The following are definitions of terms used in the description of medical coverage. Understanding these terms will make it easier to compare the benefits provided under each of the plans.
Allowed Charge: That portion of a charge that the plan determines is reasonable for covered services that have been provided to the patient. Also known as the “allowance.” Amounts in excess of the allowed charge are not paid by the plan. If the services were provided by aparticipating provider, the amount in excess of the allowed charge is waived by the provider. If the services were provided by a non-participating provider, the patient may be responsible for paying the additional amount (see Balance Billing).
Covered Charge: An allowed charge for service that the plan is designed to accept and for which the plan will pay, if all other conditions (likedeductibles and coinsurance) have been met. Charges that are not covered do not affect deductibles, coinsurance, or out-of-pocket maximums.
Deductible: The total amount of covered charges that the insured must pay in full during the plan year before any payment is made by the plan.
Coinsurance: The portion of a covered charge that is paid by both the insured and the plan. It is the sharing of charges as defined by the plan. Typically these amounts are expressed in terms of the “percentage paid by the plan versus percentage paid by the insured,” such as 80 percent by the plan and 20 percent by you; 70 percent by the plan and 30 percent by you; or 50 percent by the plan and 50 percent by you. Coinsurance amounts may affect out-of-pocket maximums.
Out-of-pocket Maximum: The maximum amount that would be paid by the insured for covered charges during a plan year, usually a combination of deductibleand coinsurance. The amount does not include plan copayments, charges for services that are not covered, and charges that are in excess of plan allowable charges (see Balance Billing).
Copayment: A flat dollar amount paid to the provider by the insured for a covered service at the time the service is received. An example would be paying the physician $15at the time of an office visit.
Balance Billing: Occurs when a provider of services or supplies refuses to accept the payment level determined by a medical plan as payment in full. The provider then bills the insured for the amount of the charge that exceeds plan payment plus deductible, coinsurance, and/or copayment.
Wellness Care: Any covered medical service or supply that is received in the absence of symptoms or a diagnosed medical condition. Wellness care includes preventive health services like physical examinations, certain immunizations, and screening tests. Wellness care can also provide specific programs of education, exercise, or behavior modification that seek to manage disease or change lifestyle — programs for diabetes management, smoking cessation, childbirth preparation — and the like. Medical plans clearly define the types of services, supplies, and programs they offer as wellness benefits, and they provide them based upon protocols establishedin the medical community with regard to factors like frequency, patient age, and suitability.