Health Insurance Glossary

Terminology commonly used in the health insurance marketplace can add confusion to the shopping experience. This glossary contains defintions (and explanations) of health care related terms and acronyms you'll likely encounter.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z |

 

A
Actual Charge
The dollar amount charged by a physician or healthcare provider for medical services provided. In most circumstances, this amount will be greater than the allowable charge.

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Acute Care
Medical care administered for treatment of a serious condition, injury, or illness. Acute care is typically in response an isolated incident or a temporary condition, as opposed to chronic care, which refers to a permanent or persistent illness.

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Adverse Selection
The tendency for individuals with greater health risks, dangerous jobs, or high-risk lifestyles to purchase a health insurance plan. Too many adverse selection customers may cause a health insurance company to raise rates to compensate for the higher risk.

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Agent
A licensed individual or entity that represents one or more health insurance companies. An agent solicits customers and facilitates the sale of insurance contracts or policies and provides services to the policyholder on behalf of the insurer.

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Allowable Charge
The dollar amount considered payment-in-full by a health insurance company and its network of providers. For Example:
You have just visited your doctor for an headache. The total charge for the visit comes to $100. If the doctor is a member of your health insurance company's network of providers, he or she may be required to accept $80 as payment in full for the visit - this is the allowable charge. Your health insurance company will pay all or a portion of the remaining $80, minus any co-payment or deductible that you may owe. The remaining $20 is considered provider write-off. You cannot be billed for this provider write-off. If, however, the doctor you visit is not a network provider then you may be held responsible for everything that your health insurance company will not pay, up to the full charge of $100.
This term may also be used within a Medicare context to refer to the amount that Medicare considers payment in full for a particular, approved medical service or supply.

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Allowed Amount  (see Allowable Charge above)

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Alternative Medicine
Any practice, medical or nonmedical, that claims to heal and does not fall within the realm of conventional medicine, according to the Alternative Medicine Handbook. Alternative medicine treatments are generally not recognized as effective by the medical community and encompasses a broad range of services, practices, and treatments, including acupuncture, homeopathy, aromatherapy, naturopathy, and the like. Most health insurance companies do not provide coverage for these services.

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ASO ( or Administration Services Only)
A business arrangement in which an insurance company performs the administrative duties relating to the maintenance of a client-funded health insurance plan.

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B
Benefit
Any service or supply covered by a health insurance plan. Office visits, laboratory tests, surgical procedures, and prescription drugs are all typical benefits of health insurance plans and are received in the normal course of a patient's healthcare.

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Board Certified
A physician who has completed both an educational training program and evaluation process approved by the American Board or Medical Specialties. The certification process is designed to demonstrate written and practical mastery of the basic knowledge and skills that define medical specialization.

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Broker
A third party that arranges transactions between a buyer and seller. Often synonymous with  agent in the health insurance industry, a broker works to match applicants with a health insurance company and plan that best suits their needs. Brokers are paid by health insurance companies but represent the interests of customers.

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C
Catastrophic Health Insurance
Also known as a high deductible plan, it is a health insurance policy   with a very high deductible that covers medical expenses that are above the normal parameters of basic health insurance. A catastrophic health insurance plan is usually purchased by an individual in very good health who is not concerned with becoming ill. A catastrophic health plan usually involves a trade-off between low premiums and a high deductible.

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Claim
A bill for services rendered by a healthcare provider. A claim is typically submitted to the health insurance company, rather than the client.

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COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
Federal legislation allowing an employee or an employee's dependents to maintain group health insurance coverage through an employer's health insurance plan, at the expense of the individual, for up to 18 months after leaving employment.  All companies that have averaged at least 20 full-time employees over the past calendar year must comply with COBRA regulations.

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Coinsurance
The amount that you are obliged to pay for covered medical services after you've satisfied any co-payment or deductible required by your health insurance plan. Coinsurance differs from a co-payment in that a copayment is normally fixed, while coinsurance is a percentage that the policyholder is required to pay after the deductible..

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Consumer-driven health plan
Coordination of Benefits (COB)
The process by which a primary and secondary payer of benefits is determined in the event that a patient has multiple health insurance policies.

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Co-payment
A specific payment defined by an insurance policy that the policyholder is required to cover each time a medical service or supply is utilized or accessed. Also known as a "co-pay." For example, if your health insurance co-pay is $15, you will need to pay that amount each time you visit your physician or receive a certain prescription drug. The health insurance company pays for the remainder of the charges.

