Healthcare Insurance Terms

Choosing a health insurance plan is an important decision, so it is important that you understand all of the terminology before making a decision. Health insurance pays a certain percentage of your medical costs; however, some medical costs, such as pregnancy, may not be covered under certain plans. Examine plans carefully, consider how much how much you need the insurance to cover, and what you are willing to spend.

Co-Pay

A co-pay or co-payment is a fixed amount that you will pay for certain services. For example, an appointment with your primary doctor may cost you a fixed co-pay of $25 per visit.

Deductible

A deductible is the amount that you pay out of pocket. This is usually figured per year. Once you meet your deductible, the insurance begins covering your medical costs.

Co-Insurance

Co-insurance is the percentage of medical costs that you must pay after you meet your deductible. For example, some plans require you to pay 20 percent of your medical expenses after the deductible, and your insurance company will cover the other 80 percent.

Exclusions

Exclusions are the medical treatments that are not included in your insurance plan. For example, some plans do not cover maternity or well-baby care.

HMO

An HMO or Health Maintenance Organization is a set of providers that you may use if you decide on an HMO insurance plan. Kaiser Permanente is an example of an HMO in which you would receive all aspects of treatment through Kaiser.

PPO

A PPO is a Preferred Provider Organization. PPO's allow you to choose your own doctors. If you choose a doctor from the network of doctors included in the PPO, your expenses will be lower than if you choose an out-of-network provider. This plan gives you more flexibility than an HMO.

Maximum Out of Pocket Expense

The Maximum Out of Pocket Expense is the maximum amount that you will be required to pay for medical treatments. This may be an amount per year or a lifetime amount. The insurance will cover 100 percent of expenses once you pay this amount.

Premium

The Premium is the amount you pay each month for your health insurance coverage. If you receive insurance through your employer, they will cover a portion of your premium.

Health Savings Account

A Health Savings Account, or HSA, is a tax-free savings account that is used as a savings account for medical expenses only. The money in the HSA rolls over each year if you do not use it.