Healthcare Insurance Terms
*For more information on how these terms relate to your specific insurance plan, please contact your healthcare insurance company for more information.
Your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. You pay coinsurance plus any deductibles you owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your coinsurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.
A fixed amount (for example, $25) you pay for a covered health care service, upon receipt of the service. The amount can vary by the type of covered health care service received.
The amount you owe for health care services before your health insurance or plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything until you have met your $1,000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services.
Explanation of Benefits (EOB):
A statement sent by a health insurance company to covered individuals explaining what medical treatments and/or services were paid for on their behalf. It is important for a patient to review the EOB because it provides the list of services that the medical provider or supplier has claimed to provide to the patient. It also shows what has been paid by the healthcare insurance company and what is owed by the patient.
Flexible Spending Account:
An arrangement you set up through your employer to pay for many of your out-of-pocket medical expenses with tax-free dollars. These expenses include insurance copayments and deductibles, and qualified prescription drugs, insulin and medical devices. You decide how much of your pre-tax wages you want taken out of your paycheck and put into an FSA. You don’t have to pay taxes on this money. Your employer’s plan sets a limit on the amount you can put into an FSA each year.
There is no carry-over of FSA funds. This means that FSA funds you don’t spend by the end of the plan year can’t be used for expenses in the next year. An exception is if your employer’s FSA plan permits you to use unused FSA funds for expenses incurred during a grace period of up to 2.5 months after the end of the FSA plan year.
Health Savings Account:
A medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan. The funds contributed to the account aren’t subject to federal income tax at the time of deposit.
Funds must be used to pay for qualified medical expenses. Unlike a Flexible Spending Account (FSA), funds roll over year to year if you don’t spend them.
High Deductible Plan:
A plan that features higher deductibles than traditional insurance plans. High deductible health plans (HDHPs) can be combined with a health savings account or a health reimbursement arrangement to allow you to pay for qualified out-of-pocket medical expenses on a pre-tax basis.
The amount of money a patient owes after insurance is billed for services. This amount reflects the total fee allowance (contracted rate) minus the amount the insurance company paid for the services. If there is a difference between the billed fee and the allowed (contracted) rate, this amount is written off by the health care provider.