insurance terms


Insurance Glossary For You!





We provide the insurance glossary of terms below with useful explanations to help you understand insurance plan provisions and make sound decisions:

Benefit: A reimbursement for covered medical expenses as specified by the plan.

Brand-name drug: Aprescription drug which is marketed with a specific brand name by the company that manufactures it. May cost insured individuals higher co-pay than generic drugs on some health plans. (see “generic”).

Carrier:Aninsurance company insuring the health plan.

Co-insurance:The percentage of covered expenses an insured individual shares with the carrier. (i.e. for an 80/20 plan, the health plan member’s co-insurance is 20%). If applicable, co-insurance applies after the insured pays the deductible and is only required up to the plan’s stop loss amount (see “stop loss”).

Co-pay/co-payment: The amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might require a $15 co-payment for a doctor’s office visit.

Covered expenses: A covered expense is any service and/or product that is covered by the insurance contract as defined in the Certificate of Benefits or Policy Booklet.

Deductible:The dollar amount an insured individual must pay for covered expenses during a calendar year before the plan begins paying co-insurance benefits.

Dependents:Usually the spouse and unmarried children (adopted, step or natural) of an employee.

Effective date: The date requested by an employer for insurance coverage to begin.

Exclusions:Expenses which are not covered under an insurance plan. These are listed in the Certificate Booklet/Policy.

Explanation of benefits (EOB): Acarrier’s written response to a claim for benefits.

Generic drug:The chemical equivalent to a “brand name drug”. These drugs cost less, and the savings is passed on to health plan members in the form of a lower co-pay.

Grace period:Aspecified period immediately following premium due date, during which payment can be made to continue the policy in force without interruption.

Group health insurance: An insurance contract made with an employer or other entity that covers individuals in the group.

Health Savings Account (HSA):A Health Savings Account (HSA) is a special account owned by an individual used to pay for current and future medical expenses. HSA’s are used in conjunction with a “High Deductible health Plan” (HDHP): Insurance that does not cover first dollar medical expenses (except for preventive care). Can be an HMO, PPO or Indemnity plan, as long as it meets the requirements.

In-network: Aprovider or health care facility that is part of a health plan’s network. When applicable, insured individuals usually pay less when using an in-network provider.

Lifetime maximum benefit:The maximum amount a health plan will pay in benefits to an insured individual.  There are no longer lifetime maximums on group health plans.  There are some lifetime maximums on short term policies.

Limitations:Conditions or circumstances for which benefits are not payable or are limited. It is important to read the limitations, exclusions and reductions clause in your policy or certificate of insurance to determine which expenses are not covered.

Medically necessary: Many insurance policies will pay only for treatment that is deemed “medically necessary” to restore a person’s health. For instance, many policies will not cover plastic surgery for cosmetic purposes.

Medicare:AFederal program that provides medical insurance for people over 65 and for those who are permanently disabled. Contact your local Social Security Office for a copy of the current Medicare handbook.

Network: Agroup of doctors, hospitals and other providers contracted to provide services to insured individuals for less than their usual fees. Provider networks can cover large geographic markets and/or a wide range of health care services. If a health plan uses a preferred provider network, insured individuals typically pay less for using a network provider.

Out-of-network: Describes a provider or health care facility which is not part of a health plan’s network. Insured individuals usually pay more when using an out-of-network provider, if the plan uses a network.

Out-of-pocket maximum:The total of an insured individual’s co-insurance payments and co-payments.

Pre-certification:An insurance company requirement that an insured obtain pre-approval before being admitted to a hospital or receiving certain kinds of treatment.

Pre-existing condition (group health plans): Any condition (either physical or mental) for which medical advice, diagnosis, care, or treatment was recommended or received within a defined period (usually six months) immediately preceding enrollment in a health plan. Pregnancy cannot be counted as a pre-existing condition. Genetic information about your likelihood of developing a disease or condition, cannot be considered a pre-existing condition. Newborns, newly adopted children, and children placed for adoption covered within 30 days cannot be subject to pre-existing condition exclusions.

Preferred provider organization (PPO): Plans allow you to choose a doctor or hospital from a list of “preferred” providers in order to receive full benefits. If you go to a doctor or hospital who is not on the list, the plan may cover a smaller percentage or none of your costs. Check with the insurance carrier BEFORE you use the plan to make certain your physician or hospital is a contracting provider. Make certain your doctor refers you to other providers who are on the list, or who the carrier agrees to pay at the “preferred” rate.

Primary care physician (PCP):The doctor whom you have chosen to provide basic healthcare services. This is the doctor which would perform wellness visits and such. You will typically see your primary physician for any illness, he/she will then refer elsewhere if he/she feels another doctor or facility can provide better treatment for the issue.

Provider: Any person or entity providing health care services, including hospitals, physicians, home health agencies and nursing homes. Usually licensed by the state.

Short-term medical: Temporary health coverage for an individual for a short period of time, usually from 30 days to six months.


Please notify us of other important terms that should be added to our insurance glossary.