Handy Heath Insurance Definitions

A glossary of common insurance terms

Health insurance can be a challenging system to navigate given its various types of coverage, plans, networks, and costs. It’s also full of words you may never have heard before. In case it helps you to have a reference guide, here are some common insurance terms and their definitions: 
 

Claim
A claim is a request for payment or reimbursement that you or your healthcare provider submits to your health insurance company after you receive a medical bill. The specific care or services you received must be covered under your plan in order for you to be reimbursed. 

COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives individuals and families the right to continue health insurance coverage after a loss of group plan benefits. This can be due to losing or leaving your job, a change in how many hours you work, death, divorce, and other life events. If you qualify, you may be required to pay the entire premium for coverage up to 102% of the cost to the plan. For more information on COBRA, visit www.dol.gov.  

Coordination of benefits (COB)
Sometimes two insurance plans work together to pay claims for the same person. That process is called coordination of benefits. Insurance companies coordinate benefits to avoid duplicate payments, to establish which plan is primary and which plan is secondary, and to help reduce the cost of insurance premiums. 

Coinsurance
Coinsurance is the percentage of covered medical expenses you pay after you’ve met your deductible. Your health insurance plan pays the rest. For example, if you have an “80/20” plan, then your plan covers 80% and you pay 20% coinsurance. 

Commercial insurance
Commercial insurance is health insurance coverage offered to individuals or groups through private insurers. These policies may be purchased through an employer, a broker, or a public health insurance marketplace, and they offer different types of commercial insurance plans. 

Copay
A copay is a set amount of money you pay for each prescription, doctor visit, service, and other type of care. For example, the cost of a prescription may be covered by insurance, but it could still have a copay you need to pay at the pharmacy.

Copay accumulator
A copay accumulator is a type of copay adjustment program within an insurance plan that does not count copay assistance from drug manufacturers toward your deductible, out-of-pocket costs, and/or out-of-pocket maximum. If the manufacturer’s copay assistance maximum value is reached, your out-of-pocket costs then begin counting toward your deductible and out-of-pocket maximum. 

Copay adjustment program
A copay adjustment program is a program within an insurance plan that does not count copay assistance (including copay cards and coupons provided by drug manufacturers) toward your deductible, out-of-pocket costs, and/or out-of-pocket maximum.  

Copay assistance
Copay assistance is money (often in the form of copay cards or coupons) that a drug manufacturer may provide to patients to help with the copay costs of a prescription. 

Copay maximizer
A copay maximizer is a type of copay adjustment program within an insurance plan that does not count copay assistance from drug manufacturers toward your deductible, out-of-pocket costs, and/or out-of-pocket maximum. Typically, the maximum value of the manufacturer’s coupon/card is applied evenly throughout the benefit year. 

Deductible
A deductible is the amount of money you may have to pay for care or prescriptions before your insurance plan’s benefits begin. Some plans have a single deductible; others have separate deductibles for care and prescriptions. 

Essential health benefits
Essential health benefits are 10 set categories of services that health insurance plans must cover under the Affordable Care Act. 

Exclusion or limitation
An exclusion or limitation is a specific drug or service that is not covered by your health insurance plan. 

Exclusive provider organization (EPO)
An EPO is a type of plan that offers a limited network of providers from which you can choose. No referrals are required to see a specialist, but you need to confirm your treatment providers are in-network before enrolling. 

Explanation of benefits (EOB)
An EOB is a report or statement generated by your insurance company to explain how they processed and paid your claim according to the specific benefits described in your plan. It also documents any patient responsibility that may be required. 

Formulary
A formulary is a list of drugs or medications covered by your insurance plan. There are various types: Open (little or no limitation on medications covered); Restricted (some flexibility in choice of medications); Closed (coverage limited to only medications specified in the formulary). 

Fully insured plan
A fully insured plan is a plan in which the employer pays a certain amount each month (the premium) to the health insurance company. In return, the insurance company covers the costs of the employees’ healthcare. 

Government-funded health programs
Government-funded health programs are health insurance benefits provided through programs funded by each state or the federal government, such as Medicare and Medicaid. 

Health Insurance Marketplace or Health Insurance Exchange (HIX)
The HIX is a government-sponsored resource where you can choose a health plan. It also provides information on programs that offer financial help for insurance coverage. For more information on the Health Insurance Marketplace, visit www.healthcare.gov. 

Health insurance network
A health insurance network refers to the entire network of healthcare providers, suppliers, and facilities with whom your health insurance plan works. 

Health Maintenance Organization (HMO)
An HMO is a type of healthcare plan that limits coverage to healthcare providers contracted within the HMO network only. Your primary care physician (PCP) must give you a referral whenever you need to see an in-network specialist. 

