Insurance 101: Simplifying the Most Common Terms You Need to Know
Posted by Medavie Blue Cross on September 12, 2024
Insurance 101: Simplifying the Most Common Terms You Need to Know
Posted by Medavie Blue Cross on September 12, 2024
Health insurance terms can be confusing and overwhelming but understanding them is crucial for making informed decisions about your coverage. The use of similar terms, such as "deductible" and "copay," can further complicate things for the average consumer, especially since these industry-specific terms are rarely used in everyday language.
To better navigate the complex world of health insurance, it is helpful to understand the challenges of insurance terminology. Here are some of the most common terms you may run into and what they mean:
Usual, customary, and reasonable charges
Usual, customary, and reasonable charges are used by insurance companies to determine the amount they will pay for a covered service. "Usual fees" refers to the amount a medical professional typically charges for a given procedure. "Customary fees" are what the insurer is willing to pay for that procedure. "Reasonable fees" are additional charges a medical professional may apply in case of complications or unusual circumstances. If the cost of a service exceeds the UCR charge, the insured person may have to pay the difference.
Estate
An estate refers to the total assets and liabilities of an individual at the time of their death. This includes things like real estate, personal property, investments, and debts.
Beneficiary
A beneficiary is a person or organization designated to receive benefits from an estate, trust, or insurance policy. This could include things like money, property, or other assets.
Contingent
A contingent beneficiary is a secondary beneficiary who receives benefits only if the primary beneficiary is unable to do so. For example, if someone names their spouse as the primary beneficiary of their life insurance policy, but their spouse passes away before they do, the person's children would become the contingent beneficiaries.
Exclusion
An exclusion refers to something that is not covered by an insurance policy. For example, if a health insurance policy excludes coverage for a pre-existing condition, the insured person cannot make a claim for the treatment related to those conditions.
Coinsurance
Coinsurance is a type of cost-sharing arrangement in which the insured person and the insurance company both pay a percentage of the covered medical expenses. For example, with an 80/20 coinsurance policy, the insurance company would pay 80% of the costs, while the insured person is responsible for the remaining 20%.
Contingent
A contingent beneficiary is a secondary beneficiary who receives benefits only if the primary beneficiary is unable to do so. For example, if someone names their spouse as the primary beneficiary of their life insurance policy, but their spouse passes away before they do, the person's children would become the contingent beneficiaries.
Exclusion
An exclusion refers to something that is not covered by an insurance policy. For example, if a health insurance policy excludes coverage for a pre-existing condition, the insured person cannot make a claim for the treatment related to those conditions.
Coinsurance
Coinsurance is a type of cost-sharing arrangement in which the insured person and the insurance company both pay a percentage of the covered medical expenses. For example, with an 80/20 coinsurance policy, the insurance company would pay 80% of the costs, while the insured person is responsible for the remaining 20%.
Copayment
A copayment, or copay, is a fixed dollar amount that the insured person must pay for a covered medical service. This amount is typically small, such as $20 or $30, and is usually paid at the time of the service.
Deductible
A deductible is the amount of money the insured person must pay out-of-pocket before their insurance policy starts covering the costs of medical services. For example, if someone has a $1,000 deductible on their health insurance policy, they must pay the first $1,000 of covered medical expenses before the insurance company begins to pay.
Premium
A premium is the amount of money that the insured person must pay to maintain their insurance coverage. This payment is typically made on a regular basis, such as monthly or annually.
Copayment
A copayment, or copay, is a fixed dollar amount that the insured person must pay for a covered medical service. This amount is typically small, such as $20 or $30, and is usually paid at the time of the service.
Deductible
A deductible is the amount of money the insured person must pay out-of-pocket before their insurance policy starts covering the costs of medical services. For example, if someone has a $1,000 deductible on their health insurance policy, they must pay the first $1,000 of covered medical expenses before the insurance company begins to pay.
Premium
A premium is the amount of money that the insured person must pay to maintain their insurance coverage. This payment is typically made on a regular basis, such as monthly or annually.
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Medavie Blue Cross is a premier all-in-one carrier that provides health, dental, travel, life and disability benefits and administers federal and provincial government-sponsored health programs. Together with Medavie Health Services, we are part of Medavie, a health solutions partner committed to improving the wellbeing of Canadians. We are in the...