Some bedtime reading for when you can't fall asleep :)
HMO (Health Maintenance Organization)
HSA (Health Savings Account)
HDHP (High-deductible health plan)
EPO (Exclusive Provider Organization)
EOB (Explanation of Benefits)
FSA (Flexible Spending Account)
Maximum Allowable Amount
Out of network
PPO (Preferred Provider Organization)
PCP (Primary Care Physician)
Annual limit: The maximum dollar amount paid by a plan for health care services within a calendar year.
Co-payment: A fixed fee that you pay out-of-pocket for a service. This fee does not vary according to the actual cost of the service. (e.g. $10 co-pay for a Primary Care Physician office visit).
Co-insurance: A percentage-based fee that you pay out-of-pocket for a service. This fee varies according to the actual cost of the service (or in the case of an out-of-network provider, according to the maximum allowable amount or reasonable and customary charge). For example, the plan may offer 70% co-insurance for out of network coverage, which means the insurance company will pay 70% and the participant will be responsible for the remaining 30%.
Deductible: The amount you pay out-of-pocket within a calendar year before your health insurance begins to pay for covered service. (e.g. $200 calendar year deductible means that you will pay the first $200 of your health care costs each calendar year)
Health Maintenance Organization (HMO): This type of plan gives you 100% in-network coverage, and does not cover out-of-network visits. You also need to get a referral from your primary care physician before you can see a specialist.
Health Savings Account (HSA): These are tax-advantaged medical savings accounts that are specifically associated with high-deductible health plans (HDHP). Unlike the FSA, funds in the HSA roll over from year to year. Funds can be deposited pre-tax, and can be used to pay for any eligible medical expenses without federal tax liability. You may face penalties if you withdraw the funds for use on non-medical expenses.
High-deductible health plan (HDHP): This type of plan is basically a PPO plan with a high deductible, which is the amount you must spend before your basic health coverage starts to apply. With these plans, your monthly premium is very low because of the higher dollar amount you must pay in order to start getting covered. For example, say that your in-network deductible is $500. This means that you must first pay up to $500 in medical expenses before the PPO in-network coverage rate of 90% is applied to your costs. With this type of plan, the user saves on monthly premiums and pays for medical expenses at the point of service. To help offset the burden of paying for the high deductible, these plans are often paired with HSAs.
Exclusive Provider Organization (EPO): This type of plan combines features from the PPO and HMO plans. Like an HMO, the EPO covers in-network visits at 100%, but does not cover out-of-network visits. The EPO network is usually larger than the HMO network. And like the PPO, the EPO does not require a referral from your primary care physician in order to see a specialist.
Explanation of Benefits (EOB): The document you receive highlighting your claim information. The EOB shows how much of the expenses your insurance paid and how much you are expected to pay. If part or all of the expense is not covered, the EOB should explain why.
Flexible Spending Account (FSA): An employer sponsored benefit that allows you to pay for eligible medical expenses on a pre-tax basis. Funds in the FSA do not roll over from year to year.
In-network: Each plan has a specified network of doctors that it contracts with to provide care at discounted rates. You can check with your insurance provider to see whether this doctor belongs, or is in-network, to this contracted network of physicians for your specific health plan.
Insurance provider: The company that handles the administrative portion of your health plan and works with providers/physicians to come up with health plans and contracted rates for the services and care that they provide. These are companies like Anthem and Kaiser.
Maximum Allowable Amount [equivalent to Reasonable and Customary]: For PPO plans, the maximum amount of money that the insurance company has determined to be market price for a given procedure (note, this is not relevant for in-network providers, as they have already agreed to accept compensation at or below this amount). This determination is based on the procedure code, the location where the procedure is taking place, and the prices charged by comparable providers for the service within a geographic area. Please note that all co-insurance for out-of-network providers is based on this amount (NOT on the amount the provider charges you). (e.g. You go to an out-of-network provider to have a kidney stone removed. The maximum allowable amount designated by your insurer is $3000, but your provider charges you $4000. In addition to any co-pay or co-insurance owed for the $3000 amount, you will also owe your provider the $1000 difference between the price they are charging you and the maximum allowable amount).
Network: A group of providers in a given area who contract with a health care plan to provide care at discounted rates.
Out-of-network: Each plan has a specified network of doctors that it contracts with to provide care at discounted rates. You can check with your insurance provider to see whether this doctor belongs to this contracted network of physicians for your specific health plan. If not, out-of-network charges and coverage levels will apply.
Out-of-pocket maximum: The maximum amount of money you could pay out-of-pocket in a calendar year for covered health care services. NOTE: there are important exclusions that apply – for example, out-of-network services above the maximum allowable amount/reasonable and customary charge or if a procedure/provider is not covered.
Preferred Provider Organization (PPO): This type of plan gives you more flexibility around the doctors you can see. This is because it covers both in-network and out-of-network doctors visits, and of course, in-network visits are covered more generously than if you go to a doctor who is out-of-network. Under this plan, you can visit a specialist without first getting a referral from your primary care physician. It typically has a higher premium associated with it.
Premium: A premium is an amount paid for an insurance policy. Premiums are deducted from your bi-weekly paycheck for your benefits.
Primary Care Physician (PCP): Some plans (primarily HMO) require a participant to name a primary care physician, usually a family practitioner, internist or pediatrician, to coordinate all medical care. The PCP manages the participant's health care by serving as a main caregiver, and when necessary, by referring the participant to specialist providers for care. Some plans allow women to name one primary care physician for most care as well as an OB/GYN.
Referral: A recommendation from a provider to consult a specialist, such as a therapist. For certain plans (primarily HMO), a referral is required to receive reimbursement for a visit to a specialist.