Here are the answers to questions we get with some frequency. If someone isn’t available to answer your question, look here. It is likely that you’ll find the answer below.

Q. What is a deductible and how does it work?

A. Typically, a deductible is the amount of money you must pay each year before your health insurance plan starts to pay for covered medical expenses. For example, with a $100,000 heart surgery bill, you would be responsible for paying the first $1,000. After this $1,000 deductible is met, the insurance company will pay a percentage of the bill in what is called the coinsurance.

Q. What is coinsurance?

A. Coinsurance is a cost-sharing requirement where you are responsible for paying a certain percentage and the insurance company will pay the remaining percentage of the covered medical expenses after your deductible is met. For a health insurance plan with 20% coinsurance, once the deductible is met, the insurance company will pay 80% of the covered expenses while you pay the remaining 20% until your out-of-pocket limit is reached for the year. Typically, the out-of-pocket limit is the maximum amount you will pay out of your own pocket for covered medical expenses in a given year. For a plan with a $2,000 out-of-pocket limit, you will pay a $1,000 deductible and $1,000 coinsurance while the insurance company covers the remaining $98,000 of the heart surgery bill. Even if you are hospitalized again in the same year, the insurance company will pay 100% of your covered expenses within the limit of the lifetime maximum.


Q. What are co-pays?

A. A co-payment or co-pay is a specific flat fee you pay for each medical service, such as $30 for an office visit, after which the insurance company often pays the remainder of the covered medical charges. Let’s say you are not feeling well and went to see your doctor who charges $200 for the office visit. If your insurance plan has an office visit co-payment of $30, then you will only be responsible for the $30 and the insurance company will cover the remaining $170.


Q. What is “Out-of-Pocket-Maximum?”

A. This is the amount of money one would pay out of their own pocket towards their medical expenses in any given year. An out of pocket expense can refer to how much the co-payment, coinsurance, or deductible is. Also, when the term annual out-of-pocket maximum is used, that is referring to how much the insured would have to pay for the whole year out of their pocket, excluding premiums. Usually, your maximum out-of-pocket is never more than a couple of thousand dollars over and above your chosen deductible.


Q. What is a network?

A. A network is a list of doctors, hospitals and other providers that have contracted, or agreed, with an insurance company to do business with the insurance company. The providers fees have been pre-negotiated, which means that the insurance company will not necessarily pay the doctor or hospital what your actual medical bills are, but will pay a lower amount. For example, when you have a gall bladder removed at a hospital, the hospital’s charges, if you did not have health insurance, might be $10,000. But under the network pre-negotiated amount, the hospital may only receive $4,000 as payment in full. This saves you and the insurance company money. If you have a health insurance plan that utilizes a network and you use providers that are not part of the network, the amount of money that you would have to pay for those services will be considerably higher than if you had used providers that were in the network. Your insurance company will probably pay some part of those non-network bills, but you’ll be paying a whole lot more. Always stay in your network if possible.



Q. What’s the difference between a Primary Care Physician (PCP) and a specialist?

A. A Primary Care Physician, or PCP, is the doctor you would go to on a regular basis, such as when you’re simply not feeling well, or have an ear ache or the flu. A specialist is a doctor that your PCP might refer you to if the problem you have requires a doctor with more experience in a certain area. For example, if you contacted your PCP complaining about chest pains, your PCP would most probably refer you to a heart doctor (a cardiologist) who would have more advanced equipment and training to help you.


Q. What is a HMO?

A. A health maintenance organization (HMO) is a type of Managed Care Organization that provides a form of health insurance coverage that is fulfilled through hospitals, doctors, and other providers with which the HMO has a contract. Unlike PPO health insurance, care provided in an HMO generally follows a set of care guidelines provided through the HMO’s network of providers. Under this model, providers contract with an HMO to receive more patients and in return usually agree to provide services at a discount. When you choose to become insured under an HMO plan, you must choose a doctor (who is contracted by the insurance company and called a PCP, or Primary Care Physician) and see that doctor for all of your health issues. If you end up needing to see a specialist, you’ll need your PCP first and get a referral from him or her to see the specialist.


Q. What is a PPO?

A. A Preferred Provider Organization is a form of managed care closest to an indemnity plan. A PPO negotiates arrangements with doctors, hospitals and other providers who accept lower fees from the insurer for their services. As a result, your cost-sharing will be lower than if you go outside the network of providers.

If you go to a doctor within the PPO network, you will pay a co-payment for certain services, such as $20 for a doctor and then your PPO insurance policy will pay the rest of the doctor’s charges, no matter what they really amount to.

Another characteristic of PPOs is the ability to make self-referrals. PPO plan members can refer themselves to doctors of their choice, including specialists, as long as those providers are also part of your PPO network. With a PPO plan, you are allowed to see providers that are NOT members of the network, but in this case, your insurance company will only pay some of those charges, leaving you to pay the balance. If you have a PPO plan, in order to make it work well for you, you should always seek medical care from members of the PPO.


