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Health Plan Terms:
EPO. An Exclusive Provider Organization (EPO) is a benefit plan that allows enrolled members to use the services of “in-network” health care providers. Referrals are not required to access in-network benefits. There are minimal co-payments and deductibles, which makes an EPO a lower-cost health care option for most employees.
HMO. A Health Maintenance Organization (HMO) is a benefit plan that allows enrolled members to use the services of “in-network” health care providers. Members choose a primary care physician (PCP) who will take care of most health care needs. The PCP refers patients to in-network specialists. HMO members usually have lower out-of-pocket health care expenses. There are minimal co-payments, no deductibles, and virtually no claim forms. There is no coverage for out-of-network health care providers, or for specialists seen without a referral.
Indemnity Plan. An indemnity or traditional health insurance plan is one in which employees choose whatever health care provider they like. There is no requirement that one chooses a primary care physician (PCP) or uses a particular network of providers. This high degree of flexibility comes with higher out-of-pocket costs and more paperwork, since claim forms must be sent to the insurance company for payment.
POS. A Point-of-Service (POS) is a benefit plan that allows enrolled members to see health care providers both “in-network” and “out-of-network”. Members are required to choose a primary care physician (PCP) who will take care of most health care needs. PCP services are rendered without a deductible, as are services of in-network specialists. Most services require a co-payment. Services rendered by out-of-network health care providers are subject to deductibles and higher co-payments. Payments to out-of-network health care providers are not fully covered by the plan.
PPO. A Preferred Provider Organization (PPO) is a benefit plan that allows enrolled members to see health care providers both “in-network” and “out-of-network”. Members are not required to choose a primary care physician (PCP), and can see specialists in the network without a referral. PPOs may require that members pay an annual deductible before the insurance carrier begins to pay for services. There may also be co-payments for certain services, and members may be required to pay a certain percentage of the total charges for their medical bills. Services rendered by out-of-network health care providers are subject to higher deductibles and lower co-insurance.
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Insurance Terms:
Co-insurance. Co-insurance is a term describing the way in which the insurer and the employee share in the costs of a medical payment. For example, with 80% co-insurance the insurer would pay 80% of the total claim and the employee would pay 20%.
Co-payment. Co-payment refers to the flat dollar amount paid by the employee for the services of a health care provider. For example, a plan with a $20 co-pay on office visits requires the employee to pay the first $20 on any office visit and the insurer to pay the rest. Different co-pay amounts may apply to specialist visits, emergency room treatments, prescription drugs, etc.
Deductible. A deductible is the flat dollar amount an employee is required to pay each year toward total medical expenses before the insurer starts to pay for medical claims. For example, a $1,000 deductible may apply each year for the expenses incurred for an individual, and $2,000 for the family.
Maximum Out-of-Pocket. This is the maximum amount of money that an individual or a family would pay in deductibles and co-insurance for all covered health care expenses in a plan year. It puts a cap on the employee’s share of the expenses incurred. This figure may serve as a basis for establishing a health savings account.
Pre-Existing Condition. Any health condition of a person to be insured that existed prior to the effective date of a new plan. For example, if an employee has asthma today and is changing to a new health plan, the asthma would be a pre-existing condition. There are special rules that impact coverage for pre-existing conditions. Be sure to contact your benefits plan administrator to ask about them before switching plans.
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