Common Insurance Terms Defined
It is important to have health insurance coverage, but understanding your policy can be tricky. It is helpful to know what your policy does and does not cover in advance of any illness or injury so you can know what charges you will responsible for. This information can help you navigate your policy and use it to your advantage to stay healthy while in school.
The following common terms are often used by insurance companies to define policies, but this information is not meant to substitute the language used in your individual policy. For questions about your policy, please contact your insurance carrier directly at the number listed on your insurance ID card.
Your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. You pay coinsurance plus any deductibles you owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your coinsurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.
Coordination of Benefits
A system to eliminate duplication of benefits when you are covered under more than one group plan. Benefits under the two plans usually are limited to no more than 100% of the claim.
A fixed amount (for example, $15) you pay for a covered health care service, usually when you get the service. The amount can vary by the type of covered health care service.
The amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services.
Health care services that your health insurance or plan doesn’t pay for or cover.
Explanation of Benefits (EOB)
A statement—not a bill—sent by the health insurance company to the policy holder (student, parent or family member, depending on who bought the policy) explaining what medical treatment and/or services were paid for on their behalf. An EOB typically describes: 1) the service performed—the date of the service, the description and/or insurer’s code for the service, the name of the person or place that provided the service and the name of the patient; 2) the doctor’s fee and what the insurer allows—the amount initially claimed by the doctor or hospital, minus any reductions applied by the insurer; and 3) the amount the patient is responsible for.
HMO (Health Maintenance Organization)
A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.
The most you pay during a policy period (usually one year) before your health insurance or plan starts to pay 100% for covered essential health benefits.
PPO (Preferred Provider Organization)
A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You may be able to use doctors, hospitals, and providers outside of the network for an additional cost.
A health problem that existed before the date your health insurance became effective.
The amount you or your employer pays in exchange for health insurance coverage.
Primary Care Physician (PCP)
Usually your first contact for health care, this is often a family physician, internist, or general practitioner. A primary care physician monitors your health and treats most health problems, and refers you to specialists if another level of care is needed. In many health insurance plans, care by specialists is only covered if you are referred by your primary care physician. Contact your insurance company for specific details.
Any person (doctor, nurse or dentist) or institution (hospital or clinic) that provides medical care.
A written (or electronic) order from your primary care doctor for you to see a specialist or get certain medical services. In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don’t get a referral first, the plan may not pay for the services.
Any payer for health care services other than you. This can be an insurance company, an HMO, a PPO or the federal government.
Definitions obtained in part from the U.S. Centers for Medicare & Medicaid Services. For additional terms defined, please visit the Glossary at Healthcare.gov.