Q. What is a HSA?

A. HSAs are confusing to most people, because the term HSA can be used in two ways. Some people call their HSA-qualifying health insurance plan an HSA. That phrase is actually incorrect. What those people actually have is an IRS-recognized qualifying high-deductible health insurance policy. The policy ITSELF is not an HSA, it’s simply a health insurance policy with deductibles that qualify you to legally open an HSA (or Health Savings Account) which is very much like an IRA. One may not open an HSA at a bank or other financial institution unless one has the qualifying high deductible health insurance policy. The second way people use the term HSA relates to the actual financial instrument known as the HSA, or Health Savings Account, which is recognized by the IRS in much the same way an IRA is recognized. If one has the accompanying HSA-qualified health insurance plan, one may also have an HSA. You are not required to open an HSA and put money into it if you have the insurance plan, but lots of people elect to go with the qualifying health plan simply because it allows them to sequester the HSA deposit amounts. You’re allowed to put up to 100% of your deductible amount into an HSA account annually, but you don’t have to. You don’t even have to open an HSA account.


Q. What is a long term care plan?

A. Long term care plans (sometimes referred to as nursing home plans or home health care plans) pay a fixed daily dollar amount if you spend time in a nursing home or need extended home health care. Health insurance plans do not normally offer this type of coverage. Many people think that Medicare will pay these expenses, but it does not. Medicare will pay for a very short nursing home stay, but if you are confined in a nursing home for months or even years, only a long term care policy (or cash) will cover these expenses. In Arizona, a typical nursing home stay costs approximately $70,000 per year.


Q. What is COBRA?

A. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most employers with group health plans to offer employees the opportunity to continue temporarily their group health care coverage under their employer’s plan if their coverage otherwise would cease due to termination, layoff, or other change in employment status (referred to as “qualifying events”). The qualifying event requirement is satisfied if the event is the death of a covered employee; the termination (other than by reason of the employee’s gross misconduct), or a reduction of hours, of a covered employee’s employment; the divorce or legal separation of a covered employee from the employee’s spouse; a covered employee becoming entitled to Medicare benefits under Title XVIII of the Social Security Act; or a dependent child ceasing to be a dependent child of the covered employee under the generally applicable requirements of the plan and a loss of coverage occurs.

Health Insurance Glossary

Certificate of Creditable Coverage

A document provided by your health plan that lets you prove you had coverage under that plan. Certificates of creditable coverage will usually be provided automatically when you leave a health plan. You can obtain certificates at other times as well. See also Creditable Coverage.


Stands for the Consolidated Omnibus Budget Reconciliation Act, a federal law in effect since 1986. COBRA permits you and your dependents to continue in your employer’s group health plan after your job ends. If your employer has 20 or more employees, you may be eligible for COBRA continuation coverage when you retire, quit, are fired, or work reduced hours. Continuation coverage also extends to surviving, divorced or separated spouses; dependent children; and children who lose their dependent status under their parent s plan rules. You may choose to continue in the group health plan for a limited time and pay the full premium (including the share your employer used to pay on your behalf). COBRA continuation coverage generally lasts 18 months, or 36 months for dependents in certain circumstances.

Continuous Coverage

Generally, health insurance coverage that is not interrupted by a break of 63 or more consecutive days. Employer waiting periods and HMO affiliation periods do not count as gaps in health insurance coverage for the purpose of determining if coverage is continuous. See also Affiliation Period, Creditable Coverage, Fully Insured Group Health Plan, HMO, Small Group Health Plan, Waiting Period.


Your right, when leaving a fully insured group health plan, to convert your policy to individual health insurance. There are rules about what conversion policies must cover and what premiums can be charged. See also COBRA, Fully Insured Group Health Plan, and HMO.

Creditable Coverage

Health insurance coverage under any of the following: a group health plan; individual health insurance; Medicare; Medicaid; CHAMPUS (health coverage for military personnel, retirees, and dependents); the Federal Employees Health Benefits Program; Indian Health Service; the Peace Corps; state health insurance high risk pool, as well as certain coverage under state programs; policy or contract including short-term health insurance issued to an eligible individual; or policy issued to bona fide association members. See also Continuous Coverage, Group Health Plan, Individual Health Insurance.

Enrollment Period

The period during which all employees and their dependents can sign up for coverage under an employer group health plan. Besides permitting workers to elect health benefits when first hired, many employers and group health insurers hold an annual enrollment period, during which all employees can enroll in or change their health coverage. See also Group Health Plan, Special Enrollment Period.

Family and Medical Leave Act (FMLA)

A federal law that guarantees up to 12 weeks of job-protected leave for certain employees when they need to take time off due to serious illness, to have or adopt a child, or to care for another family member. When you qualify for leave under FMLA, you can continue coverage under your group health plan.