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D
Deductible
The dollar amount that must be paid out of pocket before the insurer will pay any expenses. The amount is determined by an individual policy. Not all policies require a deductible. As a general rule (though there are exceptions), HMO plans typically do not require a deductible, while most indemnity plans and PPO plans do.

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Dependent Coverage
Health insurance coverage held by the primary policyholder that is extended to include a spouse and unmarried children. Age restrictions apply to coverage of children; under new rules put in place under the Affordable Healthcare Act of 2012, children are eligible dependents until the age of 26.

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Discount Dental Plan
While not technically "insurance", these types of plans provide for lower cost dental services. Many discount dental plans require up-front payment. Discounts typically range from 40-60% of regular dentist rates.

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Drug Formulary
A list of prescription drugs covered under a specific health insurance plan. Drugs may be included on a drug formulary based on efficacy, safety, and cost-effectiveness. Formularies can vary between plans and may differ in the breadth of covered prescription drugs as well as co-pays and premiums for those medications. Formularies generally encourage generic substitution and may require a 100% co-pay for drugs not included.

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E
Durable Medical Equipment (DME)
Any device, aid, accessory, or apparatus used in the home to medically aid in a better quality of living. Medical equipment is a benefit included in most insurance plans. Medicaid includes such items as iron lungs, oxygen tents, nebulizers, CPAP, catheters, beds, and wheelchairs in its list of approved medical equipment.

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Effective Date
In the case of health insurance coverage, the date upon which your policy begins.

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Eligible Employee
An employee who is eligible for insurance coverage based upon the stipulations of the group health insurance plan. The employee must be employed at the time of enrollment.

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Employee Contribution
The portion of an employee's paycheck that is put towards the cost of the employee healthcare.

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Evidence of Insurability
Standards set by the insurer that must be fulfilled in order to prove that a potential customer does not provide an undue risk to the company. Traditionally, this is done through a health questionnaire or medical examination. Group health insurance plans do not require evidence of insurability during normal enrollment periods.

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Exclusions
Health conditions for which a healthcare plan will not provide coverage, usually because the plan reached a maximum on coverage or the condition is beyond the scope of the plan. Certain prescription drugs are an example of a common exclusion.

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Explanation of Benefits (EOB)
A statement from a health insurance company which explains what treatment and services were paid for on their behalf. The EOB usually describes the service performed, any associated doctor's fee, what the insurer allows for each charge, and the amount that the patient is responsible for. An EOB may also include any claims that were denied and details on the appeals process.

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F
Fee-for-service Plan

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Formulary (see Drug Formulary)

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G
Gatekeeper
A primary care provider who coordinates patient care and provides referrals to specialists, other hospitals, laboratories, and other medical services. In an HMO plan, the gatekeeper is typically the primary care physician, who serve as a patient's main point of contact for healthcare related services and referrals.

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Generic Drug
The FDA defines a generic drug as a drug product comparable to a brand name in dosage form, strength, route of administration, quality and performance, and intended use. A generic drug contains the same formulation as a brand name, but is often significantly less expensive due to the expiration of the brand name drug's original patent.

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Group Health Insurance
A health insurance plan that provides coverage for a select group of people. As opposed to an individual or family health plan, group health insurance is only for members of that organization or employees of a company.

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Guaranteed Issue
A requirement that health plans enroll any applicant regardless of health status, gender, age, or other health-related factors that would otherwise cause that person to be denied coverage. Group health insurance plans are typically guaranteed issue. Guaranteed issue does not place a limit on the cost of the plan, however.

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Guaranteed Renewable
An insurance policy that requires the insurer to continue coverage as long as premiums have been paid in a timely manner. Renewal is guaranteed; however, premiums may still inscrease.

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H
Health Insurance Portability and Accountability Act (HIPPA)
The Health Insurance Portability and Accountability Act (HIPPA) was passed in 1996 as a means of protecting health coverage for workers when they change or lose a job. The Act also establishes national standards for electronic healthcare and provides stipulations regarding health data privacy and security.

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High Deductible Health Plan
A healthcare plan that has lower premiums but a higher deductible. Sometimes referred to as a catastrophic healthcare plan. A qualifying high deductible healthcare plan is required with a Health Savings Account

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HMO (or Health Maintenance Organization)
A healthcare plan or organization that acts as a liaison between health insurance policyholders and healthcare providers. An HMO can either provide or arrange care for both individual and group health insurance customers through its network of doctors, hospitals, labs, and medical centers who agree to provide care at a predetermined rate. Members of the HMO are often restricted to care within the network of providers. Clients typically cover the entire cost of out of network care.
Home Health Care
Healthcare provided in the patient's home by medical professionals rather than in a hospital or nursing facility. Home healthcare is provided by licensed professionals, as opposed to non-medical or custodial care, which is also in the home but not provided by licensed individuals.

