Health Insurance Glossary

Coinsurance

The share of health care services paid by an enrollee. Coinsurance typically goes hand-in-hand with a deductible. Once the deductible is met, the enrollee is usually responsible for a specified percentage of the medical bill.

Co-payment

The fixed fee paid by the enrollee at the time of service – for an office or emergency room visit, for example. Co-payments are usually charged by health maintenance organizations (HMOs), point-of-service (POS) plans and some preferred provider organization (PPO) plans.

Covered benefit

A health service or item that's included in your health plan and paid for either partially or fully.

Covered charges

Services or benefits for which a health plan makes either partial or full payment.

Deductible

The annual amount you pay for services. The deductible must be met before the insurer pays for services.

Enroll

To join a health plan.

Exclusive provider organization (EPO)

This kind of managed care plan is similar to an HMO plan in that members must choose a primary care physician. The health plan administers the plan and pays providers directly. If specialty services are not authorized, the plan usually does not cover the services.

Gatekeeper

The primary care physician in a managed care plan through which all other care (visits to specialists and other providers, lab and radiology tests, hospitalizations, and so on) – with some exceptions, such as emergencies – must be coordinated.

Health insurance discount plan

A discount plan allows members to access health care providers, such as doctors and dentists, who have agreed to provide services to plan members at discounted rates. Such plans typically charge members a monthly membership fee. Discount plans are not a substitute for health insurance. Only discount plans licensed through the state of California are valid. Many providers don't accept this type of coverage.

Health maintenance organization (HMO)

Health maintenance organizations provide care through a specified network of doctors and hospitals. Members of HMOs choose a primary care physician, who coordinates all care. A co-payment is typically required for each office visit. Other than the co-payment, patients don't pay for services from a physician or hospital in the network. However, they are responsible for the cost of services that are not covered benefits and the cost of unauthorized services that they elect to receive.

Health savings account (HSA)

An alternative to traditional health insurance, an HSA gives consumers the option of setting aside pre-tax dollars for medical expenses, such as co-payments, deductibles and medication, and saving for future medical expenses. You must be covered by a high-deductible health plan (HDHP) to take advantage of an HSA. An HDHP usually costs less than a traditional plan, so the money you save on insurance can be put into the HSA. For more information, visit Healthcare.gov.

Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a federal law that mandated the creation of national standards to protect sensitive patient health information from being disclosed without the patient's consent or knowledge. It also gives people who lose their group health insurance the right to buy individual health insurance, regardless of pre-existing conditions.

Indemnity

A traditional insurance medical plan that allows you to choose any provider and pays a portion of the medical bills. You pay a deductible and coinsurance.

Independent practice association (IPA)

An organization of providers created for the purpose of entering into HMO contracts to provide medical care as a participating medical group.

In-network

This refers to doctors, hospitals, pharmacies and other health care providers that have agreed to provide members of a certain insurance plan with services and supplies at a discounted price. Under some insurance plans, your care is covered only if you get it from in-network providers.

Managed care

Managed care refers to a variety of approaches to managing health care, from managed indemnity plans to HMOs. Managed care focuses on controlling health care costs and use. This is accomplished in a number of ways, including contracts with specific providers, incentives to those providers to keep costs down, and a review process to promote appropriate use of health services.

Medi-Cal

A California state-sponsored assistance program for medical care.

Medi-Cal managed care

With this type of Medi-Cal plan, you choose a primary care provider (PCP), who serves as the gatekeeper for accessing care from other providers. Participants can bypass their PCP in certain situations (such as emergency care) and for certain needs (such as women's health care visits).

Medicare

A federally funded health insurance program for patients who are disabled or age 65 or older. The original Medicare plan has two parts: Part A is hospital insurance with coverage for hospitalization, hospice and skilled nursing facility services. Part B is medical insurance with coverage for physician services, medical supplies and clinic care.

Medicare Advantage plans

Health plan options approved by Medicare but run by private companies. They are part of the Medicare program. You may have to use the plan's doctors and hospitals to get services. With these plans, you generally receive:

• All your Medicare-covered health care through that plan
• Coverage that can include prescription drugs
• Extra benefits, such as vision, hearing, dental, or health and wellness programs
• Lower out-of-pocket costs than the original Medicare plan

Medicare High-deductible Medigap Policy

A type of policy with a high deductible but a lower premium. You must pay the deductible before the Medigap policy pays anything. The deductible amount can change each year.

Medicare private fee-for-service plan

A type of Medicare Advantage plan offered by a private insurance company. It allows you to seek care from any doctor or hospital that accepts Medicare and the fee-for-service plan. The plan provides Medicare benefits and may provide additional benefits. The insurance company, which receives funds from Medicare, decides how much it will pay for each service and how much the patient will pay.

Medicare preferred provider organization (PPO)

A type of Medicare Advantage plan available in a local or regional area. With a Medicare PPO, you pay less if you use doctors, hospitals and other providers that belong to a network. If you use providers outside the network, you pay more.

Medicare risk HMOs

A type of Medicare Advantage plan that offers an alternative to traditional Medicare coverage. Patients assign their Medicare benefits to health plans that receive monthly premiums from the federal Health Care Financing Administration. As in an HMO, care is provided using gatekeepers or primary care physicians to coordinate care. Seniors elect these plans to eliminate the paperwork and deductibles associated with Medicare. They offer the same benefits as Medicare and often additional benefits, such as prescription coverage, as incentives to enroll.

Medicare supplemental insurance

A supplemental insurance policy to help cover medical fees and services not covered by Medicare. These are also known as "Medigap" plans.

Participating medical group (PMG)

A physician group (a primary care or multispecialty group) that is a member of a health plan's network and therefore may provide services to members covered by that health plan.

Point-of-service (POS)

A health plan that offers the option to either coordinate care through a primary care physician or seek medical care from another provider. To exercise the first option, sometimes called "tier 1," you choose a primary care doctor to coordinate your care. As with a health maintenance organization, the patient is responsible for a nominal co-payment.

For a higher degree of choice, or "tier 2," you may choose to receive care from the plan's network of physicians and hospitals without coordinating through the primary care doctor. As with a preferred provider organization, the patient is generally responsible for a deductible and for paying a percentage of the bill.

In "tier 3," you may choose any doctor outside the network, but you'll pay an even higher percentage of the bill.

Precertification

Obtaining approval from a health plan for an elective hospital stay before admission to the hospital. Expected length of stay is also determined during precertification.

Preferred provider organization (PPO)

Preferred provider organizations offer care through a network of specified doctors and hospitals. There's usually no gatekeeper. Many services, however, require prior authorization by the insurer or the patient may be held accountable for a larger portion of the bill. Some plans have an annual deductible that must be met before services are covered by the insurer. Other plans have a co-payment. If you're seen by a nonparticipating provider, you're responsible for a higher percentage of the bill.

Referral

A referral is made when a physician sends a patient to another physician for evaluation or treatment of a specific, usually complex problem.

Self-insured

A self-insured employer assumes risk for health care expenses in a plan that is self-administered or handled through a contract with a third-party administrator. This type of coverage is regulated by the Employee Retirement Income Security Act of 1974.