Fully Insured Group Health Plan

Health insurance purchased by an employer from an insurance company. Fully insured health plans are regulated by state governments. See also Self-Insured Group Health Plans.

Genetic Information

Includes information about family history or genetic test results indicating your risk of developing a health condition. A health plan cannot consider pre-existing (and therefore exclude coverage for) a condition about which you have genetic information, unless that health condition has been diagnosed by a health professional.

Group Health Plan

Health insurance (usually sponsored by an employer, union or professional association) that covers at least two employees, or the self-employed. See also Fully Insured Group Health Plan, Self-Insured Group Health Plan.

Health Insurance (or health plan)

In this guide, the term means benefits consisting of medical care (provided directly or through insurance or reimbursement) under any hospital or medical service policy, plan contract, or HMO contract offered by a health insurance company or a group health plan. It does not mean coverage that is limited to accident or disability insurance, workers compensation insurance, liability insurance (including automobile insurance) for medical expenses, or coverage for on-site medical clinics. Health insurance also does not mean coverage for limited dental or vision benefits to the extent these are provided under a separate policy.

Health Plan Year

That calendar period during which your health plan coverage is in effect. Many group health plan years begin on January 1, while others begin in a different month.

HMO, or Health Maintenance Organization

Health maintenance organization. A kind of health insurance plan. HMOs usually limit coverage to care from doctors who work for or contract with the HMO. They generally do not require deductibles, but often do charge a small fee, called a copayment, for services like doctor visits or prescriptions. If you are covered under an HMO, the HMO might require an affiliation period before coverage begins. See also Affiliation Period.

Individual Health Insurance

Policies for people not connected to an employer group. Individual health insurance plans are regulated by state governments.


Large Group Health Plan Onee with more than 50 eligible employees.

Late Enrollment

Enrollment in a health plan at a time other than the regular or a special enrollment period. If you are a late enrollee, you may be subject to a longer pre-existing condition exclusion period. See also Special Enrollment Period.

Managed Care Plans

A kind of health insurance plan. Like an HMO, managed care plans can limit coverage to health care provided by doctors or hospitals who work for or contract with them – also called “network” providers – and therefore may limit enrollment to those people who live within a particular coverage area. Managed care plan may require you to get permission (a “referral”) from your family doctor before you get care from a specialist in their network. Some managed care plans will cover your care at a lower rate if you go to a non-network provider or if you get specialty care without a referral. See also HMO.


A program providing comprehensive health insurance coverage and other assistance to certain low-income residents. All states have Medicaid programs, though eligibility levels and covered benefits will vary.

Modified Community Rating

A requirement applicable to some group plans that requires that the rate for each policy not vary due to the health status of those who buy that health insurance. Premiums can vary based on age, gender, income, and by county, as well as by health plan option and family status.


The amount an individual pays in exchange for health coverage. An individual’s employer sometimes pays a portion of this amount.

Self-Insured Group Health Plans

Plans set up by employers who set aside funds to pay their employees health claims. Because employers often hire insurance companies to run these plans, they may look to you just like fully insured plans. Employers must disclose in your benefits information whether an insurer is responsible for funding, or for only administering the plan. If the insurer is only administering the plan, it is self-insured. Self-insured plans are regulated by the U.S. Department of Labor.

Small Group Health Plans

Plans with at least 2 but not more than 50 eligible employees, or plans with at least one (self-employed) individual but not more than 50 employees.

Special Enrollment Period

A time, triggered by certain specific events, during which you and your dependents must be permitted to sign up for coverage under a group health plan. Employers and group health insurers must make such a period available to employees and their dependents when their family status changes or when their health insurance status changes. Special enrollment periods must last at least 30 days. Enrollment in a health plan during a special enrollment period is not considered late enrollment. See also Late Enrollment.


Supplemental Security Income (SSI)

A program providing cash benefits to certain very low income disabled and elderly individuals. When you qualify for SSI, you generally also qualify for Medicaid. In addition, Medicaid coverage often continues for a limited time if your income increases so that you no longer qualify for SSI. See also Medicaid.

Temporary Assistance for Needy Families (TANF)

A program that provides cash benefits to low income families with children. When you qualify for TANF, you generally also qualify for Medicaid. In addition, Medicaid coverage often continues for a limited time or longer if you no longer qualify for TANF. See also Medicaid.

US Department of Labor

A department of the federal government that regulates employer provided health benefit plans. You may need to contact the Department of Labor if you are in a self-insured group health plan, or if you have questions about COBRA or the Family and Medical Leave Act. See also COBRA, Family and Medical Leave Act.

Waiting Period

The time you may be required to work for an employer before you are eligible for health benefits. Not all employers require waiting periods. Waiting periods do not count as gaps in health insurance for purposes of determining whether coverage is continuous. If your employer requires a waiting period, your pre-existing condition exclusion period begins on the first day of the waiting period. See also Pre-existing Condition Exclusion Period.


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