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Glossary of Terms Page

Coinsurance

Coinsurance is the percentage of each claim above the deductible that you must pay. For example, if you have to pay 20% coinsurance and a $500 deductible on each claim, then you pay the initial $500, then 20% of the covered loss. Typically, after paying 80% of losses up to a predetermined amount, the insurer starts paying 100% of losses.

Copayment or copay

A copayment is your portion of the cost paid for healthcare services, in addition to what your insurance covers. Copayments are pre-set flat fees, i.e., you may pay a $10 copayment for each office visit, regardless of the type of services provided.

Deductible

A deductible is the amount of money you pay before your insurance begins covering costs. It is usually a specified dollar amount (i.e., you pay the first $500, then your insurance begins to cover costs), or a percentage of the claim amount (i.e., you pay 20% of the claim, and then your insurance begins to cover costs). The higher your deductible, the lower your premium usually is.

Health Maintenance Organization or HMO

This popular and competitively-priced form of managed care provides you with a network of doctors and hospitals to choose from. The coverage available through the HMO ranges from routine physicals to emergency care to give you a comprehensive health insurance program.

Health Savings Account or HSA

A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account. You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow.

High Deductible Health Plan or HDHP

You must have an HDHP if you want to open an HSA. Sometimes referred to as a catastrophic health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesnt pay for the first several thousand dollars of health care expenses (i.e., your deductible) but will generally cover you after that . Of course, your HSA is available to help you pay for the expenses your plan does not cover. For 2007, in order to qualify to open an HSA, your HDHP minimum deductible must be at least $2,850 (self-only coverage) or $5,650 (family coverage). The annual out-of-pocket (including deductibles and co-pays) for 2007 cannot exceed $5,500 (self-only coverage) or $11,000 (family coverage). HDHPs can have first dollar coverage (no deductible) for preventive care and apply higher out-of-pocket limits (and co pays & coinsurance) for non-network services.

Network

A predetermined list of doctors and hospitals that you can choose from in order to receive the full advantage of your health insurance.

Out-of-pocket maximum or out-of-pocket limit

This is the predetermined limit that you must pay before your insurance will begin to cover 100% of your healthcare expenses.

Preferred Provider Organization or PPO

With this option, youll receive a list of highly qualified medical providers and facilities to select from when you require health care. This type of coverage typically pays for hospital room and board, physicians and surgeons fees, lab services and much more. The providers charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

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