Glossary of Health Care CoverageTerms

Co-insurance or co-pay. This is the amountyou pay each time you use a health care service. It can either bea fixed dollar amount or a percentage of the actual cost.

Deductible. This is the amount you must pay first forcovered benefits before your health care plan begins paying forhealth care services.

Formulary. A list of approved drugs for the health planthat caregivers are either encouraged or required to use.

Managed Care. An insurance plan that prescribes whichmedical providers may be used by patients. Financial penalties areimposed on patients who do not use these providers.

Maximum dollar limit. Plans usually have a ceiling onthe amount they will pay one individual or one family for a setperiod of time (per year or per lifetime0 or for a single illness.These limits vary widely from plan to plan, so you should checkthis carefully.

"Out of plan" penalties. doctors and hospitalsthat are not affiliated with the plan are called "out ofplan." When a plan enrollee gets treatment from theseoutsiders, the cost or a portion of the cost may not be covered byinsurance.

Out of pocket maximum. This is a dollar limit that anindividual or family will have to pay before the plan will fullycover the costs of treatment.

Pre-certification. nearly all managed care plans requiresurgeries, medical testing, or other procedures to be approved inadvance by the insurer. It is often the patient's responsibilityto make the phone calls necessary to obtain pre-certification.

Therapeutic drug substitution. This refers to a practicethat requires druggists to change your prescription to a lessexpensive medication according to a list issued by the managedcare plan. A chemically different but therapeutically similar drugis substituted. Pharmacists are not required to inform your doctorprior to the switch. This is different than generic substitution,which involves compounds that are almost identical chemically.