Health insurance terms to know
Annual deductible — The amount you pay for medical before your health insurance plan begins to pay benefits. For example, if your medical plan has a $500 annual deductible, you will pay your health care expenses up to $500 before your health insurance plan begins to pay according to plan benefits. Most deductibles start over at the beginning of each calendar year, but some start over based on your date of enrollment in the health plan.
Annual out-of-pocket maximum — The highest dollar amount you must pay for eligible medical care expenses during a plan year. This amount excludes your monthly premium. Once you reach your out-of-pocket maximum, your health insurance company starts paying 100% for covered services.
Authorization — The approval by your health insurance company, medical group or hospital for you to receive certain medical services.
Co-insurance — The percentage of costs for covered services you pay after your deductible. For example, if a hospital charges $1,000 for surgery, and your insurance plan covers 80%, your health insurance company would pay $800, and you would pay 20%, or $200, assuming you had already met your deductible for the year.
Co-payment — A fixed amount your health insurance company requires you to pay for a covered service. For example, your co-pay might be $20 to see your primary care physician. You may have different co-pays amounts for primary care, specialist, urgent care or emergency room visits.
Covered services — Health care services your health insurance company contractually agrees to pay for under your plan.
Exclusive provider organization (EPO) — A health insurance plan that allows you to receive care from a group of physicians, other health care professionals and hospitals (known as a network). You do not usually need a referral to see a specialist.
Fee-for-service — A health insurance plan that allows members to choose any doctor, regardless of specialty or hospital. Members 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 health insurance 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 (PCP) from the network who manages their care, including referrals for specialists.
Inpatient care — Care that requires admission to a hospital and stays at least one night.
Managed care organizations — Companies that oversee the cost, quality and delivery of health care services, including 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 insurance (HMO, PPO, fee-for-service, etc.) through an employer, Covered California or Medicare. Individuals may be asked to choose a primary care physician for themselves and family members covered by the plan.
Outpatient care — Medical care or treatment that does not require an overnight hospital stay in a hospital or medical facility. Sometimes called ambulatory care, outpatient care is usually provided in a medical office or outpatient surgery center.
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) — A type of health insurance plan that allows you to see in-network doctors without a referral from your primary care physician. If you see an out-of-network provider, your PPO may cover some costs, but you will pay more than if you saw an in-network doctor. You also may need authorization from your health plan for certain services, such as physical therapy or an MRI.
Primary care physician (PCP) — The main doctor who oversees your medical care. They can specialize in internal medicine, family medicine or pediatrics. Some plans also allow an OB-GYN to act as a primary care doctor, especially during pregnancy. Most HMO, EPO and POS insurance plans require you to choose a PCP. If you don’t choose a PCP, the health plan may assign one to you. Your PCP will provide or authorize all types of care you may need, including diagnostic tests, referrals to specialists or hospitalizations. Depending on the type of insurance plan you have, your visit to a specialist may not be covered if your PCP didn’t approve it ahead of time.
Referral — Another name for a doctor’s medical order. Under most managed care plans, such as HMO plans, you must have a doctor’s referral before you can see a specialist or have certain medical services.
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.
The information provided here is a glossary of common health insurance terms. Refer to your health plan policy for specifics about the terms of your health care policy.