In order to help you prepare for the busy season that is the Open Enrollment Period, we’ve come up with a list of the most common health insurance jargon. While the meaning of most of these terms should be obvious to you as an agent, the average consumer usually does not feel the same way. In addition to defining each terms, we’ll provide you with helpful tips. This will allow you to effectively explain the terms to your clients. For some of these terms, using the textbook definition alone will be enough to break down concepts to clients. On the other hand, some terms are more complex. For these, our tips will enable you to provide clear explanations, helping the Open Enrollment Period to run as smoothly as possible.
Common Health Insurance Jargon Defined
Before exploring some ways to break down insurance jargon, we’ll simply define the most commonly used jargon. Additionally, the standard definitions will simplify each term, making them easier to comprehend.
Premium
A premium is the amount clients pay for their health insurance plan. Think about premiums as regular occurring fees (typically paid monthly). It’s important to note that this fee must be paid regardless. It doesn’t matter if your client receives medical services that month or not. In even simpler terms, the premium is the cost of receiving insurance coverage.
Deductible
Deductibles are another term that is vital for your clients to understand. A deductible is the dollar amount that your client pays for healthcare services covered by their plan. Once the deductible is paid in total, the insurance plan starts to pay. Depending on the plan at hand this amount can vary quite a bit. It’s important to note that generally speaking, plans with higher deductibles usually have lower monthly premiums. After a client meets their deductible, the only costs will be their copayment or coinsurance (both terms are explained below). For example, if your client’s deductible is $3000, they will pay out of pocket until they reach that $3000. Only after that number is met, will their copayment or coinsurance kick in.
Copayment
A copayment, also referred to as a copay, is defined as the fixed dollar amount that a client will pay for specific healthcare services that are covered in their plan. This amount is usually due at the time of the service. For instance, you could explain that there are copays associated with things like regular doctors appointments. A specific example would be that someone would pay $30 dollars for this appointment. Be sure to make it clear that in this case the $30 payment is the copay. It’s important to note that different services have different copay amounts. For example, even if someone pays $30 to see a general practitioner, they could pay $60 to see a specialist.
Coinsurance
Coinsurance is similar to a copay in that it is also a dollar amount that your clients will pay for specific healthcare services. The difference is, unlike a copayment which has a fixed payment amount per each service, with coinsurance clients must pay a specified percentage of the cost of covered services. Make sure to explain the difference between the two. Also note that your client will only have one or the other depending on their plan. Like copayments, using examples is another great tactic. An easy example is, being charged $400 at the hospital. If they have already reached their deductible and they have coinsurance of 40%, then they will have to pay only $160. In turn, the insurance will cover the remaining $240.
Out-of-Pocket Maximum
An out-of-pocket maximum can be defined to your clients as the most amount of money that the client has to pay for covered services within a plan year. While this can be a bit confusing, the easiest way to explain it is by noting that once the out-pocket maximum limit is reached, your clients insurance plan will cover 100% of covered services. Payments that go towards an out-of-pocket maximum include copayments, coinsurance and deductibles, but not premiums. This term is especially important for those who use a lot of services in a given plan year.
Network
The best way to describe a network is — when your client has a health insurance plan, there will be a specific network of doctors, hospitals and other providers. Some people might better understand that each health plan has contracts with specific doctors, hospitals, pharmacies and other providers, so that members of the plan can receive services for a discounted price. With that said it make it clear to clients that using providers in their plan’s network, causes them to pay less. On the other hand, if they decide to use providers outside of their plan’s network, their out-of-pocket costs will be higher.
Essential Health Benefits
Established by the Affordable Care Act (ACA), essential health benefits refer to the particular set of benefits that must be covered in every health plan. Examples of these benefits include doctors visits, preventative care, hospital stays, and prescription drugs. Essential health benefits are the bare minimum that is covered in a plan.
Formulary
A formulary is quite simple. Explain it as a list of the specific prescription medications that a health insurance plan covers. This list will include information about each prescription’s costs and is essential for clients who need prescription drugs to understand and be able to access.
Pre-existing Condition
Simply put, a pre-existing condition is a health problem that a client has prior to applying for health insurance. You need to also explain to them that under the ACA, insurance companies can’t deny someone coverage or charge them a higher premium due to one of these conditions. With that said, it is important that they understand the necessity to disclaim any of their conditions ahead of time.
Health Savings Account
A health savings account, also known as an HSA, is a savings account that is tax advantaged. This means it is either exempt from taxes or tax-deferred. Its purpose is to allow clients to set aside money to use later on for certain qualified medical expenses. Most people pair HSAs with high-deductible health plans.
Tips to Help Explain Health Insurance Jargon
As noted earlier, for some clients and terms, simply providing them with a detailed definition will suffice in getting them to comprehend the term at hand. For others though, you will need to go the extra mile to make sure that they comprehend each term. Having a solid understanding enables clients to make informed decisions, and increases satisfaction.
Use Analogies and Examples
One of the easiest ways to explain jargon to your clients is to get them to relate to the term by providing a real-life example or analogy. We’ve already shown you a few ways to use examples when conveying terms, but analogies can be just as effective. An example of health insurance analogy could be the following: A deductible is like a toll booth on the highway. Just like a toll booth, you must pay the full amount before you can continue through. Once you reach your deductible, your insurance will kick in.
Utilize Visuals
As they often say in school, some people can learn by reading a definition, but others learn better when looking at a visual. The same is true for health insurance. Using things like infographics, charts, graphs, videos and more can help to simplify confusing jargon. There are a variety of ways to integrate visuals into your meetings with clients. One of the most popular practicesbut one creating a roadmap or web of sorts. Within this web you should include visual representations of important terms and then connect the jargon to each other with lines, noting their relationships to one another. Another tactic is to pre-record a video explaining confusing topics, and present it to your client, pausing along the way to make sure they understand each topic.
Use Interactive Software and Programs
There are a number of programs and software created specifically for insurance agents and their clients. These interactive tools (usually accessed by a computer or smartphone), will let your clients input their personal information, and in turn will provide them with specific options and aspects of health plans designed based on their background and needs. While these tools are not as common, they can give your clients a personalized experience. They also encourage clients to make the most informed decision.
Don’t Undervalue the Importance of Questions
The final tip is probably the simplest one, but also maybe the most important. During your meeting or presentation with a client it is crucial that you encourage them to ask questions. Even if they don’t speak up initially, make a point to ask them, “does this make sense?”. Working with your clients to make sure that they participate will help you to know when they are stuck on a certain point or if they need further clarification. As we know, selling insurance is all about providing stellar customer service, so make sure that your clients are comfortable and not afraid to speak their mind.
Final Thoughts
The Open Enrollment Period is stressful for everyone involved. For you, it’s probably stressful because it is so busy with a large influx of people seeking out insurance. For consumers, it’s stressful since people are in a time crunch to get insured before it’s over. One thing that makes the process easier for both parties is being able to effectively explain complex jargon. It’s important to do from a customer service standpoint. It also ensures that your clients get paired with plans fitting their needs, so they can leave feeling confident.
By having simplified definitions at hand, and using tactics such as real-life examples, analogies, visual aids, interactive tools, and by encouraging questions, your clients will be informed and appreciative. Only then will they be able to make a decision that suits their preferences. This OEP don’t wait until the last minute. Instead prepare sufficiently, treat each clients as individuals, and you’ll get through it with ease.
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