Health Care Benefit Basics

Insurance coverage

When it comes to health care plans no two are the same. Whether you’re getting a first job, a new job or wanting to better understand your current health care plan, having the basic terminology down can be a big help. That’s why we’ve put together a list of the some of the most commonly used terms when it comes to health care benefits.

Terms to Know

Copayment: You pay a fixed amount when a medical service is received.

Deductible: The amount that you must pay within the benefit period (usually a year) before the insurance company will take over payment.

Flexible Spending Accounts (FSA): You can set aside money from paycheck (pretax) to pay for medical expenses not covered by your plan (copay). Usually these funds have to be spent within the benefit period, or they are lost.

Indemnity Plan: You can see any medical provider. If you’ve met your deductible, this will pay for a percentage of the bill. This option is typically very expensive.

Health Maintenance Organizations (HMO): a range of health benefits for a set fee. You pay a small copay per visit at a primary care physician within the network. This primary physician would be a one stop shop for anything else medically (for example: seeing a specialist) except for an emergency.

Preferred Provider Organization Plan (PPO): an indemnity plan that is provided through a selected group of health care providers. You can go outside of the network but it will cost more.

Medical Savings Account (MSA): Pre-tax amount that you can contribute that is carried over at the end of the benefit period dedicated for out-of-pocket medical expenses.

Premium: The monthly or quarterly payments for health insurance.

Long-term Care: If you ever become ill or are unable to take care of yourself, this insurance covers the medical care, nursing home, and types of in-home care.

Disability Income Insurance: If you can’t work because of injury or illness, this will pay (usually) 60% of your income.