Health Insurance: Some Important Terms

If your employer is paying for your health insurance you must fully understand

• what is your contribution towards the coverage,
• when will it be terminated, and,
• how much is the coverage through employment,

More than often you will have to understand terms like HMO, PPO, IPA, PCP, copayment, co-insurance deductible, in – network providers and out-of-network providers etc.

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HMO PLAN

The HMO (Health Maintenance Organizations) gives you comprehensive health care benefits. You can choose a separate medical group and primary care provider for each enrolled member in your family. You will need referrals to see specialists from your primary care provider. You will be required to pay a copayment for health care (in-network, hospital visits, etc). If you go outside the network your insurance will not pay for it. You will have to pay for any medical bills arising from care received outside the HMO network. Generally, your primary care physician will be from the following departments: obstetrics/gynecology/family practice/pediatrics/general practice etc. Your (PCP) primary care physician is always the ‘go-to person’ in the HMO plan.

PPO PLAN

There is slightly more flexibility in a PPO (Preferred Provider Organization) plan. You will have access to all the health care providers in the PPO network and will be covered for part of health care cost if you go outside the PPO network. While this gives you more flexibility to choose a provider, you will have to pay the higher cost from your pocket. This gives you more flexibility and you are not dependent on a PCP (primary care physician). You can go to any health care provider in the PPO network. You will not need any referrals as in the case of HMO plan. You will be required to pay copayment and optional annual deductibles.

COPAYMENT

Every time you visit a doctor or get a procedure done you have to pay a copayment. A copayment is a flat fee that you have to pay before you see the doctor. You can pay by cash or credit card and you will get a receipt for it. During the visit you can meet the doctor, get a procedure done, or get tests done. They will all be covered in that co-payment. However, if you get all this done on different days, you will be required to pay per visit. Examples of copayment are $10-$20 for a visit to the hospital or doctor, $50 for emergency room visit, and $10-$30 for getting a prescription medicine (you will pay this to the pharmacy from where you get your medication).

COINSURANCE

This means that you and your insurance company are splitting the cost of health care on a percentage basis. Your insurance will NOT cover you for all the expenses. Typical examples of coinsurance are 70/30 or 80-20 insurance rate where your insurance will cover 70% or 80% of the total cost and you will have to pay for the balance.

DEDUCTIBLE

Your insurance company may not cover all the expenses in a PPO plan, especially if they exceed the deductible amount. Deductible stands for that part of the claim not paid by the insurance company. For example, if you pay $200 for a doctor’s visit and your insurance only covers 80% of the cost. You will have to pay $40 from your pocket.

PCP

PCP stands for primary care physician. This applies to HMO plans.

IPA

IPA stands for independent practice association. An IPA is a medical partnership of doctors who practice in independent offices. The IPA may not necessarily have all the other services like X-Ray, special exams, MRI and laboratories. They may refer you to other locations.

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Important Medical Acronyms

Some other important acronyms are: