Insurance Terminology

Common terms to know

Authorization - Approval to allow you to see a specialist, receive specific services or be admitted to the hospital.

Covered services - Health care services your insurance company will pay for under your plan.

Fee-for-service - Indemnity, or traditional, insurance under which patients may choose any doctor, regardless of specialty, at any time. Patients are responsible for all costs beyond those covered by their insurance.

Health maintenance organization (HMO) - A managed care plan that contracts with a group of physicians, other health care professionals and hospitals (known as a network) to care for its patients (known as members). Members usually must select a primary care physician from the network and call or see this doctor first for all medical care.

Managed care organizations - Companies that oversee the cost, quality and delivery of health care services. Includes HMO, PPO and POS plans.

Network - A group of physicians, other health care professionals and hospitals that have agreed to provide services to members of a specific health plan.

Open enrollment (also known as “Annual Enrollment Period”) - A specified time period each year when individuals select their health coverage (HMO, PPO, fee-for-service, etc.) through an employer, Covered California or Medicare. Individuals may be asked to choose a primary care physician to care for them and any family members covered by their plan.

Point of service (POS) - A “tiered” health plan under which your coverage level is determined by where you receive care. You pay the least for care coordinated by your primary care doctor, a higher amount if you see a specialist in your network without a referral and an even higher cost if you go to a doctor outside the network.

Preferred provider organization (PPO) - PPO plans, or "Preferred Provider Organization" plans, are one of the most popular types of plans for individuals and familes. PPO plans allow you to visit whatever in-network physician or healthcare provider you wish without first requiring a referral from a primary care physician.

Co-insurance - Your share of the costs of a covered health care service, calculates as a percentage.

Co-payment - A fixed amount (for example, $25) you pay for a covered health care service when you receive the service. 

Deductible - The amount you owe for health care services your insurance plan covers before your health insurance plan begins to pay. 

Primary care physician (PCP) - A doctor specializing in internal medicine (internist), family practice or pediatrics who coordinates all health services for a patient and refers that patient for specialty care. Some plans include obstetricians/gynecologists as primary care physicians.

Referral - The process of sending a patient from one doctor to another, or to other health care professionals, for services. Most managed care plans require the primary care physician to authorize a referral before the cost of the service will be covered.

Specialist - A doctor who has received advanced education and training in a particular area of medicine. Cardiology, dermatology and orthopedics are a few examples of medical specialties.