Common CPAP Insurance Vocabulary
Health insurance can be hard to understand for any patient no matter the experiences that you have had with it. Due to the importance of understanding some of the basic terms of insurance when shopping for CPAP supplies, Health Sqyre has compiled a list so you can find all of these definitions in one place!
Allowable charge – sometimes known as the “allowed amount,” “maximum allowable,” and “usual, customary, and reasonable (UCR)” charge, this is the dollar amount considered by a health insurance company to be a reasonable charge for medical services or supplies based on the rates in your area.
Benefit – the amount payable by the insurance company to a plan member (you!) for medical costs, in this case for CPAP therapy supplies.
Benefit level – the percentage or amount that a health insurance company has agreed to pay for a covered benefit.
Benefit year – the 12-month period for which health insurance benefits are calculated. Most of the time these benefit periods coincide with the calendar year but not all time. It is dependent on the insurance company that you have as they all work differently. Also worth noting is that health insurance companies may update plan benefits and rates at the beginning of the benefit year/period.
Catastrophic plan – an insurance plan with low monthly premium payments but a high deductible. These are also known as “High Deductible” plans. To see how high deductible plans affect the price of CPAP supplies, check out our CPAP Patient Case Studies Page for an example.
Claim – a request by a plan member (you!), or a plan member’s health care provider (your CPAP supply provider), for the insurance company to pay for medical services (the CPAP supplies you buy with insurance). Don’t worry… Health Sqyre will file and submit your CPAP claims for FREE, even when you purchase not using your insurance (out-of-pocket)!
Coinsurance – the amount you pay to share the cost of covered services (CPAP supplies) with your insurance company after your deductible has been met. The coinsurance rate is usually a percentage. For example, if the insurance company pays 80% of the claim, you will pay 20%. (Check out our CPAP Patient Case Studies Page to see some live examples and calculations as to how this works.)
Compliance – CPAP therapy compliance is measured over a 30-day period. Medicare defines compliance as: CPAP is used 70% of the time and CPAP is used for 4+ hours every night.
Coordination of benefits – a system used in group health plans to eliminate duplication of benefits when you are covered under more than one group plan. Benefits under the two plans usually are limited to no more than 100% of the claim.
Copayment – one of the ways you share in your medical costs. You pay a flat fee for certain medical expenses (e.g., $10 for every visit to the doctor), while your insurance company pays the rest. Copayments do not apply to CPAP supplies.
Deductible – the amount of money you must pay each year to cover eligible medical expenses (CPAP supplies) before your insurance company starts paying for a portion of your supplies. If your deductible has been met (paid in full), you will save a lot of money by using your insurance to purchase your CPAP supplies because your insurance company will pay for a majority of the cost. (Check out our Patient Case Studies Page for an example of how a deductible works when purchasing CPAP supplies.)
Dependent – any individual, either spouse or child, that is covered by the primary insured member’s plan.
Effective date – the date on which a policyholder’s coverage begins. This does not have to coincide with the calendar year.
Exclusion or limitation – any specific situation, condition, or treatment that a health insurance plan does not cover. Most health insurance plans cover CPAP supplies… Yay!
Explanation of benefits – tthe health insurance company’s written explanation of how a medical claim was paid – in this case for CPAP products. It contains detailed information about what the insurance company paid and what portion of the costs you paid / are responsible for.
Flexible Spending Account – an FSA allows you to set pre-tax money aside for specific health care expenses. FSA plans are usually categorized as “use it, or lose it,” meaning any unspent money in the account will be forfeited at the end of the benefit year. (For more information about how FSA’s and HSA’s work with CPAP supplies, go to our FSA / HSA Information Page. Most FSA’s and HSA’s will allow you to purchase CPAP therapy supplies.
Group health insurance – a coverage plan offered by an employer or other organization that covers the individuals in that group and their dependents under a single policy.
