Glossary of Insurance Terms
 
 These definitions are generally accepted for most insurance plans. We always recommend that all patients read their plans carefully. If some things are not clear, please contact your insurance company, agent or human resource person. If possible, get clarification in writing.
 

Co-payment-The portion of health care costs a patient is expected to pay at the time of the office visit. A co-payments may be a fixed dollar amount that can be found on your Insurance Card. Some plans may be percentage of the office visit fee.

Co-insurance-The portion of a medical bill a patient must pay after the deductible is met. It is generally expressed as a percentage of the total health care cost.

      Example:

 A procedure may cost $100. Let’s say your deductible is 50 dollars and your insurance plan then pays 80 percent for procedures. (not an office evaluation). The insurance company will then pay 40 dollars, with your responsibility being 60 dollars. The sixty dollars comes from the $50 deductible plus the 20% from the remainder owed.

$100-$50 (deductible) = $50, then the remainder is paid at 80% which is 40 dollars and the remaining 20% ($10) is still the patient’s responsibility. So, $50 + $10 = $60.  Read your insurance plan carefully. Also remember some plans exclude procedures that may be important for diagnosing a health problem.

Insurance Preauthorization or Prior authorization- Some insurance plans require an authorization confirmation for certain procedures including lab testing, imaging studies, office visits or surgical procedures. This authorization does not insure payment by the insurance company, only that the insurance company “approves” of the necessary test or procedure before it is completed. If the test or procedure is done before the authorization, the insurance company will refuse to pay.

HMO-Health Maintenance Organization-Health care insurer and delivery system that provides specific defined benefits to members for a set fee. Members choose or are assigned a Primary care provider (PCP) responsible for all referrals regarding patient’s care

PPO-Preferred Provider Organization- A network of health care providers that contracts with an insurer, employer or third party payer and agrees to accept the negotiated fees. Often the “net savings” is actually a reduction in billed charges to meet the negotiated fees.