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Health Insurance Terminology
Coinsurance
Amount of eligible medical expenses (claims) above the deductible amount that is shared by the insured and insurance company. The amount that is the responsibility of the insured has an annual maximum.
 
Deductible
Amount the insured is pays before the insurance company begins to pay. Deductibles are based on the calendar year. The annual family deductible is a multiple of the annual individual deductible amount, i.e. family deductible equals 2 times or 3 times the annual individual deductible amount.
 
Doctor Office Co-pay
Amount the insured pays per doctor office visit. There could be separate co-pay amounts for a 'primary care physician' and a 'specialist.'
 
Health Reimbursement Arrangement
Health reimbursement arrangements, also known as "health reimbursement accounts," enable employers to reimburse employees for qualified medical expenses, just as an insurance plan will reimburse covered individuals for the cost of services incurred. Under a health reimbursement account (HRA), the employer provides the funds, not the employee. All unused funds are the employers and these are rolled over at the end of the year. Employers qualify for preferential tax treatment of funds placed in a health reimbursement account . Health reimbursement arrangements are open to employees of companies of all sizes.
 
Health Savings Account
An account set up by an insured who has a qualified high-deductible health savings account insurance plan. Usually, health savings account plans do not have co-pays for doctor office visits and prescription drugs in which case doctor office visits and prescription drugs are subject to the annual deductibles. The Health Savings Account (HSA) is a tax-exempt bank account. Employees use the account to pay deductibles, coinsurance, and qualified health care expenses as well as save for post-retirement.
  • Monies deposited into a health savings account are tax-deductible.
  • Interest earned on funds that remain in a health savings account are tax-deferred.
  • Monies withdrawn to pay eligible medical expenses are not taxed.
  • Prior to age 59 1/2, funds used to pay any expenses other than eligible medical expenses are subject to 10% penalty.
Maximum Lifetime Benefit
Maximum benefits payable during the lifetime of each person insured for eligible medical expenses.
 
Network
Refers to the network of medical providers with whom the insurance company has agreements for discounted medical services.
 
Out-of-Network
Refers to medical providers who are do not have agreements with the insurance company. Deductible and coinsurance amounts paid by the insured may be higher for services provided out-of-network.
 
PPO
Preferred Provider Organization - refers to the network of medical providers with which an insurance company has agreements for discounted pricing.
 
Prescription Co-pay
The amount paid by the insured for a thirty day supply of prescription drugs. Usually, there are multiple tiers of prescription drugs for which co-pays vary.
 

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