Glossary of Health Insurance Terms (Part Two)

Exclusions: Specific conditions or circumstances for which a policy will not provide benefits.

Explanation of benefits (EOB): The statement sent to the insured by the insurance company while settling a claim. It lists services provided, amounts billed, eligible expenses, and payments made by the insurance company.

Health maintenance organization (HMO): An organization that provides health insurance through prepaid plans. The monthly premiums paid cover doctors' visits, emergency care, hospital stays, checkups, lab tests, x-rays, therapy, and surgery. The HMO contracts with hospitals, doctors, and other providers to provide healthcare services to those insured by it.

Insured: A person who has obtained health insurance coverage under a health insurance plan.

Lifetime maximum: The maximum amount of benefits a plan will pay while one is insured.

Managed care: A means to control healthcare costs while ensuring their quality. The managed care concept is used in preferred provider organizations (PPOs), health maintenance organizations (HMOs), and point-of-service (POS) plans.

Non-cancelable policy: A health insurance policy that guarantees the continuation of benefits as long as one pays the premium. It may also be called a guaranteed renewable policy.

Out-of-pocket maximum or maximum out-of-pocket expenses: The total payments for which the insured is responsible (including deductibles and coinsurance but not including premiums) under an insurance contract. Once the insured has paid this amount during a calendar year, the insurance company pays all further expenses for the rest of the calendar year.

Preexisting condition: A health problem or ailment that existed before the date one's health insurance became effective.

Preferred provider organization (PPO): An organization that provides insurance and incentives to use providers in its network. Incentives may include reduced costs, lower deductibles, and lower co-payments. Network providers agree to negotiated fees in exchange for preferred provider status because it brings them more business.

Premium: The amount paid in exchange for health insurance coverage. The beneficiary or employer pays the premium.

Primary care doctor: The first contact for healthcare. He or she may be a family physician, internist, or gynecologist. A primary care doctor monitors a patient's health, diagnoses and treats minor health problems, and makes referrals to specialists if specialized care is needed.

Provider: A provider is any person (doctor, nurse, dentist, etc.) or institution (hospital or clinic) that provides medical care.

Participating provider: A doctor, hospital, or other medical facility with which an insurance company arranges for provision of medical services or supplies to the insured at a pre-negotiated fee.

Third-party payer: Any payer for healthcare services other than the insured. This may be an insurance company, an HMO, a PPO, or the federal government.

Underwriting: The process an insurance company uses for risk assessment and to calculate the appropriate premium for a potential customer.