Terms to Know

• Co-Payment — A co-payment is a patient’s share of a health-care bill. It usually is a small amount - $5 or $10 per office visit. Health-care reform advocates say its primary function is to remind consumers that health care is not free - and to discourage them from seeking unnecessary care.
• Deductible — The part of the insured’s expenses or loss that must be paid before insurance coverage begins.
• Disability Income Insurance — A form of health insurance that provides periodic payments to replace income lost when the insured is unable to work as a result of sickness or injury.
• Drug Formulary — A list of selected pharmaceuticals and their appropriate dosages that will be covered by a health plan. In a “closed formulary,” physicians are required to prescribe from that list of drugs.
• Comprehensive Health Insurance — Sometimes called “Comprehensive Major Medical.” A form of health insurance that combines the coverage of Major Medical and Basic Medical Expense contracts into one broad contract that provides coverage for almost all types of medical expense with few internal limits, usually subject to a small deductible for some or all expenses and to a percentage participation clause (sometimes called “co-insurance”) applicable to all or some of the covered expenses.
• Hospital Benefits — Payable when an insured is hospitalized.
• Major Hospitalization Policy or Insurance — A type of health insurance that provides benefits for most of the costs of hospitalization up to a high limit, subject to a large deductible. Such policies may contain internal maximum limits and percentage participation clauses. They are distinguished from major medical by the fact that they pay only in event of hospitalization.
• Major Medical Insurance — A type of health insurance that provides benefits for most types of medical expenses incurred up to a high limit, subject to a large deductible. Such contracts may contain internal limits and a percentage participation clause (sometimes called co-insurance clause). A major medical policy pays expenses both in and out of the hospital.

Other Terms to Know

• Managed Care — Managed care is a philosophy of health care coverage that streamlines health services and creates a health-care system that includes both the financing and delivery of services to the consumer. It also takes more responsibility for maintaining subscribers’ health, not just curing them once they are sick. It lowers costs by matching the patient with appropriate care as efficiently as possible. Different insurance carriers use different kinds of managed care. Although the philosophy is popularly associated with Health Maintenance Organizations (HMOs), other kinds of carriers also employ it.
• Managed Care Organization (MCO) — Any type of organizational entity providing managed care, such as an HMO or an HCSC providing services via a preferred provider organization (PPO).
• Mandated Benefits — Certain state laws require certain benefits be included in any major medical coverage. These include mammograms, automatic coverage of newborn or adopted children, home/hospice treatment options, and others. Research what is required by your state’s Legislature.
• Medically Necessary — Covered services required to preserve and maintain the health status of a member or eligible person in accordance with the area's standards of medical practice.
• Outpatient Services — Medical and other services provided by a hospital or other qualified facility, such as a mental health clinic, rural health clinic, mobile X-ray unit or free-standing dialysis unit. Those services include physical therapy, diagnostic X-ray and laboratory tests.
• Pre-Existing Condition — A condition of health or physical condition that existed before the policy was issued. Prior to 1993, insurance coverage was denied or significantly delayed on the basis of pre-existing conditions
• Primary Care — Primary Care is the first care a patient receives. It is often a family physician, although patients also may receive Primary Care from a nurse, a paramedic, or other types of health-care providers, depending on the situation. Managed care systems try to resolve as many health problems as possible at this level.
• Usual, Customary and Reasonable (UCR) — Health insurance plans pay a physician’s full charge if it is deemed reasonable and does not exceed his or her usual charges and amount customarily charged by other physicians practicing in the area for the service.