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Health Insurance Can Be Complicated. Here’s What You Need to Know.

Health insurance helps protect you from medical costs, but it can get confusing. It’s important to understand health insurance terms so you can make the most out of your coverage. Better understanding your insurance means you’ll have a clearer idea of which services your plan will cover and what you’ll have to pay out of pocket.

Here are some key terms you should know.

  • Allowed amount: The maximum payment the plan will pay for a covered health care service.
  • Balance billing: When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $200 and the allowed amount is $150, the provider may bill you for the remaining $50.
  • Copayment (copay): The set amount you have to pay for a covered service. Your copay will depend on your plan and the service you receive.
  • Deductible: The amount you have to pay for medical services before your health plan pays their share. For example, if your deductible is $1,500, your plan won’t pay anything until you’ve met your $1,500.
  • Emergency services: Evaluation of an emergency medical condition and treatment to keep the condition from getting worse.
  • Excluded services: Health care services that your health insurance does not cover.
  • In-network: These are doctors, hospitals and other providers that accept your insurance plan. We usually refer to them as ‘Preferred’ providers.
  • Premium: How much you have to pay your health plan in exchange for coverage. If you get coverage through your employer, this is taken out of your paycheck automatically and they may pay some of the cost.


Wondering what these terms look like in action? Here are some examples.

Let’s say Jill is a new federal employee who wants to enroll in a health plan. She has one dependent, her husband, and decides to enroll in a Basic Option plan because it has no deductible. This means she doesn’t need to pay anything out-of-pocket before FEP begins to cover its share of her medical costs. In order to receive coverage, Jill must pay a bi-weekly premium of $237.91.

Susan is enrolled in a health plan with a deductible of $500. She goes to see her in-network doctor (Preferred provider) but has not met her $500 deductible yet. Her visit costs $400. So, for this visit, Susan pays the entire cost of the visit. The next time she sees this Preferred provider, her visit costs $250. This means she will pay $100 out-of-pocket and her insurance plan will cover the rest.

Still have questions? This Blue HowTo video covers more of the important basics of health insurance coverage.

We want to make sure all our members stay informed. MyBlue® gives members access to tools and tips that help them better understand their coverage. Learn about MyBlue’s benefits here.

Published on: November 10, 2022