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Financial Literacy - Insurance
Insurance toolkit
Glossary terms, calculators, work sheets and lots of strategies are provided to help you comprehend insurance.
Understanding insurance needs

Glossary of health insurance terms

5. Federal Insurance Contributions Act -- The Federal Insurance Contributions Act, or FICA, consists of payments to the Social Security retirement supplement system and the Medicare hospital insurance program. A tax for each component is levied on employers, employees and certain self-employed individuals. These taxes are taken out of your paycheck separately from your income taxes.

6. Flexible spending account -- A plan to which you contribute money each pay period to cover additional medical insurance coverage or child care. Under this plan, you then receive medical insurance and child care tax-free.

7. Group insurance -- Insurance coverage usually issued to an employer under a master policy for the benefit of employees.

8. HMO -- Health Maintenance Organization. Prepaid medical plan in which members agree to use a specific network of providers.

9. Hospital indemnity insurance -- Pays a set amount for a hospital stay based on daily, weekly or monthly limits, regardless of expenses.

10. HSA or health savings account -- A tax-advantaged savings account that allows policyholders to use pretax money on covered medical expenses. They are accompanied by a high-deductible insurance plan and contributions can be made by an employer or the employee. Cash withdrawals are subject to taxation and may be penalized.

11. Indemnity (fee for service) -- A traditional health care plan where all doctors are covered. The insurer pays 80 percent while the policyholder pays 20 percent co-insurance as well as any amount the doctor charges over the reasonable and customary rate.

12. Managed care -- A health care system whose main function is to control costs. The goal is quality, cost-effective health care.

13. Maximum out-of-pocket costs -- Limit that the insured will have to pay out of pocket. Includes things like deductibles, co-insurance and co-payments.

-- Posted: Aug. 20, 2007
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