Definitions of health insurance terms Part-1

ASO (Administrative Services Only) – An arrangement in which an employer hires a
third party to deliver administrative services to the employer such as claims processing
and billing; the employer bears the risk for claims.
Coinsurance – A form of medical cost sharing in a health insurance plan that requires an
insured person to pay a stated percentage of medical expenses after the deductible
amount, if any, was paid.
¨ Once any deductible amount and coinsurance are paid, the insurer is responsible
for the rest of the reimbursement for covered benefits up to allowed charges: the
individual could also be responsible for any charges in excess of what the insurer
determines to be “usual, customary and reasonable”.
¨ Coinsurance rates may differ if services are received from an approved provider
(i.e., a provider with whom the insurer has a contract or an agreement specifying
payment levels and other contract requirements) or if received by providers not
on the approved list.
¨ In addition to overall coinsurance rates, rates may also differ for different types
of services.

Co-payment – A form of medical cost sharing in a health insurance plan that requires an
insured person to pay a fixed dollar amount when a medical service is received. The
insurer is responsible for the rest of the reimbursement.
¨ There may be separate co-payments for different services.
¨ Some plans require that a deductible first be met for some specific services
before a co-payment applies.

Deductible – A fixed dollar amount during the benefit period – usually a year – that an
insured person pays before the insurer starts to make payments for covered medical
services. Plans may have both per individual and family deductibles.
¨ Some plans may have separate deductibles for specific services. For example, a
plan may have a hospitalization deductible per admission.
¨ Deductibles may differ if services are received from an approved provider or if

received from providers not on the approved list.