Insurance Terms

Calendar-Year – January 1 to December 31.

Calendar-Year Maximum Benefit – Sometimes used by health insurance plans, this is the absolute maximum amount that the insurance company will pay on behalf of a health insurance participant within a given calendar-year.

Certificate of Insurance – A contract provided to insureds or members of a group insurance plan which outlines the plan’s coverage and members’ rights. This document is what determines and defines the limits of a health plan’s coverage.

Claim – A demand made to the insurance company by an insured person or beneficiary for the payment of benefits under an insurance policy.

Coinsurance – An insurance policy provision in which the insured and the insurance company share medical expenses in a specified ratio (e.g., 80/20) after the deductible is met.

Coinsurance Maximum Out-Of-Pocket – This is the maximum amount paid under the coinsurance by an insured person. Deductibles and co-payments will still apply. Do not confuse this with the plan’s maximum out-of-pocket.

Co-payment – The amount of out-of-pocket expenses that must be paid for health services by the insured becoming payable by the insurer. It is usually less than a deductible and happens on a per-occurrence basis.

Coverage – Benefits available to inpiduals under a health insurance plan. These benefits are subject to deductibles, coinsurance, and co-payments.

Daily Room Benefit or Daily Hospital Benefit – Warning! Plans with this type of hospital benefit could leave you with huge hospital bills. This is because these plans limit what they pay for your hospital expenses, and is often far short of the actual bills. A Daily Room Benefit is the maximum daily amount that an insurance company will pay for your hospital room and board.

Deductible – The amount of out-of-pocket expenses that must be paid for health services by the insured before the insurance company pays anything. Deductibles can be based on a calendar-year or per-occurrence basis. Calendar-year deductibles allow for charges from multiple occurrences within a calendar year to be applied. Per-occurrence deductibles will be assessed for claims from each medical treatment occurrence

Discount Drug (Prescription) Program – A benefit that allows a policyholder to receive a discount on prescription drug purchases. Generally, nothing is paid by an insurance company, so a policyholder could experience very large expenses for prescription purchases. This is a very important distinction from Drug (Prescription) Coverage.

Drug (Prescription) Coverage – A provision under medical plans whereby the beneficiary can obtain prescription drugs without incurring potentially large out-of-pocket expenses. Different types of prescription drug plans exist, and many require deductibles and coinsurance to be met first. Most insurance companies offer better benefits if prescriptions are purchased under the plan’s mail-order program.

Limitations & Exclusions – Conditions or circumstances for which benefits are payable or excluded. Detailed information about limitations and exclusions can be found in the certificate of insurance.

Maximum Out-of-Pocket – This is the maximum amount an insured pays before the insurance company pays 100% of all future medical expenses for the rest of the calendar-year. Although a plan may indicate a maximum out-of-pocket, it typically does not include prescription co-payments. Generally speaking for non-HMO plans, co-payments of any kind and per-occurrence deductibles do not apply to the maximum-out-of-pocket.

Family Coinsurance Maximum Out-of-Pocket – The amount paid under coinsurance within a family plan that must be paid before the insurance company pays 100% of claims. It is usually a multiple of two or three times an invipual’s coinsurance maximum.

Family Deductible – The number of inpidual deductibles (or the total amount paid, which applies toward a deductible) that must be satisfied within a family health plan before the insurance company automatically begins paying for a medical claim. Most insurers limit this to a multiple of two or three times an inpidual’s deductible.

Lifetime Maximum Benefit – This is the absolute maximum amount that the insurance company will pay on behalf of a health insurance participant.

Non-Participating (Non-Network) Providers – Doctors, hospitals, pharmacies, and medical facilities who have not signed a contract with your health insurance plan. These providers are permitted to charge more for their medical services. Insurance companies generally make policyholders pay more out-of-pocket (or sometimes all) of the expenses when these medical providers are used.

Participating (In-Network) Providers – Doctors, hospitals, pharmacies, and medical facilities that have signed a contract with your health insurance plan. These providers must accept discounted payments that were agreed to under their contract. Insurance companies generally provide more generous coverage if participating providers are used.

Plan Description (Brochure) – This is a reasonably close explanation of a health insurance plan’s benefits. This explanation should include limitations and exclusions of the benefits, or you may find some unpleasant surprises when you attempt to use your health plan. Anything that is unclear to you in the Plan Description should be clarified by consulting your certificate of insurance or by contacting your agent.

Pre-Existing Condition – A physical and/or mental condition of an insured person that existed prior to the issuance of his or her policy. These conditions might not be covered by an insurance company. A policyholder should read the rules within his or her policy to help determine if benefits will be paid for a pre-existing condition.