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  Health Insurance Terminology
Neil Naber

Copayment (Copay) is the fixed dollar amount of a medical bill that you’ll be responsible for. For example, you may have a $35 copayment for a doctor visit.

Deductible or Calendar Year Deductible (CYD) is the amount you have to pay of your medical bills before your insurance starts paying the cost of your health care. For many routine medical services, such as a doctor’s visit the plan will “waive the deductible”. This means the plans provides the full level of coverage, regardless of whether you’ve paid the deductible or not. Most plans have an Annual Deductible; there could also be a Per Admission Deductible (PAD) or Access Fee on some plans.


Coinsurance is the part of a medical bill you pay, but it’s expressed as a percentage. You may be responsible for a deductible plus 20% of the remaining bill. Many plans have a Coinsurance Maximum.


Coinsurance Maximum is the annual cap on how much you’ll have to pay in coinsurance. In other words, you’ll be responsible for a percentage of some health care cost until you’ve reached this dollar maximum.


Out-of-pocket Maximum (OOP) is the most you’ll have to pay for covered care per year. This maximum usually includes the deductible, copayments, and coinsurance. Once you meet this maximum dollar amount, your plan covers 100% of all covered bills for the rest of the year.  

In-Network vs. Out-of-Network (OON); if you have a PPO or POS plan; you have coverage with a provider network of doctors and hospitals. These plans provide more coverage with in-network physicians. You can receive Provider Discounts for covered services even before your deductible is met.

HMO plans usually don’t provide any coverage for out-of-network providers. Emergencies are treated as in-network.


Pre-Existing Condition; A pre-existing condition is any condition for which the patient has already received medical advice or treatment prior to enrollment in a new medical insurance plan, or is anything for which symptoms were present and a prudent person would have sought treatment.


Pre-existing condition exclusions and riders by the insurance industry are meant to cope with adverse selection by potential customers. A pre-existing condition can affect your health insurance coverage in several ways.


Look-back period; identify a pre-existing condition, measured in months, years or ever had.

Pre-existing condition exclusion period; Months or years before the condition is covered.

Policy issued as standard; No increased premium, normal coverage.

Increased Premium.

Elimination riders; permanently excluding the pre-existing conditions;

Decline coverage; a policy will not be issued due to the condition.


Prescription Drug Coverage typically has a copayment. Often there is an Rx Deductible for Brand Name Drugs.


Wellness/ Preventive Care; All major medical plans being issued now will cover your recommended preventive health services with no copayment or deductible as long as you use an in-network provider.


Lab tests and X-rays usually require a deductible and coinsurance for diagnostic services.


Emergency Room (ER) Depending on your plan and level of coverage, you might be responsible for a deductible and coinsurance for an emergency room visit.  Some plans have an additional emergency room fee or ER copay, this fee is usually waived if you are admitted to the hospital.

A true emergency is covered both in and out of network.


Urgent Care Centers; provide medical care outside of a hospital emergency room, usually on an unscheduled, walk-in basis. Urgent care centers are primarily used to treat patients who have an injury or illness that requires immediate care but is not serious enough to warrant a visit to an emergency room. These visits cost much less than the Emergency Room and are often covered with a copayment.


Outpatient Surgery is any surgical procedure where there is no need to stay overnight in a health care facility to recover from the operation. You’re in and out the same day. Outpatient surgeries usually require a deductible and coinsurance.


Ambulatory surgery centers (ASC), also known as Outpatient Surgery Centers are health care facilities where surgical procedures not requiring an overnight hospital stay are performed. Such surgery is commonly less complicated than that requiring hospitalization. Avoiding hospitalization can result in cost savings.


Physical Therapy is the care for rehabilitating your body after an accident or serious illness. Physical therapy usually requires a deductible and coinsurance payment.


Occupational Therapy; (OT) provides care for disabled patients to help them improve skills with daily activities, keep jobs, interact with society, and balance their lives. Occupational therapy also usually requires a deductible and coinsurance payment.


Maternity Care Coverage; Most individual health plans don’t include coverage for maternity care, but there are plans available that offer maternity coverage for an additional premium.


Hospital and Emergency Care; Depending on your plan and level of coverage, you might be responsible for a deductible and coinsurance for a hospital admission or an emergency room visit.


PPO; Preferred Provider Organization plans have networks of doctors, hospitals, and other health care providers. PPO plans have two levels of coverage: in-network and out-of-network. In-network care will cost less than out-of-network care.

HMO; Health Maintenance Organization plans also have networks of providers. In an HMO plan, you’ll only have coverage with providers in the network. You’ll also choose a primary care physician (PCP). You usually need a referral when you need a specialist or hospital care. An HMO offer less flexibility than PPOs, but they usually offer most services for just a copayment.


POS; Point of Service plans are like a cross between an HMO and a PPO. With a POS plan, you’ll choose a primary care physician and usually need a referral to see a specialist. But you’ll also have coverage for doctors and hospitals outside your plan’s provider network.


HSA; Health Savings Accounts is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP) (HSA qualified). The funds contributed to the account are not subject to federal income tax at the time of deposit. Funds roll over and accumulate year over year if not spent. HSAs are owned by the individual. Funds may be used to pay for qualified medical expenses at any time without federal tax liability.


- Health Insurance Terminology
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