20 Health Care Terms You Need to Know

You’re lost in a world of acronyms and insurance-speak unless you master some of the common lingo. Here are some terms you should know:

Co-insurance: Percentage of treatment cost the patient is responsible for on an insurance claim.

Co-payment: Fixed dollar amount the consumer must pay for each visit to doctor’s office.

Deductible: Annual amount the consumer must pay for medical services (excluding premiums) before the insurance plan begins covering costs.

Exclusions: Medical services not covered by an insurance policy.

Fee for service: Plan in which the insurance company and consumer share the cost of treatment according to a fixed ratio (for example, the company might pay 80%, while the consumer pays 20% in co-insurance).

Formulary: List of medications covered by an insurance plan.

Generic drug: Cheaper duplicate of a brand-name drug (whose patent has expired), using the same amount of the same active ingredients.

Health maintenance organization (HMO): Plan in which the consumer pays a modest co-payment for doctor and hospital visits, but coverage is restricted to participating doctors. Specialist care requires a referral from a primary care provider.

Health savings account (HSA): Tax-free, portable savings account that is used to pay medical expenses. Unused funds can be carried over from year to year. Requires enrollment in an HDHP.

High-deductible health plan (HDHP): Plan with lower monthly premiums but much higher deductibles (often more than $2,000 for individuals and $5,000 for families) than typical managed care plans.

In-network/out-of-network: Refers to whether doctors or hospitals are part of the group (network) whose services are covered at the maximum rate.

Medicaid: Federal and state-funded program to pay for medical care for those who cannot afford it.

Medicare: Federal program that helps pay for medical care for people 65 and older, or who have certain disabilities. Those enrolled are responsible for premiums, deductibles and co-payments. Newest Medicare benefit, for prescription drugs, is sometimes referred to as Part D.

Medigap: Private insurance used to fill “gaps” in Medicare coverage.

Point-of-service (POS) plan: Option offered with certain HMOs allowing some coverage for out-of-network treatment. Consumer can often visit specialists without a referral from primary care physician.

Pre-existing condition: Medical condition not covered by insurer because consumer is believed to have had condition prior to obtaining policy.

Preferred provider organization (PPO): As with HMOs, consumer pays co-payment for visits to network doctors. Unlike HMOs, PPOs partially cover treatment by out-of-network doctors.

Premium: Fee paid by consumer for participation in a health plan, often deducted from paycheck.

Primary-care physician (PCP): Doctor chosen by patient in a managed care plan to provide routine care, as well as referrals to medical specialists.

Stop-loss: The point at which consumer has fully paid the deductible and reached the maximum amount of co-payment required by a policy. Insurance covers 100% of additional costs for the remainder of year.

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