GLOSSARY OF HEALTH TERMS

Capitation

A method of paying medical providers through a pre-paid, flat monthly fee for each covered person. The payment is independent of the number of services received or the costs incurred by a provider in furnishing those services.

COBRA

The consolidated Omnibus Budget Reconciliation Act 1985, commonly known as COBRA, requires group health plans with 20 or more employees to offer continued health coverage for you and your dependents for 18 months after you leave your job.  Longer durations of continuance are available under certain circumstances.  If you opt to continue coverage, you must pay the entire premium, plus a two percent administration charge.

Coinsurance

The amount you are required to pay for medical care in fee-for-service plan or preferred provider organization (PPO) after you have met your deductible. The coinsurance rate is usually expressed as a percentage of billed charges. For example, if the insurance company pays 80percent of the claim, you pay 20 percent.

Co-payment

A cost sharing arrangement in which a person pays a specific charge for a specific medical service – say $10 for an office visit or $5 for a prescription.

Deductible

The amount of money you must pay upfront each year to cover your medical care expenses before your insurance policy starts paying.

Exclusions

Specific conditions or circumstances for which the policy will not provide benefits.

Fee-for-Service

A payment system for health care where the provider is paid for each service rendered.

Health Maintenance Organization (HMO)

Prepaid health plans in which you pay a monthly premium and the HMO covers your doctor’s visits, hospital stays, emergency care, surgery, preventive care, checkups, lab tests, X-rays, and therapy.  You must choose a primary care physician who coordinates all of your care and makes referrals to any specialists you might need.  In an HMO, you must use the doctors, hospitals and clinics that participate in your plan’s network.

Health Savings Accounts (HSA)

An HSA works like an IRA, except that money is used to pay health care costs.   Participants enroll in a relatively inexpensive high deductible insurance plan. Then, a tax-deductible savings account may be opened to cover current and future medical expenses.  The money deposited, as well as the earnings, is tax-deferred.  The money can then be withdrawn to cover qualified medical expenses tax-free.  Unused balances roll over from year to year.

Lifetime Limit

A cap on the benefits paid under a policy.  Many policies have a lifetime limit of $1 million, which means that the insurer agrees to cover up to $1 million in covered services over the life of the policy.

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