Healthcare has a language all its own. If you’re not exactly fluent, here are a few important translations:
When you stay in-network for care, participating providers agree to charge no more than a negotiated rate for their services.
However, when you go out-of-network, a provider is not bound by a negotiated rate, and typically charges a higher amount.
That’s where an “allowed amount” comes in. It’s the maximum amount Blue Shield of California (or MetLife for dental) will pay for a covered out-of-network service. The plan will pay its share of coinsurance, based on the allowed amount. You will be responsible for your share of coinsurance plus any remaining balance due.
Pro tip—before going out-of-network: Be sure to find out the allowed amount for a service, and ask your providers what they’re going to charge you. This will help to avoid surprises when your bills come in.
With some plans, most medical expenses are on you until your total for the year reaches your deductible. After that, you and the plan share costs for services (called “coinsurance”) until you reach the annual “out-of-pocket maximum.”
This is a specific dollar amount you pay at the time of service, for example for a doctor’s visit or when you pick up a prescription. Typically, copays do not count toward meeting a plan’s annual deductible.
This is a percentage of the provider’s fee. Paying coinsurance is more common with the PPO plans, for expenses like surgery.
Once you pay this grand total in a given year, the plan starts paying 100% for eligible expenses.
“Formulary” is a fancy name for a list of drugs covered by an insurance plan.
Within the formulary, you’ll notice different levels of coverage for prescription drugs, for example, generic, brand name, and specialty.
Generic drugs (also called “tier 1” under Blue Shield of California plans)
These drugs have the same active ingredients as an equivalent brand name drug; the Food and Drug Administration (FDA) rates them to be as safe and effective as brand name drugs. You’ll usually save money by choosing a generic drug.
Brand name drugs (also called “tier 2” under Blue Shield of California plans)
These drugs are typically sold under a specific trademark name or protected by a patent. You’ll pay more for brand name (or tier 2) drugs.
Non-formulary drugs (also called “tier 3” under Blue Shield of California plans)
These drugs are not included on the formulary list. You’ll typically pay a higher share of the cost or a higher copay for these drugs.
Specialty drugs (also called “tier 4” under Blue Shield of California plans)
These drugs are used to treat complex, difficult conditions. They typically require special handling, administration, or monitoring, and sometimes require prior authorization by Blue Shield of California or Kaiser.
Includes routine healthcare services offered by your provider—such as screenings, check-ups, and patient counseling—to help prevent illnesses, disease, or other health problems.