’t include premium and billed charges. As this varies from one plan to another, it can include coinsurance, copay, and deductible. Once you pay your out-of-pocket maximum, your insurance company will pay 100% of the bill for your covered services. However, this doesn’t apply to non-covered services or out-of-network services.

9. Sub-limits

Sub-limits come with limited health insurance plans with much lower premiums. Limited benefit plans have a sublimit for each and every benefit. To pay lower premiums, people often choose a limited insurance plan and typically don’t realize the  attached  sub-limit clauses  Now, with a sub-limit clause attached, the insurance company may pay only up to a certain amount. The rest medical bills must be cleared by the insured individual. For e.g. if the plans says that hospitalization is covered at $1400 per day for a maximum of 30 days, then if the hospital charges $1800 per day for 5 days then, the plan will  pay pay $1400 x5 which is $7000 instead of $9000 and the $2000 ($400 per day for 5 days) will be out of pocket.

10. Waiting period

When you purchase a healthcare policy, you need to know that not all diseases are covered and not all are covered from Day 1. There is a waiting period to get certain coverage, such as:

  • An initial wait period of 30 days where accidental hospitalization is covered.
  • 2 days  waiting period after effective date before which you can start using the plan.
  • 12 months  waiting period for  pre-existing conditions, like  asthma, diabetes, cardiovascular diseases, hypertension, and more.

Bottom line

With a firm understanding of all the buzzwords of the insurance industry, you can be able to find a plan that suits your medical and travel needs. Or Visitor Guard® can be a savior for you in this case. Call us to get all your queries resolved.

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