Glossary of Insurance Terms

Commonly used insurance terms and what they mean.

Every large industry has it own set of terms and references.

Having a basic understanding of these terms can help you make better choices for your insurance needs. Below is a list of commonly used terms and what they mean. Feel free to reach out and contact our team members if you have any questions.

Popular insurance terms and definitions A–Z.


Calendar Year Medical Deductible

Deductibles for Participating and Non-Participating Providers accrue separately.

Calendar Year Out-of-Pocket Maximum

Any calendar year medical deductible and any calendar year pharmacy deductible accrue to the calendar year out-of-pocket maximum. Co-payments or coinsurance for covered services from participating providers accrues to both the participating and non-participating provider calendar year out-of-pocket maximum amounts.


The Consolidated Omnibus Budget Reconciliation Act, also called COBRA, will give employees the opportunity to continue coverage for 18 months after employment is terminated. You may qualify for a longer term under certain circumstances. You will pay a premium for this coverage.


Coinsurance is the percentage you pay for care after you've paid your deductible. If your carrier was responsible for $200 and your coinsurance is 20% then you would owe $40.


A fixed fee that a company requires the patient to pay for certain covered medical expenses, such as office visits and services. Co-payments may also apply to prescription drugs.



The amount of money you must pay for care before your carrier pays out.



A service within a policy that rejects coverage for certain benefits, disorders or where you can get treatment.



A payment model for health care where the provider is paid separately for each service performed.


Health Maintenance Organization (HMO)

An HMO is an organization that works with providers they contract with to offer coverage. You pay a monthly premium and the HMO covers your doctor's, hospital labs, annual physicals, emergency room, surgery, preventive care, and other benefits covered by the plan. You choose a primary care doctor who coordinates all of your care and makes referrals to any specialists you might need. If you choose an HMO, you agree to use the doctors, hospitals and clinics that participate in your plan's network.

Health Savings Accounts (HSA)

An HSA is a medical savings account available to those who pay taxes. The funds contributed to an account are used for medical expenses and are not taxable at the time you make your deposits.


Lifetime Limit

This limit refers to the maximum dollar amount that a plan approves to pay as part of your benefit for covered services during your lifetime.


Managed Care

A system of health care in which patients accept the network of providers and visit only certain providers in which the cost of your care is supervised by the managing company. This would include HBO's and Pop's who use a provider network.


This federally sponsored program is hospital and medical insurance primarily for people age 65 and older and those with qualifying permanent disabilities.


Out-of-Pocket Maximum

After you pay out the amount stated in your policy as the Out-of-Pocket Maximum on your deductibles, copayments and coinsurance, your insurance will pay 100% of the costs of qualified benefits for the remaining of the benefit period (usually a year).


Point-of-Service (POS) Plan

A type of managed care plan which combines features of HMOs and PPOs. You make a decision if you want to go to a network provider and pay no deductible, of if you would prefer to pay a flat dollar copayment (say $20 for a physician visit), or you may choose an out-of-network provider and submit bills to be reimbursed after applying your deductible and possibly a coinsurance portion.


Pre-authorization is a cost control step whereby the insured or the insured's provider must call the insurer prior to non-emergency services and request authorization for certain services.

Pre-existing Condition

A health condition that existed prior to your enrollment in a health plan. Under the Affordable Care Act, companies are not allowed to refuse enrollment due to medical conditions.

Preferred Provider Organization (PPO)

A network of doctors, hospitals and other health care providers who have agreed with an insurance company to offer health care at lower rates members of the plan. You may see any provider in the network without a referral. You may choose to go out of the network and pay a higher fee.


The amount you pay for insurance benefits.

Primary Care Physician

You choose a Primary Care Physician from the Network of Providers Directory who will manage your care and provide treatment as needed. A primary care physician refers you to specialists if necessary.


Any person, such as a physician, who participates in your medical treatment and participates in preventing illness or disability, or a facility such as a hospital, clinic, or lab, who render a service to members.


Third-Party Payer

Someone other than the patient or the health provider that reimburses and manages health care expenses. Third-party payers may include health insurance plans, governmental agencies such as Medicare, and also employers.


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