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Glossary of Health Insurance Terms

This list is made up of many commonly used terms but isn’t a full list. Some of these terms and definitions may be different from the ones your insurance company uses; in that case, follow your insurance company’s definition. Also, most insurance companies have a glossary like this one on their websites.

A | B | C | D | E | F | G | H | I | J | K  | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Allowed Amount

The highest amount insurance will pay for a covered drug or service. This is also called an “allowable amount,” “negotiated rate,” “eligible expense” or “payment allowance”. If your doctor charges you more than the allowed amount, you may have to pay the difference.

Ancillary Care

Supportive health services, such as x-rays, physical therapy and blood tests.

Appeal

When you ask your insurance company to change the decision they made regarding payment. Also called a “request for reconsideration.”

Balance Billing

When a doctor charges the difference between his or her fee and the allowed amount. For example, if the doctor charges $100 and the allowed amount is $70, the doctor may bill you for the remaining $30.

Brand Name Drug

A prescription medication made by a specific pharmaceutical company and known by its registered brand name.

Claim

A request for payment that you, your provider or pharmacist sends to your insurance company.

Co-insurance

A percentage of the allowed amount that you pay for a service after you have paid your deductible. For example, if the allowed amount for a drug is $100 and your co-insurance is 20 percent, you would pay $20. The insurance pays the rest of the allowed amount.

Commercial Health Insurance

A type of insurance that helps pay health-related costs. Also called “private health insurance.”

Co-payment

A fixed amount set by your insurance company that pays for a covered service. This is usually paid when you get the service. The amount can vary by type of service. Also called a “co-pay.”

Coverage Determination

This is a document from your insurance company that says the amount they will or will not pay for your drug or service. Also called “determination” or sometimes “denial notice.”

Deductible

The set amount you pay first before your insurance starts to pay for drugs or services. For example, if your deductible is $1,000, you have to pay for items and services yourself until you have paid $1,000. Once you’ve reached your deductible, then your insurance will begin to pay for the items and services at the rate stated in your plan.

Denial Notice

A coverage determination that says your insurance will not pay for your drug or service.

Durable Medical Equipment (DME)

Equipment and supplies ordered by a provider. Some examples include wheelchairs, crutches and blood testing strips for diabetics.

Emergency Medical Condition

An illness, symptom, injury or condition that is so bad that someone would typically get care for it right away.

Emergency Medical Transportation

Ambulance services for an emergency medical condition.

Emergency Room Care

Items and services you get in an emergency room at a hospital.

Emergency Services

The treatment of an emergency medical condition used to keep the condition from getting worse.

Excluded Services

Items and services not paid for by your insurance. Also called “exclusions.”

External Review

A request for an independent third party to review a denied commercial insurance appeal.

Formulary

A list of drugs covered by your insurance. Also called a “preferred drug list.”

Generic drug

A prescription drug that uses the same ingredient formula as a brand-name drug but can be made by a pharmaceutical company other than the one that registered the branded name. Most generic drugs are known by the formula name instead of the brand name.

Grievance

A complaint communicated by you to your insurance company.

Government Health Insurance Plan

Sometimes just called “government insurance” or “government plan.” The type of insurance coverage paid for by the state or federal government. This can be Medicaid, Medicare, Veterans Benefits (VA) and TRICARE.

Habilitation Services

Healthcare items and services that help a person keep, learn or improve skills and functioning for daily living. These services may include physical, occupational or speech therapy, and other services for people with disabilities.

Health Insurance Plan

The type of insurance coverage your employer, union or other group offers to you to help pay for healthcare items and services. There are commercial (private) plans and government plans. Sometimes it is just called “insurance,” “coverage” or “plan.”

Home Healthcare

Healthcare items and services a person receives at home.

Hospice Services

Comfort and support items and services for a person near the end of a terminal illness and for his or her family.

Hospitalization

Admission into a hospital for care, usually needing an overnight stay. (An overnight stay for observation could be referred to as hospital outpatient care.)

Hospital Outpatient Care

Care in a hospital that doesn’t usually need an overnight stay.

In-network Co-insurance

The percent you pay for items and services (including drugs) to a provider who has a contract with your insurance. In-network co-insurance usually costs less than out-of-network co-insurance.

In-network Co-payment

A fixed dollar amount (for example, $20) that you pay for items and services to providers who have a contract with your insurance company. In-network co-payments are usually less than out-of-network co-payments.

Medicaid

The federal government health insurance plan run by each state for low-income and disabled people.

Medically Necessary

Services or supplies needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms. These services and supplies must meet accepted standards of medicine.

Medicare

The federal government health insurance plan for people aged 65 and older. It also covers certain disabled people and people with end-stage renal disease.

