Meanings of Common Healthcare Marketplace Terms
Health insurance terminology can be daunting at first glance, but don’t fret. We’ve compiled the most common terms you will encounter on any health insurance marketplace.
Remember, you can always contact Briva Health with any questions you may have about terminology, enrollment, terms of coverage, and more. The more in-the-know you are, the more confident you’ll feel about your healthcare options.
A deductible is the amount that the individual policy owner must pay towards health coverage before insurance begins to pay towards your care.
For instance, if your deductible is $1,000, you are responsible for paying the $1,000. Anything beyond that amount will be covered by your insurance provider. For individuals with coinsurance, any costs that exceed the amount of the deductible will be split between provider and policyowner.
Deductibles vary in price depending on the plan you choose but do not change once you have signed to a plan.
The term ‘co-insurance’ is often used interchangeably with the term ‘copayment’. While coinsurance functions in a similar way as a copayment, it is actually a separate term.
The term co-insurance refers to healthcare costs that you share with your insurance provider. The rate is usually a fixed percentage and is paid after you have paid your deductible. For example, you may pay 35% of the cost of your care while your insurance provider pays the other 65% after reaching your deductible.
It’s important to note that the rate is limited by your out-of-pocket maximum. If you reach your out-of-pocket maximum, your health insurance will cover the rest of the expenses for the rest of the plan year.
In general, healthcare plans with high premiums have lower coinsurance rates while plans with low premiums will have higher coinsurance rates.
A co-pay is a flat fee paid by a policy holder to the provider before receiving a service. You will most commonly see copays for visits to the doctor, lab tests, certain types of specialist care, and prescriptions.
In general, plans with higher premiums will have lower co-pays while plans with lower premiums will have higher co-pays.
Cost-Sharing Reductions (CSR)
Cost-sharing reductions refer to discounts that can be applied to deductibles, copayments, and coinsurance for lower healthcare costs.
It’s important to note that not all plans are eligible for cost-sharing reductions. Only Silver plans are eligible for CSR. Qualifying applicants may be eligible for both CSR and premium tax credits.
An insurance premium refers to the monthly cost of your health insurance. A premium does not cover additional expenses such as doctors visits, prescriptions, deductibles, or coinsurance.
Plans with low premiums are not right for everyone, especially if you have a family or a chronic medical condition that requires frequent visits to the doctor.
Maximum Out-of-Pocket Expense
A maximum out-of-pocket expense is the maximum amount you are required to pay towards services that are covered in a plan year. Any expenses that exceed this amount and are covered by your insurance will be paid for by your insurance provider. You may be responsible for expenses that exceed this amount that are not covered by your insurance.
Out-of-pocket expenses include deductibles, coinsurance and copayments. Your monthly premiums do not count as part of your out-of-pocket expenses.
In general, plans with higher premiums will have lower out-of-pocket expense thresholds while plans with lower premiums will have higher out-of-pocket maximums.
Premium Tax Credit
An insurance premium tax credit is a credit that can be applied towards your monthly premium to lower the cost of your monthly health insurance costs. This is only available through the marketplace.
Eligibility for this credit is determined based on your household size and income. You may be eligible for a premium tax credit if your household income falls between 100% and 400% of the federal poverty level.
You do not have to use your tax credit towards your insurance premium. You can request it instead in the form of a tax refund at the end of the year. Conversely, if you use more credit than you are given, you are required to pay the difference on your next tax return.