The portion of eligible expenses that plan members are responsible for paying, most often after the deductible is met. Co-insurance is usually determined as a percentage of the total provider's actual charge, or the allowed amount.

Consumer-Directed Health Plans (CDHP)

Consumer-directed health plans typically offer reduced premium costs, in exchange for a higher deductible. In addition, many provide incentives and tools to manage both health care decisions and the costs associated with them. A typical consumer-directed plan also may include:


The amount that a plan member must pay the provider at the time of service. Also called a copay, this amount varies depending on the specifics of a given health plan contract.

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The dollar amount that a member must pay for health care services before a health plan will cover eligible services. For example, if a member's deductible is $500, the member will pay that amount, out of pocket, before the health plan will cover any eligible services.

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An accident or sudden illness that an ordinary layperson believes needs to be treated right away or it could result in loss of life, serious medical complications, or permanent disability. Important: If you believe that you are having a life-threatening medical emergency, call 911 or your local emergency number and seek medical help immediately.

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Generic drug

A prescription drug that has the same active-ingredient formula as a brand-name drug. A generic drug is known only by its formula name and its formula is available to any pharmaceutical company. Generic drugs are rated by the Food and Drug Administration (FDA) to be as safe and as effective as brand-name drugs and are typically less costly.

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Health Maintenance Organization (HMO)

An organization that arranges a wide spectrum of health care services which commonly include hospital care, physicians' services and many other kinds of health care services with an emphasis on preventive care.

Health Savings Account (HSA)

A financial vehicle in which members can pay for health costs through a fully insured, tax-exempt savings account. Employees or employers or both fund the account. An HSA is subject to regulations mandated by the federal government that limit coverage to IRS section 213(d) medical coverage. All unused amounts contributed by the employee carry over indefinitely during a participant's lifetime.

Health plan

A term that has different meanings depending upon the context. "Health plan" can be used to mean an HMO, a health benefits plan provided by an employer to its employees, or a health benefits plan offered to employers by an insurer or third party administrator.

Health reimbursement arrangement (HRA)

A financial vehicle in which a member may be reimbursed for covered health expenses by his or her employer, up to a certain annual amount. Some employers allow employees to carry HRA balances over from one year to the next, however, most HRA balances are not portable, they revert to the company if the employee terminates his or her health coverage or employment.


An institution whose primary function is to provide diagnostic and therapeutic inpatient services, for a variety of surgical and non-surgical medical conditions. In addition, most hospitals provide outpatient services, including emergency care.

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ID card

Identification cards are provided to all participants for proper identification under their group health plan. ID card information helps providers verify patient eligibility for coverage.

In-Network Provider

Any health care provider (physician, hospital, etc.) that belongs to a health plan's network. Using an in-network provider will usually cost members less in copayments or co-insurance.

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Mail order/mail service pharmacy

A pharmacy that dispenses maintenance medications through the mail. Mail order or mail service pharmacies usually charge members the same copayment for a longer-term supply of medications (typically 90 days) as a retail pharmacy charges for a standard 30-day supply.

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A group of health care providers under contract with a managed care company within a specific geographic area.

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Out-of-Network Provider

Any health care provider that does not belong to one of our provider networks. Members can use their benefits for out-of-network expenses, but miss out on in-network discounts.


Copayments, deductibles, or fees paid members for health services or prescriptions.

Out-of-Pocket Maximum

The most a plan member will pay per year for covered health expenses before the plan pays 100 percent of covered health expenses for the rest of that year. Members still pay copayments after the maximum has been reached.

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Preferred Provider Organization

A type of health plan with a network of providers who are "preferred", that is, a member can visit these preferred in-network physicians and don't need to choose a primary care physician. In some PPOs, members can also visit non-preferred, or out-of-network providers, but may have to pay a higher fee or copayment.

Prescription drug

A drug that has been approved by the Federal Food and Drug Administration as dispensable only with a licensed physician's prescription.

Primary Care Provider (PCP)

A provider, usually a family or general practitioner, internist, or pediatrician, who provides a broad range of routine medical services and refers patients to specialists, hospitals, and other providers as necessary. Under some benefits plans, a referral by the primary care provider is required to obtain services from other providers. Each covered family member chooses his or her own PCP from the network's providers.

Provider Network

A panel of providers contracted by a health plan to deliver medical services to the enrollees.

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If a PCP determines that an individual requires specialized care, the PCP may "refer" that person to an appropriate specialist. A referral is often required by a managed care plan before the plan will cover certain services.

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