A Guide to Health Insurance Terminology

1. Deductible: A set dollar amount you pay each benefit period for covered services before your health insurance policy begins paying benefits. Deductibles are reset each year.
2. Coinsurance: A percentage, (for example 20%) of the allowed amount you pay for a health care covered service. Coinsurance applies after the deductible has been met.
3. Copayment: A fixed dollar amount (for example $20 or $30) you pay for specified covered services such as a doctor visit. A co-pay applies each time the service is provided.
4. Amount Charged vs. Amount Allowed: A provider can charge you any amount for a service, but a health insurer may establish the maximum they will pay for a given covered service. This amount is often less than the charged amount. Contracting or “in-network” providers agree to accept the allowed amount (called the maximum allowance in your policy) as payment in full for a covered service and as part of their contract agree not to bill you the difference between the allowed amount and the charged amount.
5. In-Network vs. Out-of-Network: Depending on your policy there may be a different benefit level for in and out-of-network providers. When you use providers out of the network, you may have to pay significantly more for your health care service.
6. Out-of-Pocket-Maximum: A fixed dollar amount that is the most you will pay for deductibles and coinsurance for most covered services in the course of a benefit period. Once the out-of-pocket maximum is met, most covered services are paid at 100% of the allowed amount.
7. Non-Covered Service: A service or type of service that is specifically excluded from coverage in your policy. Read your policy for a full list, but non-covered services often include those considered investigational or convenience items.
8. Generic Drug: Drugs with identical active ingredients as corresponding brand name drugs. Generic drugs on average cost less than one-third of brand name drugs but have the same therapeutic benefit.
9. EOB: An explanation of benefits form (EOB) lists the services for which you or your providers have sent claims for coverage. These forms are not bills but explain the results for each service submitted.
10. Pre-existing: A medical condition, such as illness or injury, for which a person has received medical care or advice prior to enrolling in or purchasing health insurance. If your policy has a pre-existing condition clause, these conditions may not be covered until your pre-existing waiting period has been satisfied.