In-network copay/coinsurance
In-network copay/coinsurance is a fixed amount or percentage you pay for covered healthcare services to providers who are part of your health insurance plan’s network. In-network copay/coinsurance usually costs less than out-of-network copay/coinsurance. 

In-network provider
An in-network provider is a healthcare provider who has a contract with your health insurance carrier to provide care for an agreed rate. 

Insurer
An insurance company is sometimes referred to as an insurer, insurance provider, or insurance carrier. 

Managed care
Managed care is a healthcare plan or system that seeks to control medical costs by contracting with a network of providers. 

Medicare
Medicare is insurance provided by the federal government for people over 65 or people under 65 with certain disabilities or end-stage kidney disease. For more information on Medicare, visit www.medicare.gov.  

Medicaid
Medicaid is insurance coverage for families with low-income or patients with disabilities that is funded by federal and state governments and administered by states. 

Open enrollment
Open enrollment is the annual period when you can sign up through your employer for a new health insurance plan, enroll in other benefit programs (such as a flexible spending account), or make changes to your existing plan. 

Out-of-network copay/coinsurance
Out-of-network copay/coinsurance is a fixed amount or percentage you pay for covered healthcare services to providers who do not contract with your health insurance plan. Out-of-network copay/coinsurance usually costs more than in-network copay/coinsurance. 

Out-of-network provider
An out-of-network provider is a healthcare provider who does not have a contract with your health insurance carrier. If you get care from an out-of-network provider, you may be responsible for all or a greater portion of the charges. 

Out-of-pocket (OOP) cost
OOP costs are amounts you may have to pay for healthcare services over the course of a year because they’re not covered by your insurance plan. The portion you pay may include your plan’s deductible, copays, and/or coinsurance. 

Out-of-pocket (OOP) limit or maximum
The OOP limit is the maximum amount you have to pay for care or prescriptions during a policy period (usually a year) before your health insurance plan pays for the full cost of covered benefits. The OOP limit can apply to all coverage or to a specific benefit category such as prescriptions. Each plan is different; it’s best to ask your insurance company what counts towards your out-of-pocket limit. 

Pharmacy benefits manager (PBM)
A PBM is a third-party who works on behalf of a health plan to help with processing and paying claims. They have many different responsibilities including coordinating with insurance companies, drug manufacturers, pharmacies, and insurance policyholders. 

Preferred provider organization (PPO)
A PPO is a type of healthcare plan that allows you to use providers both inside and outside of your network and get coverage for both. However, you will pay less for care from in-network providers. 

Premium
A premium is the amount you and/or your employer pays (usually monthly) to the health insurance company for coverage. Most insurers require employers to contribute at least half of the premium cost for covered employees. 

Primary care provider (PCP)
A PCP is a healthcare professional that provides care and coordinates your access to a wide range of healthcare services. Certain plans require you to designate a primary care provider. 

Prior authorization (PA)
Prior authorization is authorization your provider may need to get from your insurance company before providing certain types of treatment, medications, tests, or procedures. If required, your healthcare provider will work with your health plan and/or pharmacy to provide this information. 
Tip: Prior authorization (PA) may need to be renewed after a certain amount of time. So, it may help to keep an updated list of any medications you have that require a PA to help plan for renewals before they’re needed. 

Provider network
A provider network is a group of healthcare providers (doctors), facilities (hospitals), and suppliers (pharmacies) that work with an insurer to provide services and products to its members. 

Referral
A referral is authorization you may need to get from your primary care provider to get insurance coverage for specialty care or services from a specialist. 

Reimbursement
Reimbursement is the process through which the insurance company pays healthcare providers for their services. 

Self-insured plan
A self-insured plan is a type of insurance plan usually offered by larger companies in which the employer collects premiums from people enrolled in the plan and manages payments. 

Special enrollment period
A special enrollment period is a time outside the open enrollment period when you can still sign up for health insurance. You qualify for a special enrollment period if you’ve had certain life events or unusual circumstances, such as having a baby, getting married, or losing your current insurance. You usually have up to 60 days following the event to enroll in a plan. 

Specialty pharmacy
A specialty pharmacy fills prescriptions for certain drugs under the health plan’s guidelines. They usually focus on high cost, high touch medications for patients with complex disease states. Medications in a specialty pharmacy range from oral, injectable, and biologic products. 

Summary of benefits
A summary of benefits is the section in your insurance policy that details your benefits and how they are calculated, including if your plan uses an accumulator or maximizer program. 

 

For any questions you may have about health insurance or navigating the healthcare system, your CareConnect team is just a phone call or email away. Call 1-800-745-4447, option 3, or email info@CareConnectPSS.com.