Understanding basic health plan terms

If you’re like most people, you might find health plan terminology confusing. Gaining clarity will help you feel more confident in choosing the right health plan.

We’re here to make it easier, so let’s get started.

10 key terms to know

• Allowable amount: The total dollar amount Blue Shield has established for the benefits the member has received. Physicians who have contracted with Blue Shield must accept this amount as payment in full. If a member chooses to go outside of our networks, he or she may be responsible for a much larger payment.

• Benefits (covered services): The medically necessary services and supplies covered by the health plan.

• Copayment: A set dollar amount that you may be required to pay for some services, such as a doctor’s visit.

• Coinsurance: This term sounds similar to copayment, but here’s how it differs: While a copayment is a fixed amount, coinsurance is a percentage of the total allowable amount (which differs per service).

• Contribution rates: Your contribution is the dollar amount that your employer may take out of your paycheck to cover health benefits. This amount is set by your employer.

• Deductible: The dollar amount that you must pay for most covered medical services or prescriptions before your health plan begins to pay. Specific services, such as preventive care, are covered before you reach the calendar-year deductible. You may have two kinds of deductibles: medical and pharmacy.

• Evidence of Coverage (or Benefit Booklet): The official Blue Shield documents that describe member benefits, copayments or coinsurance, and exclusions and limitations.

• Out-of-pocket maximum: The amount you’re required to pay each year may have a limit called an out-of-pocket maximum. And it’s just what it sounds like – the maximum amount that you will pay for covered services. This amount could be different for in-network providers versus out-of-network providers. These details and any exceptions will be included in the health plan’s documents.

• Prescription drug formulary: Blue Shield’s list of preferred medications for prescription drug benefits. This list includes both generic and brand-name drugs approved by the Food and Drug Administration (FDA).

• Prior authorization: Some services require prior authorization before treatment. For example, if you require a hospital stay or certain surgical procedures, Blue Shield will need to authorize these medical services before you can receive them. To get a prior authorization, call the Customer Service or Shield Concierge number on the back of your member ID card.