Glossary of Insurance Terms
This post is a reference to Medicare and Healthcare terminology you might see, hear and read on a daily basis. We will update this list regularly and add terms we think are most relevant for you to stay informed.
Premium - A premium is a dollar amount you have to pay in order to be enrolled in an insurance plan. Typically premiums are paid on a monthly, quarterly or annual basis. Depending on the type of insurance you have, ie: group vs. Medicare, you may be responsible for all premiums. If you’re on group coverage the employer may pay all or part of the premium amount.
Deductible - A deductible is an amount of money you have to pay before the insurance will pay. For example, if you had a $500 deductible for all services, you would be responsible to pay the first $500 billed in the year, after that your insurance would pay their portion for services. Deductibles could apply as a blanket to all services or only apply to specific services like Inpatient Hospital coverage or Out of Network services. Check your plans Summary of Benefits to see if you have a deductible.
Copay - A copay is a flat dollar amount you pay out of pocket for medical services. Copays usually differ depending on the service. For example, a Primary Care Physician visit may be a $10 copay while a Specialist visit is $45. If your plan has a deductible, copays are what you would typically pay after that deductible has been met.
Co-Insurance - Co-insurance is a percentage that you pay out of pocket for medical services. Co-Insurance is generally universal across services but can differ. For example, your plan may have a 25% co-insurance for all outpatient services (ie: Doctor visits, imaging, labs etc). This means, you would pay 25% of the full amount billed for the service.
Max out of Pocket (MooP) - A maximum out of pocket is the most you would have to pay for Medical services out of your own pocket per year. The costs that count towards your MooP include deductibles, copays and co-insurances. Premiums and drug costs typically do not count towards the MooP. If you reach your plans MooP, the plan will cover 100% of your out of pocket costs for the rest of the calendar year. Please note that Maximum out of Pockets and Deductibles are not the same thing.
HMO (Health Maintenance Organization) - An HMO is a network of doctors who are specifically contracted to work with and treat patients on your plan. HMO networks are negotiated between the insurance company and doctor offices. With an HMO plan you will need referrals to see a specialist. HMO’s are designed this way to help keep both medical costs and plan costs down.
HMO-POS - An HMO-POS is a Health Maintenance Organization (see definition above) combined with a Point of Service (POS) network. The POS portion essentially allows you to see out of network doctors while still being covered by the plan. Typically you pay a higher cost if you go out of the network. With an HMO-POS plan you will still need a referral for In-Network specialists but typically do not need referrals to go out of network. HMO-POS plans are designed to give people access to low cost healthcare while also giving them more provider options.
PPO (Preferred Provider Organization) - A PPO is a network of doctors who are contracted with a specific plan to offer lower cost services, similar to an HMO. However, with a PPO plan you DO NOT need referrals to see a specialist. You also have more provider options as PPO’s are typically national or statewide coverage. You can also go out of the PPO network but you typically pay more out of pocket. PPO’s also tend to have higher premiums than HMO’s.
