Meaning of Health Insurance Terms

Consumer-directed health plans: These plans are designed to increase consumer awareness about costs by giving them incentives to consider costs when making health care decisions. These plans usually have a high deductible paired with a consumer-controlled savings account for health care services.

Exclusive provider organization (EPO): Similar to a preferred provider organization in administration, structure, and operation, it does not cover care from out-of-network providers.

Flexible spending account: Allows you to save pretax dollars from your paycheck for medical and sometimes other expenses, such as dependant care. If you don’t use the money by the end of the year, you lose it.

High-deductible health plan: A plan with a deductible high enough to meet federal requirements for favorable tax treatment for contributions made to a health savings account.

Health maintenance organization (HMO): A system that provides comprehensive medical services usually in return for a fixed, prepaid fee.

Health savings account (HSA): Like a flexible spending account, it allows you to save pretax dollars for health care expenses. But unlike the flexible spending account, you can continue saving for years.

Lifetime benefit maximum: A cap on how much money insurers will pay toward the cost of health care services over the lifetime of the insurance policy.

Minimum creditable coverage: The minimum level of benefits that must be included in a health insurance plan in Massachusetts in order for an individual to be considered insured. Standards were set as part of that state’s 2006 health law.

Out-of-pocket costs: Health care costs such as deductibles, copayments, and co-insurance - but not premiums - that are not covered by insurance.

Out-of-pocket maximum: A yearly cap on the amount individuals are required to pay out-of-pocket, excluding premiums.

Open enrollment: The time of year when an individual can enroll in a health benefit plan without the restrictions that may otherwise be imposed.

Premium: The amount paid, often monthly, for health insurance. The cost may be shared between employers and employees.

Point-of-service (POS) product: An option that allows members to choose at the time they receive medical services whether they will go to a provider in the plan’s network or seek medical care outside the network.

Preferred provider organization (PPO): A PPO plan that provides incentives for members to use designated providers, but which also covers services from out-of-network providers.

Wellness programs: Employment-based programs to promote health and prevent chronic disease. Goals include reducing health care costs, improving employee health and productivity, and reducing absenteeism caused by illness.