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Understanding Health Insurance & Medical Bills

Knowing the ins and outs of a health care plan can sometimes be difficult, if not confusing. To make things simpler, Atlantic Health System – parent company of Morristown Medical Center, Overlook Medical Center, Newton Medical Center, Chilton Medical Center and Goryeb Children’s Hospital – has put together this list of terms that will help patients better understand their health insurance and pay their medical bills with confidence.

Explanation of health benefits

Basic Insurance Terms

Subscriber (enrollee):
the person who buys (or whose work buys) a health insurance plan.
the subscriber’s spouse, civil partner, or children (up to age 26) who are covered through the same plan.
the health care items or services covered under your health insurance plan.
the health care items or services covered under your health insurance plan.
Excluded services:
health care services that your health insurance plan does not pay for or cover.
Primary vs. secondary insurance company:
some people are covered by two insurance plans. An example of this is when a child is covered on both of his parents’ plans. This “double” insurance does not mean that your health care is paid for twice. Instead, one plan is always called the “primary” and the other “secondary.” For children, this is decided by the “birthday rule” which says that the parent whose birthday falls first in a calendar year is generally the primary insurance.

Who Will Take My Insurance?

a person or place that helps you when you’re sick, or provides services that help you stay well. Doctors, nurses, physical therapists, hospitals and clinics are all examples.
In-network provider:
the providers your health insurance company works with to provide you with health care services. Typically, the cost to you is less for in-network providers. These may also be called “preferred-providers” or “participating providers.”
Out-of-network provider:
providers that do not work directly with your insurance company and may charge higher fees for the same services. Also, you may have to pay a bigger part of the bill if you use an out-of-network provider.
Primary care provider/physician (PCP):
doctors and nurses who see patients in a clinic or office setting for a wide range of illnesses and injuries. They also provide regular (annual) checkups for patients who are not sick.
a provider who treats certain parts of the body or specific medical conditions.
a written order from your primary care doctor that allows you to see a specialist or get certain tests done. Not all health insurance companies require this.

Paying for Health Care

how much you pay for health insurance. Premiums are usually paid monthly, but can also be paid every three months or once a year; premiums are paid regardless of whether you use medical services during that time period or not. You may pay this to the health insurance company or pay it through your employer.
the costs that you will have to pay on top of your premium; these costs occur only when you use medical services. There are three types of out-of-pocket expenses: co-pay (or co-payment), co-insurance, and deductible.
the most you will pay during a policy year before your insurance company pays 100% of the allowed amount.
Co-Pay (Co-Payment):
a fixed amount set by your insurance company that you have to pay for a particular service. Services that may require a co-pay include office visits, emergency room visits, and prescription drugs.
co-insurance is similar to a co-pay, but instead of paying a fixed amount, you are responsible for a percentage of the allowed amount for the services, for example, 20% of the bill. You usually pay co-insurance on top of any deductible you owe.
the amount you have to pay for your treatment before your health insurance company begins to pay. A deductible amount is set for each year per person or family and may not apply to all services. For example, services not covered by a plan, monthly premiums, and co-pays are not counted toward the deductible.
Responsible party/guarantor:
the person who will pay the bill for services. It’s usually the patient, unless the patient is a child.
a person who pays out-of-pocket (without insurance coverage) for a healthcare service. For information on the cost of healthcare services, contact the provider directly.


Pre-Approval (pre-authorization):
permission from your insurance company to receive care. This may not be required by all insurance companies or for all services.
Claim (claim number):
requests for payment that either you or your health care provider sends to the insurance company. If the claim is denied, you have the right to appeal to your insurance company.
the amount of money billed by the provider or facility for medical services; this is not always the same as the amount due from patient. You may receive a bill or letter from more than one provider for the same date of service.
Allowed amount/eligible expense:
the amount your insurance company will pay for a service. If the provider charges a higher amount than the allowed amount, you (or any other insurance company you are covered by) may be responsible to pay the extra money.
the amount your insurance company pays for a certain medical service.
Explanation of benefit (EOB):
a letter from your insurance company telling you what was billed by the provider, the amount they have paid and the amount you owe.
Date of service:
the day (or days) you received medical services.
the dollar amount removed from your bill (from the charged amount) because of a relationship between your provider and the insurance company.
Amount due from patient:
the amount you owe, after your insurance company has paid their share.