Health Insurance Terminology

Glossary of Health Insurance Terms

• Allowed Amount

  • Definition: The maximum amount an insurance company will pay for a medical service.

• Beneficiary

  • Definition: The person who receives health insurance benefits.

• Advance Beneficiary Notice (ABN)

  • Definition: A form telling a patient that Medicare may not pay for a service and that they may have to pay themselves.

• Assignment of Benefits

  • Definition: Permission for insurance to pay the doctor directly instead of the patient.

• Capitation

  • Definition: A payment system where providers receive a fixed amount per patient each month.

• Coinsurance

  • Definition: The percentage of costs the patient pays after meeting the deductible.

• CMS (Centers for Medicare and Medicaid Services)

  • Definition: The federal agency that manages Medicare and Medicaid programs.

• Co-payment

  • Definition: A fixed amount a patient pays at the time of a visit or service.

• Claim

  • Definition: A request sent to an insurance company asking for payment of services provided.

• Coordination of Benefits (COB)

  • Definition: Process that determines which insurance pays first when a patient has more than one plan.

• Clearinghouse

  • Definition: A company that checks medical claims for errors before sending them to insurance companies.

• CMS-1500

  • Definition: The standard form used to bill insurance for outpatient medical services.

• Deductible

  • Definition: The amount a patient must pay before insurance starts paying.

• Dependent

  • Definition: A family member covered under another person’s insurance plan.

• Elective Procedure

  • Definition: A non-emergency medical procedure planned in advance.

• Eligibility

  • Definition: Verification that a patient has active insurance coverage.

• Exclusive Provider Organization (EPO)

  • Definition: A health plan that only covers services from doctors within its network.

• Explanation of Benefits (EOB)

  • Definition: A statement showing what insurance paid and what the patient owes.

• Fee-for-Service

  • Definition: Payment made for each individual service provided.

• Fee Schedule

  • Definition: A list showing approved payment amounts for medical services.

• Gatekeeper

  • Definition: A primary care provider who controls referrals to specialists.

• Flexible Spending Arrangement (FSA)

  • Definition: A pre-tax account used to pay medical expenses.

• Group Practice Insurance (GHI)

  • Definition: Insurance coverage provided through an employer or organization.

• Health Insurance Exchange (HIE)

  • Definition: A marketplace where individuals can compare and purchase health insurance plans.