Helping Oregon's Local Business Owners Find the Best Healthcare Plans for Their Companies and Employees

Glossary of Insurance Terms

Definitions for Common Insurance Terms


This is cost sharing of medical expenses between you and the insurance company after the deductible has been met. Example: If the health plan has 20% co-insurance, once the deductible is met, you pay 20% and the insurance company pays the remaining 80% of the bill until your out of pocket maximum for the year has been reached.


The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees and their families who lose their health insurance benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances. This could include voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end. If an company had health benefits and then goes out of business and closes its doors, there will be no extension of coverage because the health plan no longer exists.


A set dollar amount you pay each time you receive medical care such as $30 for an office visit, after which the insurance company pays the balance of the medical charges. Example: If your doctor charges $150 for an office visit and your health plan has a $30 copay, you pay $30 and the insurance company pays the remaining $120.


The amount of money you must pay (beginning each calendar year) before your health insurance plan starts to pay for covered expenses.

Example: If you had a $1,000 deductible plan and you were in the hospital for a broken arm, you would pay the first $1,000 and then the insurance company would pay a percentage of the bill (depending on the amount of your co-insurance).


The Heath Insurance Portability & Accountability Act of 1996 (HIPAA) was passed by Congress to 1) improve portability and continuity of health care coverage for both groups and individuals, 2)  to combat waste, abuse and fraud in the health insurance industry, 3) reduce costs and administrative burden by improving efficiencies and effective of the system (standardization of electronic data) and 4) to ensure protecting the privacy of personal health records by protecting the security and confidentiality of health care information The Privacy Rule is working hard to regulate the sharing of personal health information (PHI) without making it a deterrent for accessing healthcare facilities.


A Health Maintenance Organization (HMO) is a type of health plan where hospitals, doctors and other providers have contracted to provide a form of health care coverage. Unlike traditional insurance, an HMO covers only care rendered by those doctors, hospitals and professionals who have agreed to treat patients in accordance with the HMO’s guidelines. The providers, in return, get a lot of patients. HMOs require you to choose a primary care physician who is responsible for managing and coordinating your care. You will not be reimbursed for any amount of your care if you see physicians outside of the HMO network (unless in certain emergency or out of area situations).


A network is a list of doctors, hospitals and other providers that have contracted with an insurance company where the fees have been pre-negotiated. If you have a health plan that utilizes a network and you go outside of the network to see a physician, you will have to pay substantially higher than if you had used providers that were in the network. The insurance company will pay a portion of the non-network bills, but the balance you will have to pay will be higher.

Open Enrollment

Open enrollment refers to the period of time during when all members of your group health insurance plan have the opportunity to enroll in your medical, dental, life, disability benefit programs. During an open enrollment period, insurance carriers accept all applicants of the group without underwriting or evidence of insurability. It’s important to enroll during the open enrollment period because it is generally only held once a year. If you miss your company’s annual open enrollment, you likely will not be able to enroll in your employer-sponsored health insurance program until the following year. There are a few qualifying events that are the exception such as birth of a baby, marriage or divorce.

Out of Pocket Maximum

This is the maximum you will have to pay out of pocket towards medical expenses in any given calendar year. After that, your expenses are covered at 100% (excluding prescriptions and copays).


A preferred provider organization (PPO) is a group of doctors, hospitals and health care providers who have contracted with a carrier to provide care at reduced rates to its members. PPOs offer members more flexibility overall than an HMO. A vast amount of health care services are covered in exchange for a monthly premium. A PPO plan allows you to see any doctor of your choice allowing you more options and control over who you see and where you receive services. Visits are more affordable if you stay within your PPO network. PPO plans offer services at a reduced rate because of the increased member volume inside the network, so you may only pay a small co-pay. Unlike other types  of managed care, you will still receive a portion of reimbursement if you choose an out-of-network doctor.

Pre-Existing Condition

These are health problems that exist or have existed prior to applying for a heath policy. Example: If you have had cancer at any time during your life, then cancer would be considered a pre-existing condition. Most insurance companies only look back as far as ten years. Some common examples: Alcoholism and drug abuse, heart attack or other heart problems, diabetes, cancer, obesity or pregnancy.

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