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Health Insurance Glossary

Allowable Charge – the maximum amount that the insurer will pay the health care provider for a medical service.

Ambulatory Care – outpatient care; care or treatment provided without being admitted to the hospital.

Ambulatory Surgery – outpatient surgery; surgery without the need for (at least) an overnight stay in the hospital.

Ancillary care – additional health care services like lab tests, x-ray, physical therapy.

Anniversary date – the day after the coverage ends.

Behavioral care services – assessment and therapy for mental health and substance abuse

Benefits – health care services that you don’t have to pay for out-of-pocket because they are  part of your health plan’s coverage

Board-certified – the physician was able to pass an exam that measures their mastery of their field of specialization.

Brand-name drug – a drug manufactured by a pharmaceutical company and protected by patent.

Carrier – company that provides health care coverage.

Claim – a request for payment for a medical service within the health plan’s benefits.

Coinsurance – a percentage of the cost of a medical service that the member pays after they have reached the deductible amount.

Consolidated Omnibus Budget Reconciliation Act (COBRA) –  a Federal law that requires employers (provisions apply) to allow their members to continue their coverage even after they have lost their job or their work hours had been reduced. COBRA coverage usually lasts for 18 months but may be longer for some.

Coordination of Benefits – This applies when the insured has more than one group  health insurance.   The health plans coordinate to avoid multiple payment for the same benefit. One plan is elected as the primary plan and the other becomes the secondary plan.

Co-payment (copay) – an amount that the member pays for health care benefits after they have reached the deductible. It usually ranges from $10 – $25.

Deductible – is the amount a member has to reach through accumulated out-of-pocket payments for medical services. Those enrolled in plans that have a deductible need to reach their deductible before their coverage kicks in.

Durable medical equipment – equipment used at home for the medical needs of a patient.

Exclusive Provider Organization (EPO) – a type of health plan where care is exclusively received from in-network providers; no need to elect a primary care physician (PCP); no need to  get a referral to see  a specialist. There is a deductible and copayments apply.

Explanation of benefits (EOB) – a statement sent to members who filed a claim. This document gives a detailed account of claims payment information like the date the service was provided, provider’s name, billed amount, amount the insurer paid, and the member’s portion of the cost.

Formulary – a list of approved prescription drugs that are part of the plan’s benefits.

Gatekeeper – the primary care physician (PCP); some health plans require members to obtain a referral from their PCP before seeing specialists. This is why PCPs are called gatekeeper.

Generic drug – a generic drug doesn’t have a name except their formula name. The Food and Drug Administration monitors generic drugs to ensure they are as good as brand name drugs.

Health Maintenance Organization (HMO) – a type of health plan where care is provided through a network of health care providers.

Health Reimbursement Arrangement (HRA) – an HRA is a type of arrangement where an employer contributes towards a fund that will be used to reimburse the health care costs that covered employees will incur.

HIPAA – Health Insurance Portability and Accountability Act (HIPAA) of 1996. This law allows employees to keep their coverage even if they have a pre-existing condition and they need to change jobs. HIPAA also protects the privacy and security of a person’s medical record.

Home Health Care – health care services that are administered by health care professionals  in a patient’s home.

Indemnity plan –  fee for service plans; This plan allows the insured to get health care from any chosen provider. The insured initially pays out of pocket. The insurer then refunds a portion or all of the cost of the covered service.

In-Network Provider – a network of health care providers contracted by a health insurance company to provide medical service to their members.

Inpatient Care –  all forms of medical treatment provided by a healthcare facility to an admitted patient.

Managed Care – managed system of health care delivery for the purpose of reducing cost and getting the necessary medical care. HMOs, POSs, PPOs are examples of managed care plans.

Non-Participating Provider – this can be any health care professional or facility that provides medical services but does not have a standing contract with an insurance plan.

Occupational Therapy – activities aimed at restoring a person’s physical  skills used in daily living such as bathing, walking or eating with a spoon and fork.

Out-of-Network Provider – refers to health care providers and facilities that are not part of your insurer’s contracted network.

Out-of-Pocket – your portion of the cost of a medical service that is not covered by your health insurance policy and therefore you need to pay on your own. Example: deductible, co-insurance, copayment.

Out-of-Pocket Maximum – the highest amount that a member will pay for their medical costs for the duration of their coverage.

Outpatient Care – also known as ambulatory care, this refers to medical care a patient receives without being admitted to a facility.

Participating Provider – refers to a doctor, healthcare professional, or health facility that belongs to a health insurance network. They provide medical services in exchange for a fixed fee according to their contracts.

Point-of-Service (POS) plan – a type of health plan that allow members to receive care outside the network but with higher copayment. Members are required to choose a primary care physician.

Precertification – the process of obtaining approval from the patient’s health plan before medical services are administered. A healthy policy can specify services which need prior approval before administration.

Pre-Existing Condition – any medical condition that has been diagnosed or treated within a specified time period before health coverage begins.

Pre-Existing Condition Limitations – the insurer withholds coverage for medical services towards a pre-existing condition until after the waiting period.

Preferred Provider Organization (PPO) Plan – this plan offers its members the power to choose between getting medical services within the network or outside the network. Going outside the network will cost more. Members of this plan do not require a referral from a primary care physician to visit a specialist.

Preventive care – tests and medical services aimed at early detection and prevention of diseases.

Primary Care Physician (PCP) – your main physician providing you with a broad range of care. Your PCP refers you to specialists and other necessary care.

Urgent Care – care for illness or injury that need medical attention within 24 hours. Urgent care is different from emergency care.

Usual, Customary or Reasonable (UCR) – the amount that is refunded to health care providers based on the area’s prevailing rate.


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