Understanding Your Health Benefits (Definitions and Common Terms)

Co-insurance:

The amount calculated using a fixed percentage that a patient pays or a covered service under his other insurance policy after the insurance payment is made.

Co-payment:

A fixed amount or a percentage of the fee paid by the insured person each time a service is received. Co-pay amounts are determined by the insurance plan.

Deductible:

The amount an insured person’s health plan pays before insurance benefits are available. Under some plans, the deductible is waived for specific services, like preventive care. Deductibles vary by different insurance plans.

Covered charge:

The amount a hospital or other healthcare provider bills for a covered service. Not all plan coverages are the same. The patient’s plan documents lists items and procedures that are not covered. Likewise, exclusions are plan specific and may vary from plan to plan.

Covered services:

Medically necessary procedures, services, or supplies listed in the insured person’s benefit certificate. Patient’s plan documents list exclusions—services that are not covered. Exclusions are plan specific and may vary from plan to plan. Not all plan coverages are the same.

Explanation of Benefits (EOB):

The statement that is received from the insurance company that explains how charges were considered under the benefit plan. The insured person will receive a copy for each transaction. The hospital or other healthcare provider of the service will also receive a copy of the transaction.

Guarantor:

The final responsible party on a bill after insurance pays if the patient has insurance coverage. It is essentially the person responsible for paying the balance due.

HMO (Health Maintenance Organization):

Typically may have stricter network rules regarding providers you can see, hospitals you can use, referrals necessary and potential preauthorization.

PPO (Preferred Provider Organization):

A network of providers and hospitals, not as closely managed as a HMO.