Medicare Part D

The part of Medicare insurance that helps pay for prescription drugs.

Medicare Part D Donut Hole

The “Donut Hole” is a gap in coverage that people with Medicare reach when they have spent a certain amount on their drugs. People with Medicare Part D in the Donut Hole receive a 50 percent discount on covered brand-name drugs.

Medicare Reconsideration Notice

The document that communicates the decision on a Level 2 Medicare Part D appeal.

Network

The providers, facilities and suppliers that your insurance company has a contract with to provide items and services.

Notice of Disagreement (NOD)

The initial written request made to your local or regional  Veterans office to appeal a denial.

Non-preferred Provider

A provider who is not contracted with your insurance company to give services at the contracted insurance rates. The cost is usually more to use a preferred provider.

Out-of-network Co-insurance

The set percent you pay, after you have paid your deductible, for items and services (including drugs) or to a provider that doesn’t have a contract with your insurance company. Out-of-network co-insurance usually costs more than in-network co-insurance.

Out-of-network Co-payment

The set dollar amount you pay, after you have paid your deductible, for items and services (including drugs) or to a provider that doesn’t have a contract with your insurance company. Out-of-network co-insurance usually costs more than in-network co-insurance.

Out of pocket

Any costs not covered by your insurance, such as co-pays, co-insurance, deductibles and fees that you pay for items and services.

Out of pocket Limit

Once this amount is paid during a policy time frame (usually a year), your insurance will start to pay the full amount allowed.

Pharmacy Benefit

The part of health insurance that helps pay for drugs. Also called “prescription drug coverage.”

Physician Services

Services a licensed medical physician (M.D., medical doctor, or D.O., doctor of osteopathic medicine) gives or coordinates.

Prior Authorization

The set insurance approval preview process needed before you receive items and services (except in an emergency). This includes certain medical procedures, prescription drugs or durable medical equipment. The process usually confirms that the service is needed (medically necessary). This is also called “preauthorization,” “prior approval,” “precertification” or “PA.”

Provider

The healthcare professional who provides you with the service. Some examples include doctors, dentists, surgeons and therapists.

Preferred Drug List

A list of cost-effective medications covered by your insurance. Sometimes called a “formulary.”

Preferred Provider

A provider who has a contract with your insurance company to give services at a discount. Your insurance may also have “participating providers” but the discount may not be as high.

Premium

The amount that you pay monthly, quarterly or yearly to have insurance.

Prescription Drug Coverage

The part of health insurance that helps pay for drugs. Also called “pharmacy benefits.”

Prescription Drugs

Drugs that, by law, require a prescription.

Primary Care Physician

A physician (M.D., medical doctor, or D.O., doctor of osteopathic medicine) who directly provides or coordinates healthcare services for a patient.

Primary Care Provider

A licensed physician (M.D., medical doctor, or D.O., doctor of osteopathic medicine), nurse practitioner, clinical nurse specialist or physician assistant who provides or helps a patient get healthcare services.

Private Insurance Plans

The type of insurance coverage your employer, union or other group offers to you to pay for your healthcare items and services. This is your specific insurance coverage. Sometimes called “insurance” or “plan.”

Private Health Insurance

A type of insurance that helps pay health-related costs. Also called “commercial health insurance.”

Provider

A licensed physician (M.D., medical doctor, or D.O., doctor of osteopathic medicine), healthcare professional or healthcare facility.

Rehabilitation Services

Healthcare services that help a person keep, get back or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt or disabled. These services may include physical, occupational or speech therapy and other services for people with disabilities.

Skilled Nursing Care

Services from licensed nurses in your own home or in a nursing home.

Skilled care services

Services from technicians and therapists in your own home or in a nursing home.

Specialist

A healthcare professional who focuses on a specific area of medicine or healthcare.

Statement of the Case (SOC)

The document sent by the local  Veterans office denying your initial request for appeal. (The initial request is also called a Notice of Disagreement or NOD.)

Step Therapy

An insurance process in which other drugs or services must be tried first to see if they work before you will be approved for an often more expensive or newer drug or service.

TRICARE

A specific government insurance plan for military personnel, military retirees and their dependents, and some members of the Reserve. TRICARE used to be called Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

UCR (Usual, Customary and Reasonable)

The amount paid for a service in a geographic area based on what is usually charged for the same or similar service.

Urgent Care

Care for an illness, injury or condition serious enough that someone would typically get help right away, but not so bad that they would go to the emergency room.

Veterans Health Benefits

Government health insurance benefits offered to U.S. veterans.


For additional glossaries of healthcare and insurance terms, visit your own insurance company’s website or HealthCare.gov.

Additional sources:

Department of Labor

Centers for Medicare and Medicaid Services

 

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