Glossary

Part of the problem of searching for and evaluating health insurance companies and health insurance plans serving San Juan Capistrano, the Beach Cities, and surrounding areas of Orange County is understanding the terms used to describe health insurance coverage. Here are a few of the most common terms:

Annual deductible:

The amount the health insurance consumer must pay each year before the health insurance company begins to pay its benefits.

Coinsurance:

The percentage of the health insurance claim that the individual health insurance consumer is required to pay.

Co-payment:

Common among PPOs and HMOs, a co-payment is a flat fee that the individual health insurance consumer pays for a medical service or prescription drug. The co-payment is made at the time the service is rendered or the prescription drug is purchased. For example, the health insurance consumer may pay a $15 co-payment for a doctor's office visit. The health insurance company then pays the balance of the fee.

Covered expenses:

The services, medications, procedures, and supplies paid for by the health insurance company.

Flexible spending account (FSA):

An account offered and administered by employers that allows employees to set aside an amount of their pay prior to taxation for the sole purpose of paying the employee's share of health insurance premiums and/or for medical expenses not covered by the employer's health insurance plan. An employer also can make contributions to an employee's FSA. Funds in the FSA typically must be used within a benefit year, or else they will be forfeited. Compare to Health Savings Account (HAS).

Group health insurance:

Health insurance purchased by an employer for the benefit of its employees and their families.

Health Maintenance Organization (HMO):

A managed care organization the provides healthcare services through a network of medical providers with which the health maintenance organization has a contract. The HMO covers only the care provided by medical professionals who have agreed to treat patients according to the HMO's guidelines.

Health savings account (HSA):

A savings account created for the deposit funds to be used for medical expenses. These funds can be deposited by an employer, employee, or both prior to taxation. These funds are sheltered state income tax deductions, federal income tax deductions, and Federal Insurance Contributions Act (FICA) tax deductions. Unlike an FSA, the funds in an HAS rolls over from year to year and tax-free, they are used for medical expenses or withdrawn after the account holder reaches age 65. Most HSA accounts require the account holder to enroll in a High Deductible Health Plan (HDHP), with minimum deductibles of $1,100 for an individual or $2,200 for a family.

Maximum out-of-pocket costs:

The limit that a health insurance policyholder will have to pay out of his/her own pocket for medical expenses. Out-of-pocket expenses include deductibles, coinsurance, and co-payments.

Medical savings account (MSA):

A savings account designed to help self-employed individuals and employees of small businesses to pay for medical expenses not covered by regular health insurance.

Medicare:

A program of the federal government that provides health insurance benefits for qualified individuals typically individuals 65 years old or with a disability. Medicare Part A covers hospitalization and is wholly funded with taxpayer money. Medicare Part B, known as Supplemental Medical Insurance or Medicare Supplement, covers basic medical expenses and is funded by both the government and the Medicare policyholder.

Portability:

The ability to change from one health insurance plan to another regardless of pre-existing medical condition exclusions.

Point of service plan (POS):

A health insurance plan that blends features of an HMO and a preferred provider organization (PPO). A POS policyholder can receive benefits from in-network and out-of-network medical care providers. The benefits usually are highest when a primary care physician has referred the consumer to another provider and are lowest when the consumer seeks treatment without a referral.

Preferred Provider Organization (PPO):

A health insurance plan that provides discounts to the policyholder when he or she access services through a network of healthcare providers specified by the insurer. The policy holder will be responsible for a greater portion of the expense when he or she seeks services outside the network.

Pre-existing condition:

A health-related condition that exists prior to a policyholder enrolling with a new insurance company or a new health insurance plan.

Supplemental medical insurance:

Health insurance coverage that is purchased separately from a main a policyholders main health insurance policy.