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Hospice Care
End-of-life care provided in either an inpatient or home setting. Hospice emphasizes pain management and emotional support for terminally ill patients. Some programs also provide services to the patient's family.

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Hospitalization Coverage
A health insurance benefit that pays a portion or all of the costs related to a hospital stay.
It is possible to purchase just a hospitalization coverage policy at a significantly lower cost than a traditional health insurance policy, but this would only cover hospitalization costs. Any other healthcare related costs, such as x-rays, doctor visits, testing, and many others would not be covered at a potentially significant expense to the policyholder.

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HSA (or Health Savings Account)

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I
Indemnity Plan
Also known as a fee-for-service" plan, an indemnity plan allows the policyholder to visit any doctor or healthcare provider, regardless of network affiliations. The policyholder must pay up front for services and submit a claim to the health insurance company for reimbursement. The health insurance company will typically pay these claims at a set percentage of the "usual, customary, and reasonable" (UCR) rate, which is the rate typically charged for a given service or treatment.

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Individual Health Insurance
A health insurance policy purchased by an individual or family. The policy is not associated with any employer or group. Currently, in most states, a health insurance company may decline coverage based on a preexisting condition or health history. However, the Affordable Care Act of 2010 made this illegal for individuals under 19 to be denied based on a preexisting condition. This requirement will expand to all individuals in 2014.

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Inpatient
A person admitted to a hospital for a period of at least 24 hours. A patient must be admitted to a hospital to qualify as an inpatient and ended through a formal discharge.

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J
K
L
Lifetime Maximum
The dollar amount of benefits available to a health insurance policyholder for covered services over a lifetime.

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Limited Benefit Plan
Also called a bare bones or minimum benefit plan, this type of healthcare plan offers a reduced set of benefits at a lower cost than a major medical healthcare plan. Some of these plans are not considered continuous coverage under HIPPA.

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Long Term Care
Services and treatment provided on a continual basis for a chronically ill or disabled patient. Long term care may be provided on an inpatient or outpatient basis.

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M
Major Medical Insurance
An insurance policy issued directly to an individual that provides coverage for most healthcare costs, both inpatient and outpatient. These types of plans often carry a high deductible and are more expensive than group coverage.

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Managed Care
A system of healthcare management intended to reduce healthcare costs by requiring that a policyholder coordinate healthcare through a primary care physician as well as utilizing in-network resources to minimize costs. There are several different types of managed care plans, including HMO, PPO, and POS plans.

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Maternity Coverage

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Medical Savings Account (MSA)
A health insurance plan combining a high deductible insurance policy with a savings account to allow policyholders to pay for their own medical and healthcare expenses. Savings accounts are tax sheltered. In 2007, medical savings accounts were replaced by HSAs.

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Medicaid
A public healthcare program, funded by both states and the federal government, for low income individuals and families.

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Medicare
A national, federally-administered senior health insurance program that guarantees access to health insurance for eligible individuals. Medicare covers the cost of hospitalization, medical care, and other related health services through defined benefit plans.

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Medicare Advantage
A Medicare plan provided by a private health insurance company, rather than the federal government. These plans are standardized, so coverage and benefits are the same across providers.

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Medicare Part D
Also known as the Medicare prescription drug benefit, Part D is a federal program that subsidizes the cost of prescription drugs for Medicare beneficiaries. In order to received Part D benefits, a Medicare recipient must enroll in a standalone prescription drug plan (PDP) or a Medicare Advantage plan with prescription drug coverage.

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Medicare Supplemental Insurance
An individual insurance plan that provides coverage for costs not covered by regular Medicare.

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Medigap Coverage (see Medicare Supplemental Insurance)

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MedicareRx (also see Medicare Part D)

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N
National Association of Insurance Commissioners (NAIC)
A standard-setting and regulatory support organization that includes insurance regulators from all fifty states, the District of Columbia, and five U.S. territories. The NAIC establishes best practices and standards, coordinate regulatory oversight, and conduct peer review to ensure uniform laws and regulations.

