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Glossary of commonly used Health Insurance Terminology

Health Insurance: A contract between an individual and an insurance company that provides financial coverage for medical expenses, such as hospitalization, doctor visits, and prescription drugs.

Premium: The amount of money an individual or employer pays to an insurance company to maintain health insurance coverage.

Deductible: The fixed amount of money that an individual must pay out-of-pocket before the insurance company starts covering most medical expenses.

Copayment (Copay): A predetermined amount that an insured person pays at the time of receiving medical services, typically for doctor visits or prescription medications.

Coinsurance: The percentage of medical costs that an insured person is responsible for paying after meeting the deductible.

Out-of-Pocket Maximum: The maximum amount an insured person has to pay in a calendar year for covered medical expenses. Once this limit is reached, the insurance company covers 100% of the costs.

Preauthorization: The process of obtaining approval from an insurance company before receiving certain medical services or treatments to ensure they are medically necessary.

In-network: Healthcare providers, hospitals, and facilities that have contracted with an insurance company to provide services at a discounted rate to insured individuals.

Out-of-network: Healthcare providers, hospitals, and facilities that do not have a contract with an insurance company. Visiting an out-of-network provider may result in higher out-of-pocket costs for the insured person.

Provider: A healthcare professional or facility that delivers medical services, such as doctors, hospitals, clinics, and laboratories.

Primary Care Physician (PCP): A healthcare provider, often a general practitioner or family doctor, who serves as a patient’s main point of contact for non-emergency medical care and coordinates referrals to specialists.

Specialist: A healthcare provider who focuses on a specific area of medicine, such as cardiologists, dermatologists, or orthopedic surgeons.

Formulary: A list of prescription medications approved by an insurance company for coverage under a specific health insurance plan.

Explanation of Benefits (EOB): A statement sent by an insurance company to an insured person, detailing the costs and benefits of a medical service, including what the insurance company paid and what the insured person owes.

Network Adequacy: The requirement that an insurance plan has an adequate number of in-network healthcare providers in a certain geographic area to ensure access to care for insured individuals.

Open Enrollment Period: A specific time frame during which individuals can enroll in or make changes to their health insurance coverage, usually on an annual basis. *Does not apply to all health insurance plans.

Pre-existing Condition: A health condition that an individual had before obtaining health insurance. Under the Affordable Care Act, health insurance plans cannot deny coverage or charge higher premiums based on pre-existing conditions.

COBRA: The Consolidated Omnibus Budget Reconciliation Act, which allows eligible individuals to continue their health insurance coverage for a limited period after losing a job or experiencing other qualifying events.

Medicare: A federal health insurance program primarily for people aged 65 and older, as well as certain younger individuals with disabilities or specific medical conditions.

Medicaid: A joint federal and state program that provides health insurance to low-income individuals and families.

Affordable Care Act (ACA): A comprehensive healthcare reform law enacted in 2010 that expanded access to health insurance, introduced consumer protections, and implemented healthcare market reforms in the United States. Often referred to as Obamacare.

Minimum Essential Health Benefits: A set of healthcare services that must be covered by health insurance plans, as mandated by the Affordable Care Act. These services include preventive care, hospitalization, mental health services, and prescription drugs, among others.

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