Allowed Amount
The maximum amount a plan will pay for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.” If your provider charges more than the plan’s allowed amount, you may have to pay the difference.
Coinsurance: The percentage of costs of a covered health care service you pay (20% for example) after you’ve paid your deductible. Generally speaking, plans with low monthly premiums have higher coinsurance and plans with higher monthly premiums have lower coinsurance.
- Example: Let’s say your health insurance plan’s allowed amount for an office visit is $100 and your co-insurance is 20%. If you’ve paid your deductible, you’ll pay 20% of $100, or $20. The insurance company pays the rest. If you haven’t met your deductible, you’ll pay the full allowed amount–$100.
Copayment
A fixed amount ($20 for example) you pay for a covered health care service after you’ve paid your deductible. Copayments, sometimes called “copays” can vary for different services within the same plan, like drugs, lab tests and visits to specialists. Generally, plans with lower monthly premiums have higher copayments. Plans with higher monthly premiums usually have lower copayments.
- Example: Let’s say your health insurance plan’s allowable cost for a doctor’s office visit is $100. Your copayment for a doctor's visit is $30. If you’ve paid your deductible, you pay $30, usually at the time of the visit. If you haven’t met your deductible, you pay $100, the full allowable amount for the visit.
Coordination of Benefits
A way to figure out who pays first when two or more health insurance plans are responsible for paying the same medical claim.
Deductible
The amount you pay for covered health care services before your insurance plan starts to pay. For example, with a $2,000 deductible, you pay the first $2,000 of covered services yourself. After you pay the deductible, you’ll usually pay only a copayment or coinsurance for covered services while your insurance company pays the rest. Generally, plans with lower monthly premiums have higher deductibles, and plans with higher monthly premiums usually have lower deductibles.
Durable Medical Equipment (DME)
Equipment and supplies ordered by a health care provider for everyday or extended use. Coverage for DME may include wheelchairs, crutches or blood testing strips for diabetics.
Health Maintenance Organization (HMO)
A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.
Network (In-Network vs. Out-of-Network)
The facilities, providers and suppliers your insurer or plan has contracted with to provide health care services.
- In-network: Provider or facility has a contract with the insurance company and has negotiated a contracted or discounted rate with insurance. You generally pay less when you receive care from an in-network provider.
- Out-of-network: The provider or facility does not have a contract with the insurance company. You generally pay more when you receive care from an out-of-network provider.
Non-Covered Benefits or Exclusions
Health care services that your health insurance or plan doesn’t pay for or cover. Common exclusions can include travel vaccines, massage therapy, cosmetic procedures, non-medically necessary services or supplies, etc.
Medically Necessary
Health care services or supplies needed to diagnose or treat illness, injury, condition, disease or its symptoms and that meet accepted standards of medicine.
Out-of-Pocket Maximum
The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits. The out-of-pocket limit doesn’t include:
- Your monthly premiums
- Anything you spend for services your plan doesn’t cover
- Out-of-network care and services
- Costs above the allowed amount for a service that a provider may charge
Preauthorization or Prior Authorization (PA)
A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.
Preferred Provider Organization (PPO)
A type of health plan that contracts with medical providers, such as hospitals and doctors to create a network of participating providers. You pay less if you use providers that belon to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
Premium
The amount you pay for your health insurance every month. In addition to your premium, you usually have to pay other costs for your health care, including a deductible copayments and coinsurance. If you are shopping for a plan, keep in mind that the plan with the lowest monthly premium may not be the best match for you. If you need much health care, a plan with a slightly higher premium but a lower deductible may save you a lot of money.
Referral
A written order from your primary care doctor for you to see a specialist or get certain medical services. In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don’t get a referral first, the plan may not pay for the services.