Oral & Vision Health Blog

15 Most Common Insurance Terms and Definitions

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Signing up for health, dental or vision insurance (or a plan that covers all of them) can introduce you to a whole new vocabulary. There are words and phrases used in the insurance lingo that you don’t use every day. This can make understanding your health benefits difficult. Knowing what some of these terms mean, however, can help you better understand how your plan works.

Here are 15 of the most common insurance terms and their definitions. Soon, you’ll be talking insurance like a pro!

A

1. Accident

In the world of insurance, an accident is an unexpected and unavoidable event that results in a major or minor injury to the body.

2. Accumulation Period

This is the period in which a person covered by insurance has paid medical expenses that qualify toward satisfying that year's deductible. Don’t worry…we’ll explain what deductibles are, too!

3. Actual Charge

Actual charge is the amount charged by health care providers for their services. It is not the same as the allowable charge, which is the amount your plan will cover. Think of this as the “retail price” rather than a “wholesale price” for medical services.

4. Allowable Charge

This is the amount your insurance has agreed to pay for health care services and supplies. This may be different from the actual charge billed by the health care professional. Your insurance carrier likely negotiated special rates for its members.

5. Annual Limit 

Annual limit is the maximum dollar amount an insurance company will pay for claims within a given year for any person they cover. Your plan details or benefit summary will list your yearly limit. This can also be called your calendar year maximum for dental plans. Some plans, such as certain types of HMOs, might not have an annual limit. And, under the new Affordable Care Act, essential health benefit medical plans no longer have an annual limit. This has been replaced by a maximum out-of-pocket amount.

 

B

6. Benefit Year

This is an insurance policy's year. It’s important to know that this timeframe may be different from the calendar year. Many insurance years begin in the fall or spring, for example. Benefits, rates, plan type or coverage levels may change at the beginning of a benefit year. And, annual limits are reset. If your employer provides you benefits, they will tell you about your new benefit year through an open enrollment meeting. You’ll be offered benefits and can enroll in, or decline coverage for that year.

 

C

7. Claim

This is a formal request that’s made either by a plan participant or his or her healthcare provider to the insurance company, asking for payment for a procedure the member received. 

8. Coinsurance

The amount a person with insurance coverage must pay for health care services after co-payments and deductibles are met.  It’s your portion of the healthcare cost for covered services.

9. Co-payment

A co-payment is a pre-set charge that an insurance plan requires its members to pay for services, prescriptions or medical supplies. For example, a co-pay for a visit with a specialist may be $25 with one insurance company, while a co-pay for annual teeth cleaning may be $15. The co-pay is different from insurance company to insurance company, and even by plan type. Your schedule of benefits or benefits handbook will list what these co-pays and services will cost. Sometimes, you might be required to visit a doctor or provider in the insurance company’s network to receive the co-pay discount cost.

Helpful tip: Know before you go. If you’re not sure if your provider is part of the network, go on the carrier’s website or give the provider (or even your insurance company) a call. 

10. Coordination of Benefits (COB)

COB applies to you if you have more than one group insurance plans. Both plans typically work together to lower your out-of-pocket cost. One plan is considered the primary insurance plan. Once you receive the benefits outlined in your primary insurance, the secondary plan is then used. COB also ensures that claims are not paid multiple times.

 

D

11. Deductible

This is the dollar amount an insurance company requires its members to pay every year before insurance benefits kick in. Not every health insurance plan has a deductible.

E

12. Enrollment Period

The enrollment period is the once a year window when new people can sign up for a group health insurance plan or make changes to their existing plan.


G

13. Group Health Insurance

This is a health insurance plan that covers members of a group, such as employees of a particular company. This is different from individual health insurance plans. These are bought by single people or families without being part of a larger group. Some companies will offer these plans at no cost to their employees, while others pay for a portion. Some companies offer group plans, which could cost less or provide richer benefits, than individual coverage. However, employees pay for the cost of these types of plans. Be sure to ask your human resources representative what your company offers.

H

14. Health Maintenance Organization (HMO)

A HMO is a type of health insurance plan that provides coverage when you visit an in-network provider. Many HMO plans also require the selection of a primary care provider. Premiums on a HMO medical plan are typically the least expensive compared to other types of health insurance.

P

15. Preferred Provider Organization (PPO)

With A PPO health insurance plan, you have the freedom to visit and receive services from an in-network or out-of-network provider; however, you save more when you use an in-network provider.These plans generally don’t require the selection of a primary care provider.  

Once you get familiar with these terms, understanding your policy becomes a lot easier. You’ll have the peace of mind that comes with knowing exactly what's covered, how it's covered, and when it's covered. So, there will be no surprises when you need to use it!

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