Employee Benefits

20 Common Health Care and Insurance Terms Explained

When reviewing medical information or your insurance benefits, you may notice many unfamiliar terms. Some may be easy to figure out, but others are unclear. Here’s an explanation of 20 common health care and insurance terms.

  1. Premium – This is a fee you pay to participate in a health care insurance plan. If you sign up for benefits through your employer, the cost is deducted from your paycheck.
  2. Primary care physician – Sometimes this term is written as PCP. It’s the doctor you choose to provide routine care, and who can refer you to a specialist.
  3. Generic drugs – These are less expensive versions of brand-name drugs that are no longer are covered by a patent. Generic drugs are made with the same amounts of active ingredients and cost less.
  4. Copayment (copayment) – This is a set amount you pay at each doctor appointment.
  5. Co-insurance (coinsurance) – The percentage of the bill you pay toward treatments and services on insurance claims.
  6. In-network, out-of-network – Doctors, hospitals and other medical service providers are listed as “in-network,” if they’ve agreed to accept a set payment amount for each service from your insurance company. Providers not on the list are considered “out-of-network,” and you may pay more for their services.
  7. Deductible – The amount you pay each year for medical services before your insurance plan begins covering the costs.
  8. Fee-for-service – You can see any medical provider or specialist. Services are paid for separately. The plan pays a set amount of the cost for each covered medical expense. It’s a type of traditional indemnity plan.
  9. Exclusions – These are medical services and procedures not covered by the insurance plan.
  10. Stoploss – When you have met the plan deductible and reached the maximum amount of co-payment required, the insurance company will cover 100 percent of the costs for the rest of the year.
  11. Preexisting condition – An insurance company may not cover medical conditions you had prior to signing up for the plan.
  12. Formulary – A list of medications covered by an insurance plan.
  13. Health maintenance organization (HMO) – Under this plan, you pay a small co-payment for doctor and hospital visits. But, you must see providers participating in the HMO.
  14. Point-of-service (POS) plan – Some HMOs allow coverage for specific out-of-network services. You may be able to visit specialists without a referral from your primary care physician.
  15. Preferred provider organization (PPO) – With this plan, you pay a co-payment for visits to doctors, hospitals and other medical providers in the network. They also generally cover a portion for out-of-network services.
  16. High-deductible health plan (HDHP) – This plan features lower monthly premiums with higher deductible amounts. HDHP deductibles can be more than $2,000 for individuals and $5,000 for families.
  17. Health savings account (HSA) – This tax-free savings account can be used to pay qualifying medical expenses. An HSA requires enrollment in a high-deductible health plan. Currently, the maximum HAS amount for an individual plan is $3,450. For a family plan, it’s $6,900. If you’re age 55 and older, you can save an extra $1,000. Unused funds can be rolled over to the next year.
  18. Medicare – A federal program that helps pay for medical costs for people age 65 and older and those with certain disabilities. People enrolled in the plan are responsible for set premiums, deductibles, and co-payments. The Medicare benefit for prescription drugs is called Part D.
  19. Medicaid – This is a federal and state-funded program for those who can’t afford to pay for medical care.
  20. Medigap – A private insurance plan that helps cover medical costs not paid by Medicare.

Sources:
Reader’s Digest
The Balance

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