How to Make Sense of Insurance Lingo

Coinsurance

A financial (cost-sharing) requirement imposed by a health plan whereby a patient must pay a certain percentage of the total cost of health services. For example, a 30 percent coinsurance means that if a bill for health services is $1,000, then the health plan will pay $700 and the patient must pay $300.

Copayment (aka copay)

A financial (cost-sharing) requirement imposed by a health plan whereby a patient must pay a set amount when receiving health services (e.g., $25 per doctor’s visit or $100 per admission to a hospital).

Cost-sharing

The amount a patient has to pay for health services that are covered by the health plan (i.e., a co-pay, coinsurance or deductible), also called a financial requirement.

Deductible

A financial (cost-sharing) requirement imposed by a health plan whereby a patient must pay a specified amount out-of-pocket before the health plan will pay any money for health services. For example, a patient who has a $500 deductible must pay for all health services up to $500 before the health plan begins to pay for claims.

Essential Health Benefits

The 10 categories of benefits (e.g., mental health and substance use disorder services including behavioral treatment, preventive services, prescription drugs) that ACA Plans must cover.

Individual plans

Health insurance plans not sponsored by an employer or the government. These plans are purchased directly by individuals (typically on the Marketplaces or Exchanges) and must comply with the ACA (including the EHB requirement).

Medication for Addiction Treatment

Medications approved by the Food and Drug Administration (FDA) and prescribed by a health care provider are an effective and, for some conditions, a critical component of addiction treatment. Currently, there are FDA-approved medications for alcohol and opioid use disorder as well as smoking cessation. Medications for the treatment of opioid use disorder (MOUD) are the most effective treatment for opioid addiction.

Outpatient

Outpatient Services typically consist of less than 9 hours of service/week for adults, or less than 6 hours a week for adolescents. Outpatient Services are often appropriate as an initial level of care for patients with less severe disorders or as a step-down from more intensive services.

Intensive Outpatient

Intensive Outpatient (IOP) Services typically consist of 9 or more hours of service a week for adults or 6 or more hours adolescents, typically delivered at a specialty facility. The structured outpatient programming can take place during the day, before or after work or school, in the evening, and/or on weekends.

Partial Hospitalization

Partial Hospitalization (PHP) Services typically provide 20 or more hours of clinically intensive programming a week for adults and adolescents to treat patients who need daily monitoring and management in a structured outpatient setting but do not require 24-hour care. Partial hospitalization programs differ from intensive outpatient programs in the intensity of clinical services directly provided by the program. They are appropriate for patients who are living with unstable medical and psychiatric conditions.

Residential

There are different levels of residential care, ranging in intensity. These services are provided in a structured, residential setting that is staffed 24 hours/day.

Clinically Managed Low-Intensity Residential Services are appropriate for patients whose recovery would be aided by living in a stable, structured environment. They provide 24-hour living support and structure with available trained personnel and offer at least 5 hours of clinical service a week.

Clinically Managed Residential Services (high intensity for adults, medium intensity for adolescents) are appropriate for individuals in some imminent danger who cannot safely be treated outside of a 24-hour stable living environment.

Clinically managed services are directed by nonphysician addiction specialists.

Inpatient Care

There are different levels of inpatient care, ranging in intensity.

Medically Monitored Inpatient Services (intensive for adults, high-intensity for adolescents) are appropriate for patients with conditions that require highly structured 24-hour services including direct evaluation, observation, and medically monitored addiction treatment.

Medically monitored services are provided by an interdisciplinary staff of nurses, counselors, social workers, addiction specialists, etc., under the direction of a physician. Medical monitoring is provided through patient contact, records review, team meetings, 24-hour nursing and coverage by a physician, and a quality assurance program.

Medically Managed Intensive Inpatient Services are appropriate for adolescents and adults with conditions severe enough to warrant the provided 24-hour nursing care and daily physician care. Counseling is available to engage patients. These services are provided in a hospital-based setting.

Parity Act

Under the 2008 Mental Health Parity and Addiction Equity Act (Parity Act), most private and public insurers are obligated to provide comprehensive and equitable coverage for substance use disorder and mental health benefits. The Parity Act requires a health plan’s standards for substance use and mental health benefits to be comparable to – and no more restrictive than – the standards for other medical benefits. Generally, this means that a plan cannot put more restrictive visit limits, impose higher cost sharing or apply more onerous prior authorization or concurrent review requirements on MH/SUD benefits as compared to similar medical benefits or surgical benefits.

In-network

Providers who have a contract to participate in a plan’s network. You may only be permitted to see an in-network provider. You may also pay less in cost-sharing for services from in-network providers.

Out-of-network

Providers who do not have a contract to participate in a plan’s network. Before receiving services from an out-of-network provider check with your plan to see if you have out-of-network coverage and if your plan has any requirements to receive services from an out-of-network provider (e.g., prior authorization). You may have higher out-of-pocket costs for services from out-of-network providers.

Out of pocket

The amount you pay for health care services. This includes services not covered by your plan or services from providers not covered by your plan; amounts that apply toward your deductible; copayments; and coinsurance.

Small group plans

Health insurance plans offered to employees of companies with less than 100 employees. These plans are subject to the ACA (including the EHB requirement).