HEALTH INSURANCE 101 – Common Insurance Terms

Author: Kelley Filice Jensen

Most things have a language all their own, and when you know the language, everything becomes shockingly less confusing.  Here is a partial list of common terms used when discussing individual health insurance plans and group health insurance plans.  Learn more by watching health insurance informational videos sponsored by Humana.    And, make sure you can answer these questions about your health insurance needs.

CARRIER – An insurance company that provides a health plan.  Examples would be Blue Cross, Aetna, Health Net or several others.  A carrier could also be a Health Maintenance Organization (or HMO) which may not technically be an insurance company, but HMO’s are also carriers that provide health plans.  See More Carriers, and get quotes now.

CLAIM – A formal request for an insurance company to pay a medical bill.  A claim is generally filed by a health care provider like a doctor or hospital to be reimbursed for services provided.  A claim is subject to review by a carrier to determine whether the services are covered by the health plan agreement.  If approved, then the provider will be paid for covered services, however, a claim can also be denied.

COINSURANCE  – An individual will often be required to pay a portion of the cost of the care he receives, called co-insurance.  It is usually expressed as a percentage.  An example would be if an individual is required to pay 20% of a provider’s bill while the carrier agrees to pay 80% of the cost.

COBRA Health Insurance Coverage – Consolidated Omnibus Reconciliation Act of 1985 (COBRA) is a federal law that permits employees and their covered dependents to temporarily continue coverage under and employer’s insurance plan when they would be otherwise ineligible due to loss of employment or change in family status (such as divorce).  The full cost of the continuation coverage is paid by the individual.  Read more about Alternatives to COBRA.

Copay/Copayment – The amount that a member pays for each doctor visit, prescription, or covered service.  Normally a flat dollar amount.  Get Copay comparisions now.

Deductible – a portion of expenses a member may have to pay out of pocket for the calendar year for covered services before an insurer begins to pay for benefits.  Get High Deductible quotes now.

Dependent – Under health care reform legislation, dependent is defined as including any child of the participant under the age of 26.  Note that this definition is only for purposes of determining eligibility on a group health policy, the definition of dependent for tax purposes remains unchanged. See expanded information on dependents, and decide if it makes sense to keep adult children on your health plan.

Group Plan – Health insurance that a member receives through a group (company or union).

Guaranteed Issue – Coverage for a member of a group or group is guaranteed, that is, the member or group cannot be turned down by an insurance carrier.

Health Insurance Agent (California) – a person who is licensed by the state (California) to sell insurance and may provide service to subscribers.  An agent can be a sole proprietor, a member of a large firm, or an employee of the insurance company.  The insurer pays the agent a fee or commission.

HMO – A Health Maintenance Organization (HMO) is a pre-paid health plan agreement in which an individual (or employer) pays a fixed dollar amount each month regardless of the amount of care administered or received.  Some HMO’s like Kaiser, employ their own physicians and build their own medical facilities.  Other HMO’s utilize private practice doctors and hospitals.

Individual Medical Insurance Coverage – An insurance policy sold to individuals who are not eligible for medical insurance under a group policy, choose not to enroll in a group policy, or need more coverage than is available to them through their group plan.

OUT-OF-POCKET MAXIMUM – A limit to the amount of money an individual would have to pay in any given year as their share of cost or co-insurance.  An example would be if a health plan has an annual out-of-pocket maximum of $6000, that means that if his deductible plus co-insurance amounted to $6000, the carrier would pay 100% of all remaining covered services the rest of that calendar year.

PPO – A preferred provider organization (PPO) is a list or grouping of doctors and health care providers who are contracted with a carrier to dispense or render health care services to the carrier’s policy holders.  Because these PPO providers have agreed to provide their services at a discount, if a policy holder or member uses a physician outside of the PPO plan or network, typically the member will pay more for the medical care provided.

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