Glossary
Many times knowing the language used by the particular industry we are trying to form a business relationship with can aid in building a level of confidence. We offer you this glossary as a goodwill attempt to build confidence and earn you to trust.
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A
Actuary: A mathematician working for a health insurance company responsible for determining what premiums the company needs to charge based in large part on claims paid verses amounts of premiums generated. Their job is to make sure a block of business is priced properly.
Admitting Privileges: The right granted to a doctor to admit patients to a particular hospital.
Advocacy: Any activity done to help a person or group to get something the person or group needs or wants.
Agent: Licensed salespersons who represent one or more health insurance companies and present their products to consumers.
Association: A group with members who prefer to seek certain services together. Often, associations can offer individual health insurance plans specially designed for their members.
B
Benefit: Amount payable by the insurance company to a claimant, assignee, or beneficiary when an issued person suffers loss.
Brand-name drug: Prescription drugs marketed with a specific brand name by the company that manufactures it; usually this is the company that also develops and patents it. When patents run out, other companies market generic versions of many popular drugs at a lower cost. Check your insurance plan to see if coverage differs between name brand and their generic twins.
Broker: A licensed insurance salesperson who obtains quotes and plans from multiple sources and provides this information to clients.
C
Capitation: Capitation represents a set dollar limit that you or your employer pay to a health maintenance organization (HMO), regardless of how much you use (or don't use) the services offered by the health maintenance providers.
Carrier: The insurance company or HMO offerig a health plan.
Case Management: Case management is a system embraced by employers and insurance companies to ensure that individuals receive appropriate, reasonable health care sevices.
Certificate of Insurance: The printed description of the benefits and coverage provisions, which forms the contract between the carrier and the customer. The description discloses what is covered, what is not, and dollar limits.
Claim: A request by an individual (or by a provider) to an individual's insurance company for the payment of services obtained from a health care professional.
COBRA: Federal legislation that allows certain employees to continue to purchase health insurance for up to 18 months in the event of unemployment or coverage termination. If you work for an insured employer of 20 or more employees, you may be eligible. Seek additional information, visit: The Department of Labor (DOL).
Co-Insurance: Co-Insurance refers to money that an individual is required to pay for services after a deductible has been paid. All insurance plans except for an HSA or 100% plans have a co-insurance. In some health care plans, co-insurance is called "co-payment." Co-insurance is often specified by a percentage. For example in an 80/20 Co-Insurance, the individual pays 20 % towards the charges for a service (after the deductible) up to a set limit or "stop loss" (say $10,000). The insurance company pays 80% of the amount up to the "stop loss." Then the insurance company pays 100% of the rest of the validated claims. For example: 80/20 Co-Insurance on a $40,000 medical bill. Pay the deductible (let's say $2,500), then pay 20% of the next $10,000 of charges = $2,000 out of pocket for a total of $2,500+$2,000= $4,500 total out of pocket and then the insurance company pays 100% of the rest. You only pay $4,500 of a $40,000 bill. The insurance company pays the rest. That's a lot better than paying for it all. There is no Co-Insurance with a 100% or an HSA plan.
Co-Payment: Co-payment is a predetermined (flat) fee that an individual pays for health care sevices, in addition to what the insurance covers. For example, some plans with a doctor visits co-pay you are going to pay a set amount say $40 for an office visit. Other services provided may be subject to the deductible and co-insurance. Co-pays are not usually specified by percentages. Some prescription co-pays require a deductible first for prescriptions other than generic. Doctor visit co-pays do not require a deductible first.
Credit for Prior Coverage: This is something that may or may not apply when you switch employers or insurance plans. A pre-existing condition waiting period met while you were under an empoyer's (qualifying) coverage can be honored by your new plan if any interruption in the coverage between the two plans meet state guidelines. This usually applies only to group or employer provided insurance.
D
Deductible: The pre-set amount an individual must pay for health care specified expenses. Often, insurance plans are based on yearly deductible amounts. The annual usually starts and stops on Dec. 31, but some plans provide for a fourth quarter carry over of applied deductible already paid. See specific plans for details. There are deductibles that are a one family deductibles as in HSA or 100% plan policies.
Denial of Claim: Refusal by an insurance company to horor a request by an individual (or his or her provider) to pay for health care services obtained from a health care professional.
