Health Insurance Basic Terms

Below are some of the most common health insurance words 


Health Insurance Terminology Description or Definition
Co-Insurance A percentage the patient is responsible for on a given insurance claim.  For example, a health plan would pay 80% of the allowed amount on a claim, the 20% balance is the co-insurance amount to be paid by the patient to the medical provider.
Deductible A set dollar amount which must be satisfied within a specific time frame before the health plan begins making payments on claims.  For example, if a plan has a $500 deductible, the patient must satisfy and pay this amount to the medical provider before the health plan begins to make any payment on a claim.
Generic Drug When a brand name drug's patent ends, other drug companies are able to make and sell duplicates of the original drug.  These Generic Drugs are often cheaper than its Brand Name counterpart.  Health Plans usually offer incentives to its members in selecting Generic Drugs.
In-Network Medical providers that are part of a health plan's network and who have negotiated a set fee and discount to see members of that particular plan.  Health Plans usually offer incentives to its members who see physicians within their network and may actually not pay on a claim if they don't see a physician in the network.
Out of Pocket Maximum An amount that an member must pay up to before the health plan pays 100% of the allowed amount.
Primary Care Physician (PCP) A physician or medical provider who serves as a "gate keeper"  to the member's health plan and health care system.  Often, if a member has an HMO or other restrictive type of plan, the Primary Care Physician must first authorize a referral to a specialist for the service to be covered.  Many health plans also require that their members select a PCP as part of their coverage.
Usual and Customary Fees Also known as Usual and Reasonable Fees.  This is a cost containment measure used by health plans to limit the amount paid to medical providers.  All health plans have different fees based on internal statistics of what the health plan considers is a fair and reasonable rate for a specific medical service or treatment.
Utilization Review A method by the health plan to mandate that a medical provider and/or patient contact the health plan before a certain medical service or treatment is performed.  A reviewer at the insurance company, usually a health care nurse, reviews the case and approves or denies the requested item or service.  

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