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Health Insurance Terms

Out of Pocket - an amount you pay (the money comes out of your pocket). Your out of pocket costs would be any deductible, co payments, and co-insurance amounts you pay.

Co payment - an amount that you must pay out of pocket for medical services covered by your health insurance policy. Your co payment is usually expressed in a dollar amount (for example, you pay $10 per doctor visit). Your insurance company thens pays for the remaining cost of the medical services, no matter what the amount.

Coinsurance - similar to a co payment, except that the amount you pay out of pocket is expressed as a percentage (for example, you pay 20% of your medical bill and the insurance company pays the remaining 80%).

Deductible - an amount that you must pay out of pocket (usually on a per year basis) before the health insurance company begins to pay a greater percentage of your medical costs. The amount you pay is usually listed in your policy as the out of pocket maximum. For example, if your health insurance policy has a $1000 deductible, you must pay $1000 of your medical expenses before your insurance company will begin to pay some your covered medical services. In general, the higher your deductible, the lower your health insurance premiums will be.

Out of Pocket Maximum - the maximum amount you must pay before your health insurance company begins paying a greater amount or percentage of your medical expenses. Health insurance policies can have both yearly and life of policy out of pockets maximums.

PPO - PPO stands for Preferred Provider Organization. A PPO will have a list of physicians and health organizations that they consider to be "preferred providers". You will usually pay less out of pocket when you utilize the services on the PPO preferred provider list. If you use medical services not on the PPO list (called out of network providers), you will usually pay may or receive fewer reimbursed benefits from your health insurance policy.

HMO - HMO stands for Health Maintenance Organization. If your health plan has an HMO, you are expected to utilize the medical services provided by the HMO at their facilities. An HMO will usually have their own clinics and medical facilities, and you will need to consult with your HMO before being admitted to a hospital in a non-emergency situation. Typically, use of medical services outside of the HMO is not covered by your health policy.

Out of Network - medical services that are not on your HMO or your PPO preferred provider list

Exclusions - health insurance policies will not pay for every medical service or for treatment for every medical condition. Medical services and conditions that are not covered by your health policy are called exclusions.

Coverage Limits - some health insurance policies will only pay a maximum amount of total benefits over the course of a year or for the lifetime of the policy. After you have reached your coverage limit, you are expected to pay 100% of your future medical expenses. A good health insurance policy will have a lifetime coverage limit in the millions of dollars.

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