Understanding medical insurance terminology

Medical insurance is big business, aimed at making a profit. They will pay-out what they have agreed to in your signed contract (including the fine print).

The terminology used in policies can be deemed “legal speak” which may seem confusing e.g. Your medical plan states 100% cover for procedure x. You may assume that you can have the procedure done “free of charge”….. not necessarily. Grasping the terminology is half the battle won.

Here’s how it works:

• The insurer researches the price for each procedure/service i.e. the going rate in the marketplace
• Having done this they set about making deals with hospitals and other medical service providers to negotiate a discounted rate (bulk buying)
• Insurers use this discounted rate as their 100% line in the offered policies
• You may still have to pay the first Rxxx of a 100% covered procedure due to the excess stipulation in your policy. The insurer views these as two separate issues
• You may have a procedure done at a facility of your choice, BUT if the service provider is not “contracted” by your medical insurance company, you will be presented with a bill for the remainder. Marketplace price + excess – % of insurers discounted rate= balance.

Remember that insurance companies determine which treatment/procedure they will refund NOT the physicians. Each insurance package/plan has a different range of cover and levels of personal excess that accompanies it. To avoid any nasty financial surprises, take the time to examine/review your policy carefully.

• Excess is the amount the insurer requires the contracted client to pay, i.e. Hospitalisation could be (partly) charged per day-rate
• There appears to be no standard agreement amongst insurance companies regarding which category a treatment falls under
• Regardless of this, each package/plan maintains a financial restitution “ceiling” and a pre-defined client excess value per treatment or procedure.