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Network Provider
A healthcare provider who contracts with a health insurance company to provide services at a pre-determined rate. This relationship may also establish standards of care, protocols, and allowable charges for certain services.

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O
Open Enrollment Period
A period of time in which all members of a group health insurance plan have the opportunity to enroll in certain benefit programs. During this period, insurance companies are rqeuired to accept all applicants without requiring evidence of insurability. Open enrollment is normally held once a year.

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Out of network care
A treatment or service provided outside of the insurance company's network of providers. Most health insurance companies do not pay for these services.

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Outpatient
A patient who receives care at a hospital or medical facility but is not admitted overnight or the period of care does not exceed 24 hours. This term may also refer to certain types of services received by a patient.

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P
Point of Service (POS) Plan Point of Service Plan)
A type of health insurance plan that combines an HMO and PPO plan. A POS plan has a network of providers as well as a primary care physician. You are allowed to use out-of-network providers, but you will pay more for the priviledge.

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PPO (or Preferred Provider Organization)
A type of health insurance plan that allows the policyholder to visit any network healthcare provider without a referral from a primary care physician. You receive more extensive coverage when visiting network providers but may be required to pay a co-payment or co-insurance and pay an annual deductible before coverage begins.

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Pre-existing Condition
A health problem not readily covered by standard insurance plans. Policyholders with a pre-existing condition typically represent a greater risk, and therefore cost, to the insurance company. The Affordable Care Act of 2010 has a large number of pending regulations regarding the inclusion of those with pre-existing conditions.

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Primary Care Physician (PCP)
A doctor that acts as the first contact for a policyholder and serves as the main healthcare provider. The primary care physician is often the first point of contact for healthcare and can make referrals within the network.

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Private Health insurance
Coverage provided by a health insurance plan obtained through an employer, group, organization, or purchased by an indvidual from a health insurance company.

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Q
Qualifying Event
A major life change that make an individual eligible to change employer-sponsored healthcare coverage outside of the normal enrollment period. Such events include a marriage, divorce, or birth of a child.

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R
Referral
A recommendation to seek additional care from a specialist for the diagnosis or treatment of a specific condition. A referral is usually necessary to see any practicioner other than the primary care physician.

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S
Self-funded health insurance plan
A health insurance plan in which funded by the employer instead of being contracted to a health insurance company. The insurer will handle administration of the plan, but the employer will cover the cost of claims.

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Service Area
The geographic area in which a policyholder may access the benefits of a health insurance plan. Some plans do not provide coverage outside of this specified service area. top
Short Term plans
An individual healthcare plan whose coverage typically extends for no more than six months. Benefits are less comprehensive than a traditional plan. A short term plan is often used as a safety net for individuals transitioning in between life events.

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Skilled Nursing Care
Trained nursing professionals that are needed on a temporary basis due to an injury or illness. Registered and Licensed Practical nurses provide this year, usually on an inpatient basis, at a hospital or skilled nursing facility.

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Subrogation
Circumstances in which an insurance company attempts to recoup expenses for a claim paid when another party should have been responsible for paying the claim. For example, frequent subrogation claims arise when a driver is injured in an automobile accident, in which case the auto insurer is considered the primary payer.

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Subscriber
The person or organization that pays the health insurance premium or the person whose employment makes him or her eligible for group health insurance.

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T
Temporary health plan (see Short Term Plans)
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Terminally Ill
The medical term used to describe an individual who is not expected to live beyond six months due to a specific health condition.

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Triage
The process of determining treatment priority for patients based on the severity of their conditions.

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U
Underwriting
The process that a health insurance company uses to determine the eligibility of a customer to receive health insurance based upon risk projections. This process also determines the customer's monthly premium.

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Universal Healthcare
A healthcare system that provides publicly funded care and financial protection to all citizens of a given state.

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Usual, customary, and reasonable (UCR) charges
The amount that an insurance carrier is willing to pay for a specific service. UCR is the standard or most common charge for a particular medical service in a given geographic area. This type of charge is usually employed for determing Medicare payments.

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V
Vision Coverage
An insurance plan that covers all or part of costs associated with eyeglasses or contact lenses. Typically available only on a group insurance plan.

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W
Well Baby/ Well Child Care
The main source of preventive healthcare for children involving regularly scheduled preventive services, such as vaccinations, up to a certain age as specified by an insurance company and mandated by the government. HMO and POS plans normally provide coverage for well-baby or well-child care and may be limited under a PPO or fee-for-service plan.

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