If you are new to health insurance or reading about it for the first time, it can be a lot like reading a foreign language. This is a quick rundown of definitions for the many terms used around and within the healthcare industry. We hope to give some clarity and allow you to better navigate the health insurance world.
General Health Insurance Terms:
Carrier: The health insurance company that is giving you a health plan (for example, Blue Cross, Cigna, Aetna, Kaiser,etc.).
Carrier’s Network: A group of doctors working with a carrier to provide you health services.
Claim(s): A request to your carrier for payment of your health care service or visits.
In-Network Doctors: Doctors contracted to work with your carrier.
Out-of-Network Doctors: Doctors who are not contracted to work with your carrier.
Insurer: Another name for the carrier that is providing you healthcare insurance.
Insured: You or your company/group that is receiving coverage from a health carrier.
PCP: Primary Care Physician or Primary Care Doctor which is the main medical or family doctor that you see for your health services. Many times you must get a referral from your PCP before you can see a specialist.
Specialist: Doctors who focus on a specific type of medicine (exmp., orthopedic, neurologist, gynecologist, etc.).
Ancillary Benefits: Smaller health care plans such as dental and vision plans.
Health Census: Collection of a company’s employee data (date of birth, gender, zip code, etc.) to be submitted to health carriers at the time of quoting for health plans.
Health Insurance Plans:
HMO – Health Maintenance Organization: This plan provides health care through doctors contracted with the carrier and usually requires you to get a referral from your primary doctor before you can see a specialist — usually specialists must also be an in-network doctor to be covered by your plan.
PPO – Preferred Provider Organization: This plan provides health care inside and outside the carrier’s doctor network. Usually there is a higher percentage of cost-sharing, meaning you pay more, for out-of-network care.
POS – Point of Service: These plans are usually a mix between HMO and PPO plans. You have the benefit of the HMO-like plan of a carrier’s in-network system and you may need a referral from your primary doctor to see a specialist. But you also have the benefit of the PPO-like plan where you will have coverage for out-of-network doctors, but again, with higher cost-sharing expenses, meaning you generally pay more for out-of-network care.
EPO – Exclusive Provider Organization: These are similar to HMO plans with an in-network system of doctors, but you are usually not offered coverage for health services outside of the carrier’s physician network. However, you often do not need a referral to see a specialist within the carrier’s doctor network.
HSA – Health Savings Account: This is a high deductible plan with a tax-favored savings account. Essentially, you open a savings account and deposit funds into it ONLY to be used for your health cost-sharing expenses (example, co-payments, deductible, etc.). Both you or your employer can contribute funds to the HSA savings account. The benefit is not only do you have funds set aside for your portion of your health costs, but these are funds you can deposit into your account tax-free or with a tax deduction – either way, you save money. Oftentimes, money in this account that is not fully used is simply “rolled over”, meaning you can continue to use and build these funds for your following year’s health insurance payments.
HRA – Health Reimbursement Arrangement: Employers have full control over how HRA plans are designed and the options are endless. However, there are 3 main rules regarding HRA’s: 1) Employer’s set limits for the plan/funds and is 100% responsible for funding. 2) Only income tax deductible medical expenses can be paid from HRA account. 3) No withdrawals allowed for anything but qualified medical reimbursements. Other than that, the sky’s the limit.
Health Policy Terms:
Starting Date: Date which your health insurance policy actually starts.
EE + SP: Employee + Spouse
EE + CH: Employee + Children
Policy Cost and Payment Terms:
Cost-Sharing: pre-set amounts or percentages that you must pay with your own money for health services, such as, co-payments, coinsurance, deductibles, etc.
Co-payment: A flat fee that you pay for health services.
Coinsurance: A split or percentage of payment between you and the health insurance. Example: 20/80 coinsurance is 20% of the cost paid by you and 80% of the cost paid by your carrier for a health service claim.
Deductible: A set amount you must pay for all your health care claims before your insurance company begins to covers the costs.
Out-of-Pocket Limit: A set amount of money you must pay from your own funds before your insurance company will pay 100% for your health care expenses (this counts your deductible plus other cost-sharing expenses).
Maximum Dollar Limit: The maximum amount of funds that an insurance company will pay for your health claims within a certain time period.