Understanding a Health Policy

The Basics of Understanding a Health Policy

When reading through your health policy, you may find yourself asking: "Who writes this stuff?"

That's because understanding a health policy isn't easy. It seems like policy documentation is typically loaded with complicated jargon that only an insurance expert could understand. The good news is that you can sort through it; you just have to be a careful reader.

The easiest way to understand a health policy is by dissecting it and going through one section at a time. If you come across something you don't understand, make a notation on a separate piece of paper. This will help you to keep all the questions you will inevitably have organized. When you have completely reviewed the policy, you can take this list to your health insurance provider and get every answer you need at one time.

Deductibles and Co-Payments

Though you should read through every single portion of your health insurance policy, the sections you will want to pay the most attention to will include information on your deductibles and co-pays.

Deductibles and co-pays are important because these are your out-of-pocket expenses. It is always better to know beforehand which expenditures you will be required to pay and which ones your insurance provider will cover.

Deductible

The deductible amount that is noted on your health insurance policy is the amount of money that you will be required to pay before your insurance benefits kick in. Most health insurance plans have an annual deductible. This means that if you meet your deductible one year, you will have to do it again the next year.

While some policies can be very straight forward when it become to your deductible, others have specific provisions. For example, your deductible may not apply to doctor's visits, but will apply to other medical services and procedures.

Co-Pays

Sometimes called co-insurance, the co-pay is the amount of money that you will be required to pay after your deductible has been met. Co-pays cover the portion of the services that your insurance company will not cover. For some health plans, this amount is a percentage (10%, 20% etc.). For others, it is a flat rate ($15 for doctor's visits, etc.)

Other Health Policy Terms

Part of understanding a health policy involves understanding the terminology that is used. Here are some terms commonly found in health insurance policy documentation:

• Exclusions – There are some medical services that your health insurance policy will not cover. These items will be referred to as exclusions. In some cases, pre-existing conditions are excluded from coverage.

• Lifetime Maximum – Some health insurance policies limit the amount of coverage you have to a specific dollar figure. This amount is known as your lifetime maximum. Read this part carefully. Lifetime maximums can be different for individuals vs. families.

• Waiting Period – Not all health insurance policies have a waiting period, but some do. Make sure you know exactly when your coverage kicks in.

• Coordination of Benefits – If you have more than one insurance plan, you will be subject to a coordination of benefits clause. For example, if you have an insurance policy, but are also covered under a spouse's policy, benefits will be coordinated to make sure each plan pays a portion of the bill.