A Quick Guide to Health Insurance Lingo

by Lesley Politi on April 24, 2009

A Quick Guide to Health Insurance Lingo

Policies have been dejargonized over the years, but some health insurance terms still need explaining

Posted April 22, 2009

Health insurance has its own language, as young adults entering the world of healthcare policies will find. You might want to print out these terms and definitions, adapted from a guide published by the federal Agency for Healthcare Research and Quality, to consult when comparing different policies.

Coinsurance: How much you have to pay for medical care after meeting your deductible (below). A typical health insurance policy or plan will pay 75 or 80 percent of a certain amount. The remainder is your coinsurance.

Copay: A set fee you pay each time you receive medical care—$10 whenever you visit the doctor, for example. Your plan pays the rest.

Deductible: How much you have to pay in a given year before your plan begins covering the cost.

Exclusions: What a health plan or policy will not cover, sometimes called limitations. They must be clearly spelled out in the plan’s literature.

Flexible spending arrangements: Accounts set up by employees to tap during the year to pay qualified medical expenses. They reduce taxes because the funds are subtracted from earnings before they are taxed. Anything left over at the end of the year is forfeited.

Formulary: A list of the medications a policy or health plan will cover entirely or in part.

Health maintenance organization: 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: Accounts set up by employers to pay employees’ medical expenses. Only the employer can contribute to the account.

Health savings account: A special account established by an employer or an individual to save money toward medical expenses. As with flexible spending arrangements, they reduce taxes because the funds are subtracted from earnings before they are taxed. A key difference is that any remaining balance at the end of the year rolls over to the next year.

High-deductible plan: A health plan that provides comprehensive coverage only for costly care such as expensive surgery. It features a high deductible and an annual limit on the total amount paid out by a covered individual or family. Such a plan is usually coupled with a health savings account or a health spending account.

High-risk pool: A state-run program that offers coverage for those who cannot get health insurance from another source because of serious illness.

Individual health insurance: Coverage purchased for an individual, usually directly from an insurance company.

Managed care: Managed-care plans are built around a network of physicians, hospitals, and other participating providers. In some types of plans, covered individuals must see an in-network provider; in other types, covered individuals can go outside of the network, but they will pay a larger share of the cost.

Medicaid: The federal program that provides healthcare coverage for low-income individuals and families. It is administered by the states. Eligibility and other features vary by state.

Medicare: A federal insurance program that provides healthcare coverage to those age 65 and older and those with certain disabilities such as end-stage renal disease.

Network: Physicians, hospitals, and other providers that participate in a healthcare plan.

Open enrollment: A set time of year when you can enroll in health insurance or change from one plan to another, usually toward the end of the year. Marriage, divorce, birth, a spouse’s death, and certain other life-changing events may qualify for joining a plan or changing plans outside the open-enrollment window.

Point-of-service plan: A type of managed care in which a primary-care physician coordinates your care. You have more flexibility in choosing specialists and hospitals than you do in an HMO.

Pre-existing condition: An illness like cancer or another serious medical condition, diagnosed before you enroll in a plan or purchase a policy, that could be used as a reason to reject enrollment or to deny coverage for treating the condition or a possibly related problem.

P referred- provider organization: Similar to a point-of-service plan: You can see both participating and nonparticipating providers, but your out-of-pocket expenses will be lower if you see only participating providers.

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

Primary-care physician: Usually a family-practice doctor, internist, obstetrician-gynecologist, or pediatrician. This physician is your first point of contact with the healthcare system, particularly in a managed-care plan.

Reasonable and customary charge: The prevailing cost of a medical service in a given geographic area. Most plans will not routinely pay a higher amount.

Waiting period: The length of time before coverage takes effect. The cost of treatment and other medical services during this period is not covered.

Source: www.usnews.com

Questions Please call Politi Insurance Agents & Brokers



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