Health Insurance Terms to Know
Below are various health insurance terms you should be aware of as you review your health insurance coverage:
- Cafeteria Plan – Also known as “Section 125 plans” are employee benefit arrangement in which employees can select from a range of benefits such as medical coverage, accidental death and dismemberment insurance, short and long-term disability, life insurance and dependent care.
- Co-insurance – also known as “percentage participation” a portion of a claim shared between the insured and the insurance company. For instance, in a medical insurance policy, co-insurance may be stated as 75/25. In this example, the insurance company agrees to pay 75% of the claim while the insured agrees to pay 25%. 100% co-insurance would indicate the insurance company will pay all claims after deductibles and co-payments are made.
- Co-pay – is a fixed amount for a covered service, paid by a patient to the provider of service before receiving the service
- Comprehensive Major Medical – Health Insurance policy that provides broad coverage and high benefits for hospitalization, physician and drug coverage and services. These plans are typically characterized by co-pay and co-insurances.
- Deductible – the amount of claim that must be paid by the insured before medical benefits are paid.
- Formulary – A list of drugs that are available to an enrollee in a health insurance prescription drug coverage plan.
- HMO – Health Maintenance Organizations are health care service providers that stress preventive care, early diagnosis, and treatment on an outpatient basis when possible all in an attempt to keep health costs low.
- HSA – Health Savings Accounts are tax advantaged savings accounts available to taxpayers enrolled in a high deductible health care plan.
- Lifetime maximum benefit – or maximum lifetime benefit – is the maximum dollar amount a health plan will pay in benefits to an insured individual during that individual’s lifetime.
- Provider Network – a list of medical service providers available for use with a health insurance policy when it uses managed health care (HMO, PPO, POS) system.
- Open Enrollment – A time when an individual can enroll for health care coverage or make changes to their existing coverages without having to show evidence of insurability. Open enrollments are part of Obamacare, Medicare and group health insurance plans.
- Out-of-pocket maximum – (OPM) the maximum amount an policy owner will pay for healthcare during a specified period (usually a year.) Cost that contribute to the out-of-pocket maximum include co-pays, co-insurance and deductibles. Premiums typically are not included in OPM maximums.
- PPO – An association of health care providers that agree to provide medical services to members of a group at fees negotiated in advance.
