Health Insurance Terms Explained

Formulary, coinsurance, balance billing, and out-of-network. If you don’t know what those mean, you’re not alone. Health insurance has many terms that can be confusing for members. We want you to get the most out of your health plan, and to do that it’s helpful to understand some common terms you’ll likely encounter. Below is a list of health insurance terms that we’ve compiled, along with an explanation of each term.

• Allowable charge/Allowed amount: This is the maximum amount that we will pay for a health care service. Providers participating in our network cannot charge more than the allowed amount.
• Appeal: If a member does not agree with a decision we’ve made, they have the right to challenge that decision by filing an appeal, asking us to review and reconsider the decision.
• Balance billing: When a provider bills you for the difference between what we paid for a service and what they originally charged. Providers participating in our network are prohibited from balance billing.
• Benefits: Items or services that are covered under your health plan. You can find out what your plan’s benefits are by looking at your plan’s outline of coverage, which you should have received when you enrolled. You can also access this information through the Member Resource Center.
• Care managers: Our care managers work with doctors and other providers to coordinate your care. They also work directly with members to support them as they deal with health issues and help them return to optimal health.
• CDHP: Consumer directed health plans (also known as consumer driven health plans) are designed to give you more control of your health care spending. They are often coupled with health savings accounts (HSAs), which members can use to pay for their share of services. 
• Certificate of coverage: A document that is the contract for your health plan. It details your health plan’s benefits, what is covered and not covered, and any restrictions or limitations. The certificate of coverage also contains information about your rights and how to file appeals.
• Claim: A request for payment that you or your provider submits to us, after you receive covered items or services.
• Coinsurance: The percentage of the cost you pay. Coinsurance on some of our plans applies after paying your deductible amount. Check out this blog post for more information.
• Coordination of benefits: When you or a family member is covered by more than one health plan, coordination of benefits rules identify the plan that should pay first and ensures claims are paid correctly.
• Copayment: A fixed amount that you pay for a service or item. For example, a $25 copay for a doctor’s office visit, with Blue Cross paying the rest of the cost. Check out this blog post for more information.
• Cost-share: The portion of costs that you pay out of your own pocket. This may include the deductible, coinsurance, and copayments.
• Covered services: The services that are eligible for benefits under your plan. A deductible, coinsurance, or copayment may be applicable.
• Deductible: The amount you’ll have to pay each year for covered services before your health plan starts to pay. You can find this amount on your outline of coverage.
• Dependent: A person, other than yourself, who is eligible for coverage under your health plan.
• Diagnostic test: A test, ordered by a provider, used to detect a disease or condition. The provider may also order such a test to rule out a possible condition. For example, taking an X-ray to check if someone’s leg is broken.
• Durable medical equipment (DME): Medical equipment ordered by a provider for you to use for an extended period of time. For example, a wheelchair or crutches.
• Excluded services: These are the services not covered by a health plan.
• Exclusive provider organization (EPO): A type of health plan where services must be received from doctors, hospitals, and other providers within the network, except in an emergency. Referrals from the primary care provider to see a specialist are not required.
• Explanation of benefits: A document sent to a member explaining how a claim was paid or why it was not paid. This is now called the summary of health plan payments.
• Flexible spending account (FSA): If you have health coverage through your employer, you can use an FSA to pay for health care costs without paying taxes on the money. Employers may contribute to your FSA, but they aren’t required to. FSA funds must be used by the end of the year or they will be lost.
• Formulary: A list of prescription drugs covered by a health plan.
• Generic drug: A prescription drug that is not sold under a brand name. Generic drugs have the same active ingredients as their brand name equivalent, but usually cost less.
• Grievance: When you tell us you have a complaint about your health plan or one of our decisions.
• Health maintenance organization (HMO): A health plan where care is managed. Members must have a primary care provider and get referrals from the primary care provider to see specialists.
