December 3, 2019
Co-insurance, Co-pay, deductibles, EPO. PPO, HMO, In-Network Hospital, Network Area, Out-of-Netowrk Hospital
Buying a student health insurance plan in countries like the US may be tricky for Indian students. This is because most Indian students are not familiar with the meaning of certain terms associated with health insurance in the US. Therefore, in order to help develop a proper understanding of those terms, Student Cover brings you a 2 part blog series where we explain the meaning of those terms. We hope the readers will find it helpful in taking decisions regarding the purchase of health insurance plans.
In part 1 of the 2 part blog series, we have tried to provide meaning of 10 of those terms. For the remaining 10, readers are advised to click on the link below for part 2 of this blog series.
1. HMO – Acronym for Health Maintenance Organization plans, HMO plans comprise a local network of hospitals and physicians where a person with health insurance can get treatment from.
(a) They have lower premiums and deductibles than PPOs and have Primary Care Physician (PCPs) appointed for the insured.
(b) PCP not only provides primary care but also refers the insured to specialists in case the need arises.
(c) The HMO plans do not provide coverage in out-of-network providers.
2. PPO – The Preferred Provider Organization plans encompasses a network of medical providers (hospitals, physicians etc).
i) These providers have a formal agreement with the health insurance provider to treat the insured.
ii) The cost that such medical providers would charge for treatment is agreed upon in advance between them and the health insurance provider.
iii) When an insured person can get treated in preferred provider hospital and get the treatment cost paid by the insurer as per his or her plan terms.
3. EPO – Exclusive Provider Organization plans are a hybrid version of HMO and PPO. While they charge lower premiums and provide medical care to the insured in a larger network of hospitals, they, unlike HMO do not require the referral from Primary Care Physicians to avail treatment from EPO hospitals.
4. DEDUCTIBLE – A deductible is the fixed amount insured pays for medical treatment. This amount is either has an Annual limit or a per injury/sickness limit.
Let’s say a plan’s Annual deductible is $500 for PPO. Insured will pay $500 as deductible for the all the medical bills generated at Preferred medical providers. After this limit is reached Insured will not pay anything as deductible. Insured would be paying other elements under cost-sharing concept as mentioned under the schedule of benefits.
5. CO-INSURANCE – Co-insurance is referred to the percentage of each medical bill amount to be paid by the insured. Generally, this percentage ranges from 10% to 50%. In the schedule of benefits, the percentage displayed is either the one to be paid by the insurance company or the one by the insured. This is totally at the discretion of the company.
For example, if plan coinsurance is 90%, that means that insurer/insurance company covers 90% of all medical expenses and insured pays the remaining 10%.
6. CO-PAY– A Co-payment or co-pay, as commonly referred to, is a fixed payment for a covered service, paid when an individual receives particular medical treatments as mentioned in the schedule of benefits. Generally, co-pay is applied to each physician’s visit, emergency room visit & purchase of prescription drugs.
7. OUT-OF-POCKET MAXIMUM (OOPM) – The maximum amount insured has to pay for covered services in a plan year. This amount is the addition of the amounts paid as Deductibles and Co-insurance. In some plans, Co-pays are also part of OOPM. After the out of pocket maximum predetermined limit is reached the health plan pays 100% of the costs of covered benefits.
8. IN-NETWORK – These are network of hospitals, clinics and medical providers that have entered into an agreement with an insurance company wherein the treatment costs are prefixed with the provider and the company. Persons getting treatment in medical providers, classified as In-network by the insurance company, get greater benefits and cover on their insurance such as lower deductibles, lower co-pay, higher co-insurance and lower ‘out-of-pocket maximum limit’ as compared to providers that do not fall in the insurance company’s network.
9. OUT-OF- NETWORK – These are those medical providers which have not entered into any agreement with insurance company. These providers charge regular fee from the insured patient. A person getting treatment from an ‘out-of-network’ medical provider gets lesser benefits on his or her insurance policy and has to pay higher deductible, higher co-pay and gets lower co-insurance and out-of-pocket maximum benefits.
10. NETWORK AREA – It refers to the geographic area of a radius of a few kilometers where the insured person resides or studies (in case of students). This geographic classification helps an insured person identify the ‘In-network’ medical providers that are located in that area.
For example, for all Student Cover health insurance plans, the network area is the ’50-mile radius around the local school campus the named insured is attending’. In case there are no ‘In-network’ medical provider within that radius, any medical providers where the insured gets treated in that area are considered as ‘In-network’ providers and the insured student gets the same benefit as he or she would have got while getting treatment in an ‘In-network’ medical provider.
Click here to go to part 2 of the blog
Disclaimer: This blog was written based on the personal research of the writer. Readers are advised to exercise discretion and read the insurance document, its terms and conditions as well as meaning of those terms as mentioned in the documents before taking purchasing any health insurance plan. Student Cover will not be liable for any wrongful interpretation of the content of this blog.
Leave your details below