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Insurance Terms: Understanding Key Pieces of Your Insurance Claim

Insurance Terms: Understanding Your Insurance Claim

Updated: March 14, 2024 · 6 Minute Read

Max Meyerhoff

Reviewed by:

Max Meyerhoff, Health Insurance Expert

Highlights

  • This is a glossary of the most common terms you might see when reviewing your insurance plans.

 

The Key Terms:

 

Benefits

The healthcare coverage that the insurance plan offers and different benefits packages may cover various healthcare services or cover those services at different reimbursement rates.

 

Claim

The healthcare provider submits a bill to the insurance to be processed and reimbursed according to the member’s benefits.

 

Prior Authorization

A written statement where a healthcare provider gives notice and rationale for a particular procedure before that service occurs. The insurance company will, in turn, provide a written statement confirming or denying coverage for that service based on the member’s benefits.

 

Peer-to-Peer

(Also known as a “P2P”) Shortly after a claim or prior authorization denial, your provider has an opportunity to have a conversation with a clinician at the insurance company to discuss the criteria and rationale behind a service denial. Sometimes a peer-to-peer can result in a determination of new approval. The peer-to-peer must typically occur within 72 hours of a claim or authorization denial and must occur before filing a formal appeal.

 

Appeal

A written statement from a healthcare provider that disputes a claim or authorization determination.

 

In-Network Provider

A healthcare provider or health system has a contract with a health insurance company. This contract details how much a provider can charge for particular healthcare services.

 

Out-of-Network Provider

A healthcare provider that does not have a contract with a health insurance company. These providers can charge what they want, and the insurance company does not have a way to limit those charges.

 

Allowed Amount

The amount that an in-network provider is allowed to charge for a particular service. They might charge $150 for a check-up, but the explanation of benefits on the claim will show that the allowed amount is only $100. The plan benefits (i.e., 20 percent co-insurance) will then apply to the allowed amount. In this case, you would owe 20 percent of the $100 allowed amount ($20).

 

Balance Bill

An in-network provider charges you for the difference between the allowed amount (contracted rate) and the total charged amount. If you went to an in-network provider for a check-up and they charged you for the difference ($50) between the allowed amount ($100) and the billed amount ($150), that would be considered balance billing and a violation of their contract with the insurance company.

 

Explanation of Benefits

(Also known as an “EOB”) The equivalent of the receipt from the health insurance company detailing the cost breakdown of a particular healthcare service. The explanation of benefits describes the allowed amount, the amount that the insurance covers, and any remaining patient responsibility.

 

Clinical Trial

Researchers regularly conduct clinical trials to determine if a new treatment is effective. While these trials are often searching for participants, be aware that any costs associated with treatments that are not approved by the FDA are typically not covered by health insurance.

 

High Deductible Health Plan

A plan with a high deductible ($2,000+) but a low bi-weekly premium (cost). These plans are great to protect you against a large unexpected healthcare event but do very little for your day to day healthcare needs since you’ll have to hit the high deductible before the insurance starts to pay.

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