• Health savings account (HSA): A type of savings account that lets you set aside money tax-free to pay for health care expenses. You must be enrolled in an eligible high-deductible health plan to use an HSA. Unlike FSAs, unused HSA funds roll over year to year. Account owners may be able to invest the money that’s in an HSA.
• High deductible health plan: These plans have a deductible that is higher than a traditional health plan’s amount. They can be paired with a tax-free health savings account.
• Home health: To help you recover from an illness or stay healthy, a nurse or other health care professional visits you at home to provide services and support.
• Hospice: Services to provide comfort and support when a person is near the end of life.
• ID card: A card that identifies you as a member and has information about your health plan.
• In-network: When services are performed by providers and facilities that are participating in our network.
• Office visit: When you go to see a provider at their office.
• Open enrollment period: The time period when you are allowed to change your health plan.
• Outline of coverage: A document members receive from us that outlines their health coverage, including what services are covered and the costs they pay when using network providers. It also includes information on restrictions and limitations.
• Out-of-network: When services are performed by providers and facilities that do not participate in our network.
• Out of pocket maximum/out of pocket limit: The most that you’ll have to pay for covered services in a year. Once you reach this amount, by paying your deductible and coinsurance, your health plan pays for covered services at 100 percent.
• Pharmacy benefit manager (PBM): A company that contracts with us to manage prescription services and help reduce the cost of prescription drugs.
• Primary care physician/provider (PCP): A doctor or other health care professional who you have chosen for your basic health care needs and to coordinate your other care.
• Preventive care: Services aimed at keeping you healthy and detecting diseases in their early stages. For example, an annual checkup or a colonoscopy to detect colon cancer.
• Preferred provider organization (PPO): A type of network made up of providers that have contracted with us to provide care to our members at a lower cost.
• Point of service plan (POS): A type of health plan that is similar to an HMO, but members have the flexibility to see out-of-network providers, usually at a higher cost.
• Premium: The set amount that you pay for your health coverage every month.
• Premium tax credit: A tax credit that you may be eligible for to help lower your monthly premium cost. To receive the premium tax credit, you must enroll in a qualified health plan through Vermont Health Connect.
• Prior authorization/prior approval: Services that first must be approved by us before you can receive them.
• Provider: A health care professional or facility that provides services to our members.
• Qualified health plan (QHP): Health plans that have been certified as providing essential health benefits under the federal Affordable Care Act.
• Referral: A written order from your primary care provider for you to see a specialist or receive certain medical services. This may be required in certain health plans, like an HMO.
• Rehabilitation services: Services that help you regain or improve skills and functions that were lost or impaired because of illness or injury. For example, physical or occupational therapy.
• Summary of health plan payments (SHPP): This document sent to members provides an overview of the amount your provider charged for services, how much we paid, and your costs. It also breaks down the health plan’s payments and what the member owes in a table format.
• Skilled nursing care: Services from licensed nurses in your home or a nursing home.
• Summary plan description (SPD): A document that employers give to employees participating in health plans covered by the Employee Retirement Income Security Act (ERISA). It is a detailed guide to the plan’s benefits and how it works. 
• Specialist: A doctor who focuses on specific area of medicine. For example, a urologist is a specialist in diseases and conditions that affect the urinary tract.
• Summary of benefits and coverage: A standard form document that describes benefits and coverage that a health plan offers.
• Urgent care: Treatment when you want an illness or injury taken care of right away, but it’s not serious enough to need a trip to the hospital’s emergency room. There are now urgent care centers in many parts of Vermont where you can receive care without an appointment.
• Utilization management: When we evaluate the use of medical services to determine if they are appropriate for the situation. This can be done before services are provided (prior authorization) or after they are given.

We hope these explanations are helpful, but there are many other terms we didn’t include in this list. If you come across a health care term you are unfamiliar with, we encourage you to look it up in an online glossary, so that you’ll have a better understanding of how your health plan works.