Health Insurance Terminology

• Comprehensive coverage—Insurance is either comprehensive or limited. Comprehensive means broader coverage and/or higher indemnity payments than limited coverage.
  
  
• Coinsurance—The portion of the bill for which the insured is responsible.
• Copayment—In managed care plans, the amount the insured must pay directly to the provider of the service. It is typically five to fifteen dollars.
  
  
• Deductible—The amount of money the insured must pay out of pocket before benefits begin. Deductibles are usually on a calendar year or policy year basis. Some policies have deductibles per diagnosis—the least desirable—or family deductibles. A policy may have a $250 deductible per individual with a $500 deductible per family. This means that when two individuals have each satisfied a $250 deductible, the remaining family members will not have to meet any deductible.
• Elimination period—The first days of an illness that are not covered by insurance.
  
  
• Explanation of benefits (EOB)—One of these forms comes with or without an insurance check to explain what portion of the submitted bill was covered and why. If you have more than one policy covering you, this is your proof of what your primary coverage paid.
  
  
• Exclusions—Specified illnesses, injuries, or conditions listed in the policy that are not covered. Experimental therapies, cosmetic surgery, and eyeglasses are common exclusions.
  
  
• Health maintenance organization (HMO)—The first and most traditional type of managed care plan. Like other types of managed care, HMOs are organizations that both finance health care (provide insurance) and provide the care by collecting fees in advance.
  
  
• Indemnity insurance—Traditional insurance that pays providers on a fee-for service basis.
  
  
• Lifetime maximum—Total benefits that the insurance company will pay per individual over a lifetime.
  
  
• Managed care—Organizations that function as both insurer and provider of health care simultaneously. HMOs were the first type, but variations include preferred provider organizations and independent practice associations. HMOs tend to operate with stricter rules than their variations.
  
  
• Participating provider—A health care provider who has joined a managed care plan and is willing to accept its contracts.
  
  
• Point-of-service (POS) plans—Managed care plans that give the insured the option of seeing providers within the plan’s network and paying the copayment amount only, or seeing providers out of the network and getting reimbursed as you would under an indemnity policy.
  
  
• Primary care provider (PCP)—Sometimes referred to as the gatekeeper, PCPs are non-specialty physicians in many managed care plans that enrollees choose to serve as their coordinator for all the services they may need. PCPs must pre-approve referrals to specialists and use of services, including emergency room care. HMO plans always require the insured to choose a PCP.
  
  
• Provider—The supplier, physician, psychologist, pharmacist, or other health care professional providing a service to the insured.
  
  
• Stop loss—The point during a calendar year when your insurance policy pays 100 percent of costs for the remainder of the year. Thus your out-of-pocket expenditures, or losses, stop. Most policies pay 80 percent and the individual pays 20 percent. If the policy has a $5,000 stop-loss point, 20 percent of that equals $1,000. This means that when you have spent $1,000 out of your pocket plus your deductible, the policy will pay 100 percent rather than 80 percent.

Irene Card & Betsy Card share the responsibilities of running Medical Insurance Claims, Inc. a health insurance services company . If you have questions relative to this column or other related topics, we invite you to call (973) 492-2828, or visit our contact page.