Glossary: Some Basic Health Insurance Coverage Terms

You're bound to find that shopping for health insurance coverage is a much easier process when you speak the language. Here are a few common terms you'll want to be familiar with:

Coinsurance: The percentage of your medical costs you'll have to pay after satisfying any applicable deductibles.

Co-payment: If you're insured under an HMO plan, a co-payment is the amount you'll have to pay each time you visit a health insurance provider.

Deductible: If you're insured under an indemnity plan, the deductible is the amount you'll have to pay towards your medical expenses before the insurance company begins to cover your claims.

Disability insurance: A type of health insurance coverage that pays you when you are unable to work for an extended period because of an injury or other medical condition. Coverage can be either long-term or short-term.

Indemnity plan: A type of health insurance coverage that lets you choose your own doctors and pays for your medical expenses--either totally, in part, or up to a specified amount per day for a specified number of days. This is also known as a reimbursement plan.

Long-term care insurance: A type of health insurance that provides for skilled, intermediate, and custodial care in a private home, adult daycare setting, assisted-living facility, or nursing home.

Major medical insurance: A type of health insurance coverage that protects you against losses from catastrophic illness or injury. It provides extremely broad coverage with a very high maximum benefit.

Managed care: A type of health insurance coverage that includes health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point of service (POS) plans. All of these involve an arrangement between the insurer and a selected network of doctors, hospitals, and other healthcare providers.

Preexisting condition: A medical condition that existed before your health insurance policy became effective. Most health insurance coverage plans require a waiting period of three months to one year before a preexisting condition will be covered.

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