|Glossary of health insurance terms
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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
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.
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.
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.
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.
Managed care -- A health care system whose
main function is to control costs. The goal is quality,
cost-effective health care.
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.