Health insurance Glosary

Coinsurance: The amount you must pay for medical care after you have met your deductible. Typically, your plan will pay 80 percent of an approved amount, and your coinsurance will be 20 percent, but this may vary from plan to plan

Copay: The flat fee you pay each time you receive medical care. For example, you may pay $10 each time you visit the doctor. Your plan pays the rest.

Deductible: The amount you must pay each year before your plan begins paying.

Disability insurance: Pays benefits if you are injured or become seriously ill and are no longer able to work.

Exclusions: Services that are not covered by a plan. Sometimes called limitations. These exclusions and limitations must be clearly spelled out in plan literature.

Fee-for-service insurance: Traditional (indemnity) health insurance where you and your plan each pay a portion of your health expenses, usually after you meet a yearly deductible. In most cases, you can choose any physician, hospital, or other provider (non-network based coverage).

Flexible spending arrangements: Employees use pre-tax dollars to set up these accounts and draw down on them to pay qualified medical expenses during the year. Unused amounts are forfeited at the end of the year.

Group insurance: Health plans offered to a group of individuals by an employer, association, union, or other entity.

Health maintenance organization (HMO): A form of managed care in which you receive all of your care from participating providers. You usually must obtain a referral from your primary care physician before you can see a specialist.

Health reimbursement arrangement: An account established by an employer to pay an employee's medical expenses. Only the employer can contribute to a health reimbursement account.

Health savings account: An account established by an employer or an individual to save money toward medical expenses on a tax-free basis. Any balance remaining at the end of the year "rolls over" to the next year.

High-deductible health plan: A plan that provides comprehensive coverage for high-cost medical events. It features a high deductible and a limit on annual out-of-pocket expenses. This type of plan is usually coupled with a health savings account or a health spending account.

High-risk pool: State-operated program that offers coverage for individuals who cannot get health insurance from another source due to serious illness.

Indemnity insurance: Traditional, fee-for-service health insurance that does not limit where a covered individual can get care.

Individual health insurance: Coverage purchased independently (not as part of a group), usually directly from an insurance company.

Long-term care insurance: Coverage that pays for all or part of the cost of home health care services or care in a nursing home or assisted living facility.

Managed care: An organized way of getting health care services and paying for care. Managed care plans feature a network of physicians, hospitals, and other providers who participate in the plan. In some plans, covered individuals must see an in-network provider; in other plans, covered individuals may go outside of the network, but they will pay a larger share of the cost.

Medicaid: Federal program administered by the States to provide health care for poor and low-income individuals and families. Eligibility and features vary from State to State.

Medicare: Federal insurance program that provides health care coverage to individuals aged 65 and older and certain disabled people, such as those with end-stage renal disease.

Open enrollment: A set time of year when you can enroll in health insurance or change from one plan to another without benefit of a qualifying event (e.g., marriage, divorce, birth of a child/adoption, or death of a spouse). Open enrollment usually occurs late in the calendar year, although this may differ from one plan to another.

Point-of-service plan: A form of managed care plan in which primary care physicians coordinate patient care but there is more flexibility in choosing doctors and hospitals than in an HMO.

Preferred provider organization: A form of managed care in which you have more flexibility in choosing physicians and other providers than in an HMO. You can see both participating and nonparticipating providers, but your out-of-pocket expenses will be lower if you see only plan providers.

Premium: The amount you pay to belong to a health plan. If you have employer-sponsored health insurance, your share of premiums usually are deducted from your pay.

Primary care physician: Usually a family practice doctor, internist, obstetrician-gynecologist, or pediatrician. He or she is your first point of contact with the health care system, particularly if you are in a managed care plan.

Reasonable and customary charge: The prevailing cost of a medical service in a given geographic area.

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