Health Insurance Term
Understanding Health Insurance Terms
[The meaning of a health insurance term is usually consistent but can vary, e.g., some insurers may use "out-of-pocket" to mean coinsurance instead of the total of deductible, coinsurance, and copays which is its usual meaning. - ed.]
Coinsurance: The amount you are required to pay for medical care in a fee-for-service plan after you have met your deductible. The coinsurance rate is usually expressed as a percentage. For example, if the insurance company pays 80 percent of the claim, you pay 20 percent.
Coordination of Benefits: A system 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 percent of the claim.
Copayment: Another way of sharing medical costs. You pay a flat fee every time you receive a medical service (for example, $5 for every visit to the doctor). The insurance company pays the rest.
Covered Expenses: Most insurance plans, whether they are fee-for-service, HMOs, or PPOs, do not pay for all services. Some may not pay for prescription drugs. Others may not pay for mental health care. Covered services are those medical procedures the insurer agrees to pay for. They are listed in the policy.
Deductible: The amount of money you must pay each year to cover your medical care expenses before your insurance policy starts paying.
Exclusions: Specific conditions or circumstances for which the policy will not provide benefits.
HMO (Health Maintenance Organization): Prepaid health plans. You pay a monthly premium and the HMO covers your doctors' visits, hospital stays, emergency care, surgery, checkups, lab tests, x-rays, and therapy. You must use the doctors and hospitals designated by the HMO.
Managed Care: Ways to manage costs, use, and quality of the health care system. All HMOs and PPOs, and many fee-for-service plans, have managed care.
Maximum Out-of-Pocket: The most money you will be required pay a year for deductibles and coinsurance. It is a stated dollar amount set by the insurance company, in addition to regular premiums.
Noncancellable Policy: A policy that guarantees you can receive insurance, as long as you pay the premium. It is also called a guaranteed renewable policy.
PPO (Preferred Provider Organization): A combination of traditional fee-for-service and an HMO. When you use the doctors and hospitals that are part of the PPO, you can have a larger part of your medical bills covered. You can use other doctors, but at a higher cost.
[This health insurance term does not really refer to a "combination". A means of making claims payment to private practice doctors more efficient, and patients not having to complete claim forms, is what this health insurance term is about. The "organization" part of this health insurance term refers to there being provider affiliates or participants who have agreed to a protocol for better claims filing and payment. The "preferred" part of this health insurance term may signify that participating providers are preferred because there is less out-of-pocket when their services are utilized. - ed.]
Preexisting Condition: A health problem that existed before the date your insurance became effective.
[This health insurance term may be further defined by statute or in the plan document, e.g., how far back did it exist, is it for treatment only, or should a prudent person have gone for treatment. - ed]
Premium: The amount you or your employer pays in exchange for insurance coverage.
Primary Care Doctor: Usually your first contact for health care. This is often a family physician or internist, but some women use their gynecologist. A primary care doctor monitors your health and diagnoses and treats minor health problems, and refers you to specialists if another level of care is needed.
Provider: Any person (doctor, nurse, dentist) or institution (hospital or clinic) that provides medical care.
Third-Party Payer: Any payer for health care services other than you. This can be an insurance company, an HMO, a PPO, or the Federal Government.
Additional Resources:
For more current information on health insurance and health plan choice, select Choosing and Using a Health Plan or Your Guide to Choosing Quality Health Care.
Internet Citation:
Checkup on Health Insurance Choices. AHCPR Publication No. 93-0018, December 1992. Agency for Health Care Policy and Research, Rockville, MD. http://www.ahrq.gov/consumer/insuranc.htm
Editorial comments and minor enhancements have been added.
[A longer health insurance term list is at Health Insurance Glossary - ed.]