Health Plan Finders   Ask an Expert 972-355-8132

Glossary of Insurance Terms

Medical Services that are covered by a health insurance policy are typically subject to the deductible or a copayment.

The deductible is the amount the patient is responsible for when covered medical services are received unless the medical services are subject to the copayment. Medical services that are usually subject to the deductible are hospitalizations, surgery, ER visits, laboratory tests and x-rays. Keep in mind that the insurance company will pay their portion of the bill regardless if the patient has paid their deductible to the hospital or not. Policies vary greatly, ask us about the differences.

The copayment is the set dollar amount the patient pays usually for a doctor's office visit. Keep in mind the copayment amount is usually not applied toward the deductible and lab test and x-rays in a doctor's office may be subject to the deductible. Make sure you visit a doctor who is "in-network" (this means the doctor has signed a contract with the PPO). Policies vary greatly, ask us about the differences. On covered medical expenses that are subject to the deductible, once your deductible is satisfied, most policies have a co-sharing or coinsurance percentage. Most people recognize the term 80/20 plan, this is coinsurance; the insurance company pays the first percentage (80% in this example) and the patient pays the second percentage (20% in this example). Most medical insurance policies also have a coinsurance maximum. The coinsurance maximum is the maximum amount of coinsurance the patient is responsible to pay during that calendar year. Once the coinsurance maximum is met, usually additional covered medical expenses are paid by the insurance company at 100% for the remainder of the calendar year. One important note – make sure you always stay in-network since in-network covered medical expenses have a negotiated lower price and most medical policies have a higher coinsurance maximum for out-of-network covered medical expenses. These examples are basic summaries of terms used in insurance policies.

Accident only policies - Policies that pay only in cases arising from an accident or injury.

Agent - A person who sells insurance policies.

Application - A form to be filled out with personal information that an insurance company will use to decide whether to issue a policy and how much to charge.

Carrier - A company or HMO that provides health care coverage.

Coinsurance - The percentage of each health care bill a person must pay out of their own pocket. Coinsurance amounts are typically after the insured has satisfied the deductible.

Coinsurance maximum - The most you will have to pay in coinsurance during a policy period (usually a year) before your health plan begins paying 100 percent of the cost of your covered health services. The coinsurance maximum generally does not apply to copayments or other expenses you might be required to pay.
Copayment - The amount you must pay out of your own pocket when you receive medical care or a prescription drug.

Deductible - The amount the insured must pay in a loss before any payment is due from the company.

Effective date - The date on which an insurance policy becomes effective.

Eligible employee - An employee who meets the eligibility requirements for coverage in a group plan. To be eligible to join a group plan, you usually must work full-time for at least 30 hours a week.

Emergency care - Health care services provided in a hospital emergency facility or comparable facility to evaluate and stabilize sudden and severe medical conditions.

Exclusions or limitations - Provisions that exclude or limit coverage of certain named diseases, medical conditions, or services, as well as some sicknesses or accidents that occur under specified circumstances.

Free examination period - Also known as "10-day free look" or "free look," it is the time period after a life insurance policy or an annuity is delivered during which the policy owner may review it and return it to the company for a full refund of the initial premium.

Gatekeeper - The physician selected by HMO members to serve as their personal doctor and provide all basic medical treatments and any referrals to medical specialists. Gatekeepers are prohibited in PPOs and other indemnity health plans. (Also known as a primary care physician.)

Grace period(s) - The time - usually 31 days - during which a policy remains in force after the premium is due but not paid. The policy lapses as of the day the premium was originally due unless the premium is paid before the end of the 31st day.

Lapse - The termination of an insurance policy because a renewal premium is not paid by the end of the grace period.

Lifetime maximum -The total dollar amount a health care plan will pay over a policyholder´s lifetime.

Major medical policies - Health care policies that usually cover both hospital stays and physicians´ services in and out of the hospital.

Managed health care - A system that organizes physicians, hospitals, and other health care providers into networks with the goal of lowering costs while still providing appropriate medical services. Many managed care systems focus on preventive care and case management to avoid treating more costly illnesses.

Material misrepresentation - A significant misstatement on an application form. If a company had access to the correct information at the time of application, the company might not have agreed to accept the application.

Maximum out-of-pocket expense - The maximum amount someone covered under a health care plan must pay during a certain period for expenses covered by the plan. Until the maximum is reached, the person covered is required to pay a copayment or a percentage (coinsurance) on each claim.

Medically necessary care - Health care that results from illness or injury or is otherwise authorized by the health care plan. This term can be defined differently from one health care plan to another.

Network - All physicians, specialists, hospitals, and other providers who have agreed to provide medical care to members under terms of the contract with the carrier.

Non-network providers - Health care providers and treatment facilities not under contract with the carrier.

Out-of-pocket maximum - The most you will have to pay during a policy period (usually a year) before you no longer have to pay your share of coinsurance for covered health services. Once you've reached your out-of-pocket maximum, your health plan generally pays 100 percent of your health care costs, up to your policy's coverage limit. You are still responsible for paying your premium. Depending on your plan, you also may have to continue paying copayments and some other expenses.

Point-of-service (POS) plans - POS plans allow an HMO to contract with an insurance company to give enrollees the option of receiving services outside the HMO´s network.

Precertification - A requirement that the health care plan must approve, in advance, certain medical procedures. Precertification means the procedure is approved as medically necessary, not approved for payment.

Pre-existing condition - A medical problem or illness you had before applying for health care coverage.

Preferred provider organization (PPO) - A type of plan in which physicians, hospitals, and other providers agree to discount rates for an insurance company. These providers are part of the PPO´s network. Insurance contracts with PPO provisions reimburse at a higher percentage if you use providers in the network. If you go to providers outside the PPO´s network, you will have to pay more for your care.

Premium - The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.

Preventive care - Health care services such as routine physical examinations and immunizations that are intended to prevent illnesses before they occur.

Primary care physician - The physician selected by HMO members to serve as their personal doctor and provide all basic medical treatments and any referrals to medical specialists. Primary care physicians are prohibited in PPOs and other indemnity health plans. (Also known as a gatekeeper.)

Rescission - The termination of an insurance contract by the insurer when material misrepresentation has occurred.

Texas Health Insurance Pool - The Health Pool provides health insurance to Texans unable to obtain coverage because of their medical history or for certain other reasons.

Underwriter - The person who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate.

Underwriting - The process an insurance company uses to decide whether to accept or reject an application for a policy.

Current News
Read more View All
Accident Insurance
International Medical Insurance
Dental Insurance
Short Term Medical
Glossary Of Insurance Terms
FAQ About Health Insurance
Get A Free Quote
Section 125 & 105 Documentation
Target $4 Generic Drug List
Kroger $4 Generic Drug List
WalMart $4 Generic Drug List
Vision Insurance
Health Savings Accounts
About Us is part of AMG Insurance Agency Inc., a Texas based Insurance Agency. Steve Dixon is the owner and primary agent and has worked in the health insurance business since 1990. Before starting ...

Steve Dixon
Flower Mound, TX
(972) 355-8132