Welcome to part two of our series on insurance terminology. Some of these definitions are common knowledge, while others might be more obscure. If you’re a new buyer, then you’ll want to know what you’re getting yourself into before you make any final decisions. That’s where we come in. Here are a few more terms to know before exercising your purchasing power!
What is an allowed amount?
The allowed amount is the highest dollar amount that an insurance company will ever pay. Here’s an example of the world’s worst healthcare plan: 75% coinsurance, $9,900 deductible, with a $25 allowed amount. This scam means the highest amount the company would pay is $25, and only after you’ve paid the $9,900 deductible. Plus, you’ll have paid another $75 to obtain their $25 via coinsurance. Whoops! Buyer beware.
What is a condition?
In healthcare, a condition is the illness or disease covered or not covered by insurance. Be wary of insurance contracts that don’t cover common health problems like heart disease or cancer. They might serve for a broken leg, but nothing else.
What is a copayment?
Many insurance contracts involve some sort of a copayment when you use a particular service. Let’s say you need to visit the doctor for a health problem you recently noticed. The plan might note that the deductible is irrelevant for this service, but that there is a $25 copay. That means the visit is covered by insurance, and all you’ll have to pay is the $25. Not too shabby.
What is a covered charge?
Covered charges are exactly what they sound like: they’re charges made to the insurance provider for covered services. This is of particular relevance to those who might be traveling, because they’re more likely to need the healthcare services of an out-of-network establishment. Most insurance providers will place a strict limit on the covered charges when venturing out-of-network.