Health Insurance Terms & Options

Coverage Option ExplanationsAuto | Home | Health

One of the biggest questions we get is, “What do the different options of insurance mean?”
Here is a breakdown so it all makes sense:

Co-insurance: Co-insurance refers to money that  an individual is required to pay for services, after a  deductible has been paid. In some health plans,  coinsurance is called a “co-payment.”  Co-insurance is often specified by a percentage. For  example, the employee pays 20% toward the charges for a  service and the employer or insurance company pays 80%.
Co-payment: Co-payment is a predetermined fee  that an individual pays for health care services, in  addition to what the insurance covers. For example, some  HMOs require a $10 “co-payment” for each office  visit, regardless of the type or level of services  provided during the visit. Co-payments are not usually  specified by percentages.
Deductible: The amount an individual must pay  for health care services before insurance covers any of  the costs. Deductibles are most frequently charged on an  annual basis rather than on a per incident basis.
Health Maintenance Organizations (HMOs): Health  Maintenance Organizations represent “pre-paid”  or “capitated” health care plans in which  individuals pay small fees or co-payments for specified  health care services over and above the monthly premiums  paid to be a member of the HMO. Services are provided by  physicians and allied health care personnel who are  employed by, or under contract with the HMO. HMOs vary in  design. Depending on the type of HMO, services may be  provided in a central facility, or in an individual  physicians office. HMO’s are available on both an  individual and employer group basis.
Long Term Care Policy: Insurance policies that  cover the costs of providing nursing care, home health  care services and custodial care for the aged and infirmed.
Lifetime Maximum Payment: The maximum amount of  money that an insurance company will pay for claims  within a specific period of time. For instance, most PPO  types of programs have an overall lifetime maximum  expressed in millions of dollars (usually a minimum of  $1M). Maximum dollar limits vary greatly. They may be  based on the type of illness or expressed in a period of  time.
Medigap Insurance Policies: Medigap insurance  is offered by private insurance companies, not the  government. It is not the same as Medicare or Medicaid.  These policies are designed to pay for some of the costs  that Medicare does not cover.
Out-Of-Pocket Maximum: A predetermined limited  amount of money that an individual must pay out of  pocket, before an insurance company will pay 100% for an  individual’s health care expenses.
Pre-Existing Medical Conditions: Any illness or  health problem that existed prior to an individual  obtaining medical coverage. Group health plans will cover  pre-existing conditions after you have been covered for  at least six months; individual plans after 12 months.
Primary Care Provider (PCP): A health care  professional who is responsible for monitoring an  individual’s overall health care needs. Typically, a PCP  serves as a “gatekeeper” for an individual’s  medical care, referring the individual to specialists and  admitting them to hospitals when needed.
Reasonable and Customary Charges: The charges  that a carrier determines normal for a particular medical  procedure in a specific geographic area. If charges are  higher than what the carrier considers normal, the  carrier will not pay the full amount charges and the  balance is the responsibility of the insured.
Waiting Period: A period of time when you are  not covered by insurance for a particular medical  problem.

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