Medical Insurance Terms

Here are some key medical insurance terms that are commonly used to describe various aspects of health insurance:

Premium - The amount you pay for your health insurance every month, regardless of whether you use medical services.

Deductible - The amount you pay out-of-pocket for covered health care services before your insurance plan starts to pay. For example, if your deductible is $1,000, you need to pay that amount before the insurance starts covering a portion of your medical costs.

Co-pay (Co-payment) - A fixed amount you pay for a covered health care service, usually when you receive the service. For example, you might pay $25 for a doctor’s visit, and the insurance company covers the rest.

Co-insurance - The percentage of the cost of a covered health care service that you are required to pay after you've paid your deductible. For example, if your co-insurance is 20%, you'll pay 20% of the cost of a procedure, while the insurance covers the other 80%.

Out-of-pocket maximum (or limit) - The most you will have to pay for covered health care services in a plan year. After reaching this amount, your insurance plan covers 100% of your medical costs for the rest

Network - The hospitals, doctors, and other healthcare providers that are contracted to provide services under your insurance plan. Staying within the network typically reduces your out-of-pocket costs.

In-network vs. Out-of-network - In-network: Providers that have a contract with your insurance company, which usually means lower costs for you. Out-of-network: Providers who do not have a contract with your insurance plan, often resulting in higher costs for you.

Health Maintenance Organization (HMO) - A type of health insurance plan that requires you to choose a primary care physician (PCP) and get referrals from them to see specialists. Typically, HMO plans have lower premiums but less flexibility in choosing healthcare providers.

Preferred Provider Organization (PPO) - A type of health insurance plan that offers more flexibility in choosing healthcare providers without needing a referral. PPO plans generally have higher premiums and out-of-pocket costs compared to HMOs.

Exclusive Provider Organization (EPO) - Similar to PPO but typically has a more limited network of doctors and hospitals. You may not have out-of-network coverage except in emergencies.

Point of Service (POS) - A plan that combines elements of both HMO and PPO plans. You will need to choose a primary care doctor and get referrals to see specialists, but you can also go outside of the network at a higher cost.

Pre-authorization (or Prior Authorization) - The process of obtaining approval from your insurance company before you receive certain medical services, medications, or procedures, to confirm they are covered by your plan.

Exclusions - Specific health conditions, treatments, or services that are not covered by your insurance plan. Always review exclusions carefully to understand what isn’t included.

Waiting Period - The time you must wait after enrolling in an insurance plan before certain benefits become available. For example, you may have to wait 30 days before your coverage for certain procedures kicks in.

Preventive Care - Health care services that are aimed at preventing illnesses or detecting them early, such as screenings, immunizations, and checkups. Many plans cover preventive care at no additional cost.

Out-of-pocket costs - These are the costs you pay for healthcare services, including deductibles, co-pays, and co-insurance, up to your plan’s out-of-pocket maximum.

Balance Billing - When a healthcare provider charges you the difference between what your insurance paid and what they billed. This typically happens when you go out of network.