HCPCS – HCPCS is an acronym for Healthcare Common Procedure Coding System (HCPCS). Standardized code sets are necessary for Medicare and other health insurance providers to provide healthcare claims. (Check out our list of HCPCS for CPAP)
Health maintenance organization (HMO) – a health care financing and delivery system that provides comprehensive health care services for enrollees in a particular geographic area. HMOs require the use of specific, in-network plan providers and do not provide any benefits / coverage for out-of-network providers.
Health savings account (HSA) – a personal savings account that allows participants to pay for medical expenses with pre-tax dollars. HSAs are designed to complement a special type of health insurance called an HSA-qualified high-deductible health plan (HDHP). HDHPs typically offer lower monthly premiums than traditional health plans. With an HSA-qualified HDHP, members can take the money they save on premiums and invest it in the HSA to pay for future qualified medical expenses. (For more information, go to our FSA / HSA Information Page)
High deductible plan – an insurance plan with low monthly payments but a high deductible. (Check out our Patient Case Studies Page for an example)
In-network provider –a a health care professional, hospital, pharmacy, or DME vendor that is part of a health plan’s network of preferred providers. You will generally pay less for CPAP supplies purchased from in-network providers because they have negotiated a discount for their products in exchange for the insurance company sending more patients their way. However, if you have a high-deductible plan you should consider paying without using your insurance (out-of-pocket).
Individual health insurance – health insurance plans purchased by individuals to cover themselves and their families. Different from group plans, which are offered by employers to cover all of their employees.
Medicaid – a social health care program created in 1965 that provides health benefits to low-income individuals who cannot afford Medicare or other commercial plans. Medicaid has been described as a “government insurance program for persons of all ages whose income and resources are insufficient to pay for health care.”
Medicare – the federal health insurance program that provides health benefits to Americans age 65 and older. Medicare has two parts; Part A, which covers hospital services, and Part B, which covers doctor services.
Medicare supplement plans – plans offered by private insurance companies to help fill the “gaps” in Medicare coverage.
Network – the group of doctors, hospitals, DME vendors, and other health care providers that insurance companies contract with to provide services at discounted rates. You will generally pay less for CPAP products purchased from providers in your network.
Out-of-network provider – a health care professional, hospital, pharmacy, or DME vendor that is not part of a health plan’s network of preferred providers. You will generally pay more for CPAP supplies purchased from out-of-network providers.
Out-of-pocket maximum – the most money you will pay during a year for coverage. It includes deductibles, copayments, and coinsurance, but is in addition to your regular premiums. Beyond this amount, the insurance company will pay all expenses for the remainder of the year. (Health Sqyre explains in greater detail in our Out-of-Pocket Maximum Page)
Payer – the health insurance company whose plan pays to help cover the cost of your care.
Preferred provider organization (PPO) – a health insurance plan that offers greater freedom of choice than HMO (health maintenance organization) plans. Members of PPOs are free to receive care from both in-network or out-of-network (non-preferred) providers, but will receive the highest level of benefits when they use providers inside the network.
Premium – the amount you pay each month in exchange for insurance coverage. This amount usually goes down with a high deductible plan.
Provider – any person (i.e., doctor, nurse, dentist) or institution (i.e., hospital, clinic, CPAP vendor) that provides medical care or equipment.
Reimbursement – This the amount of money that you can receive after filing a claim with your insurance company. Health Sqyre does this for free for any CPAP products that are purchased from us. (We also have you covered if you want to learn how to apply for reimbursement)
Rental – insurance companies will sometimes (varies by payer) make patients rent certain CPAP supplies, most often a CPAP machine, when the individual uses his/her insurance instead of buying it outright. The monthly payments are essentially installments that lead to the patient owning the machine after 3 to 13 months (the rental period depends on the insurance company). Insurance companies do this so to ensure that the patient is actually using the CPAP device and getting better / healthier, so that they aren’t paying for something that no one is using and wasting money.
Since there are so many terms relevant to insurance, it can be easy to get them mixed up. With Health Sqyre, we sort out every unique aspect of your plan to give you dynamic pricing an any CPAP products that you may need. Sign up for a free account today to see how much you can save!