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Making Sense of Health Insurance Terms

Make sure you understand these terms before you make a decision.

Co-insurance – The amount of the healthcare costs (often a percentage) that you have to pay. You'll pay this cost even after your deductible has been met.

Co-pay or co-payment – This is the charge for a specific service or medication. For example, your plan may require a $20 co-pay for a doctor's office visit or a $15 co-pay for a prescription drug.

Deductible – The dollar amount that you are required to pay before your plan begins to make payments for claims. Generally, HMOs (Health Maintenance Organizations) do not require a deductible, but most PPOs (Preferred Provider Organizations) do.

Drug Formulary – This is a list of prescription medications that your insurance plan covers. If your drug is not on the formulary, your doctor may need to provide a preauthorization before it is covered. Some plans may require you to pay a larger share or all of the cost of a drug that is not on the formulary.

In-network – Doctors, hospitals and healthcare facilities that are contracted with your insurance company's plan. Some insurance plans cover only in-network providers. For others, your out-of-pocket expenses may be higher.

Out-of-network – Doctors, hospitals and healthcare facilities that are not contracted with your insurance company's plan. Some insurance plans do not cover out-of-network providers. For others, your out-of-pocket expenses may be higher.

Health Insurance Marketplace – The Affordable Care Act established the marketplace to provide a collection of health insurance plans (excluding Medicare and AHCCCS), each offering different benefit levels that meet the standards established and enforced by the federal government. Some people may qualify for a subsidy that reduces their cost of health insurance. The marketplace is available at www.healthcare.gov.

Health Savings Account – Health Savings Accounts are like personal savings accounts that are used to pay for healthcare. The money you deposit in this account is not taxed and can remain in the account from year to year. To be eligible to open an account, you must have a high-deductible plan that is sponsored by your employer or an insurance plan (does not apply to Medicare or AHCCCS). You may be penalized if you withdraw the money for anything other than qualifying medical expenses.

PCP – Primary Care Physician.

Premium – This is the amount of money you pay to your insurance company every month. If you are employed, part of this amount may be paid by the employer.

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