MEDICAL GLOSSARY
Allowed Amount: Maximum amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance” or “negotiated rate.” If your provider charges more than the allowed amount, you may have to pay the difference (see Balance Billing) Annual Maximum Benefit: A cap on the benefits your insurance company will pay in a year while you’re enrolled in a particular benefit plan. After an annual limit is reached, you must pay all associated health care costs for the rest of the year. Prescription Drug Formulary: A list of prescription drugs covered by a prescription drug plan. Also called a drug list. Coinsurance: The percentage of a covered expense you must pay after you meet your deductible, but before you reach the annual out-of-pocket maximum. The remaining percentage is paid by the health plan. Balance Billing: When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A provider who balance bills is typically known as an out-of-network provider. An in-network provider cannot balance bill you for covered services. Deductible: The amount you must pay each year for medical expenses before the medical plan begins to pay benefits. Copayment: The per-service fixed fee you pay for certain covered medical expenses. Domestic Partnership: Two people of the same or opposite sex whose relationship has been recognized as legally binding by a state or local government. Guarantee Issue Amount: The amount of coverage you can be automatically approved for. If you apply for more coverage than the guarantee issue amount, you will have to complete an Evidence of Insurability form, and be approved for your coverage amount. Usually only available at your first enrollment opportunity. In-Network: Providers who contract with your insurance carrier. In-network coinsurance and copayments usually cost you less than out-of-network providers.
Out-of-Network: Providers who don’t contract with your insurance carrier. Out-of-network coinsurance and copayments usually cost you more than in-network coinsurance. In addition, you may be responsible for anything above the allowed amount (see Balance Billing). Out of Pocket Maximum: The limit the medical plan puts on the amount of money you have to pay each year out of your pocket for eligible medical expenses. Once you reach the limit, the plan will pay 100% of your eligible expenses for the rest of the year. Prior Authorization: Approval from a health plan that may be required before you get a service or fill a prescription in order for the service or prescription to be covered by your plan. Preventive Care: Services available to you, such as screenings, vaccinations, and counseling, that can help you avoid illness.
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