Insurance Terminology

Common terms to know

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

Co-insurance - The percentage of costs of a covered health care service you pay after your deductible.

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

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

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

Fee-for-service - Indemnity, or traditional, insurance under which patients may choose any doctor, regardless of specialty or hospital. Patients pay the bills directly and then file paperwork with the insurer to be reimbursed. These policies are becoming less common and are generally the most expensive type of health 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 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 Organizationplans - One of the most popular types of plans in the individual and family market, PPO plans allow you to receive care from whatever in-network physicians or health care provider you wish without first requiring a referral from a primary care physician.

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.