Understanding Insurance Terms

Sometimes wading through insurance documents can be like swimming in alphabet soup or reading a foreign language. Here’s a quick glossary to help you with some of the abbreviations and words you’re most likely to encounter.

Copay: The fixed amount you pay for healthcare services. This might be a set dollar amount or a percentage of the actual cost.

Deductible: What you pay for healthcare services before your plan pays anything.

Embedded Deductible: Refers to plans that have two deductible components: A family deductible and an individual deductible. A non-embedded plan will only have the family deductible.

Explanation of Benefits (EOB): The document you receive after a covered healthcare service. It shows the original cost of the service, the cost you actually are charged under your insurance plan, deductibles and copays, the total benefit you will receive, and other important information.

High Deductible Health Plan (HDHP): A health plan that keeps premiums low by setting deductibles high.

Health Savings Account (HSA): A savings account to set aside pre-tax dollars for health needs, so long as you’re enrolled in an HDHP.

Network: A list of healthcare providers that have contracted with an insurer to provide service to plan participants. Providers on this list are said to be in-network; those not on the list are out-of-network providers and will typically cost more.

Out-of-Pocket Maximum: The limit to how much you actually pay out of your own pocket each plan year.
Preferred Provider Organization (PPO): A group of physicians, hospitals, and other healthcare providers that have contracted with an insurer payer to provide services at a reduced cost.

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