Dependents: Spouse and/or unmarried children (whether natural, adopted or step) added to a policy.
E
Effective Date: The date your insurance coverage will begin. You are not covered until the policy's effective date.
Employee Assistance Programs (EAPs): Mental health counseling services that are sometimes offered by insurance companies or employers. Typically, individuals or employers do not have to pay for EAP services directly.
Exclusions: Medical services that are not covered by an insurance policy.
Explanation of Benefits: The insurance company's written explanation to a claim, showing what they paid and what the client must pay. If appropiate, the explanation is accomplished by a benefits check.
G
Generic Drug: A "twin" to a "brand name drug" once the brand name company's patent has run out and other drug companies are allowed to sell a duplicate of the original. Since generic drugs are cheaper, most prescription and health plans reward clients for choosing them.
Group Insurance: Coverage through an employer or other entity that covers all individuals in the group.
H
Health Care Decision Counseling: Services, sometimes provided by insurance companies or employers, which help individuals weigh the benefits, risks, and costs of medical tests and treatments. Unlike case management, health care decision counseling is non-judgmental. The goal of health care decision counseling is to help individuals make more informed choices about their health and medical care needs, and to help them make decisions that are right for the individual's unique set of circumstances.
Health Maintenance Organizations (HMOs): Health Maintenance Organizations represent "pre-paid" or "capitated" insurance plans in which individuals or their employers pay a fixed monthly fee for services, instead of a seperate charge for each visit or service. The monthly fees remain the same, regardless of types or levels of services provided. Services are provided by physicians who are employed by, or under contract with, the HMO. HMOs vary in design. Depending on the type of the HMO, services may be provided in a central facility or in a physician's own office (as with IPAs.)
HIPPA: A Federal law passed in 1996 that allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships, as long there has been no lapse in coverage. It also creates the authority to mandate the use of standards for the electronic exchange of health care data; to specify what medical and administrative code sets should be used within those standards; to require the use of national identification systems for health care patients, providers, payers (plans), and employers (sponsors); and to specify the types of measures required to protect the security and privacy of personally indentifiable health care. Full name is " The Health Insurance Portability and Accountability Act of 1996."
I
Indemnity Health Plan: Indemnity health insurance plans are also called "fee-for-service." These are the types of plans that primarily existed before the rise of HMOs, IPAs, and PPOs. With indemnity plans, the individual pays a pre-determined percentage of the cost of health care services, and the insurance company (or self-insured employer) pays the other percentage. For example, an individual might pay 20 percent for services and the insurance company pays 80 percent. The fees for services are defined by the providers and vary from physcian to physcian.
Indemnity plans can also be forms of "discount" plans. An indemnity discount plan will offer the client (the insured) a scheduled discount for services or set fee which the individual pays up front. Then the discount company reimburses the individual. These are not necessarily considered to be the best of plans.
Independent Practice Associations: IPAs are similar to HMOs, except that individuals receive care in a physcian's own office, rather than in an HMO facility.
Individual Health Insurance: Health insurance coverage on an individual, couple or family, not group basis. The premium is paid by the individual, and cannot be paid by the employer. The employer may give money (taxable) to the individual as a "loyality bonus" or other such name and the individual then uses the money to pay their insurance premium. With the rise in cost for group coverage, individual insurance policies for a company with a smaller number of employees is usually a better bargain.
In-network: Providers or health are facilities which are part of a health plans network of providers with which it has negotiated a discount. Insured individuals usually pay a percentage less when using an in-network provider because those networks provide services at lower cost to contracted insurance companies.
L
Lifetme Maximum Benefit (or Maximum Lifetime Benefit): The maximum amount a health plan will pay in benefits to an insured individual during that individual's lifetime or term of policy.
Limitations: A limit on the amount of benefits paid out for a particular covered expense, as disclosed on the Certificate of Insurance.
Long-Term Care Policy: Insurance policies that cover specified services for a specified time period. Long-term care policies (and their prices) vary significantly. Covered services often include nursing care, home health care services, and custodial care.
LOS: Los refers to the Length of Stay. It is a term used by insurance companies, case managers, and employers to describe the amount of time an individual stays in a hospital or in-patient facility.
M
Managed Care: A medical delivery system that attempts to manage the quality and cost of medical services that individuals receive. Most managed care systems offer HMOs and PPOs that individuals are encouraged to use for their health care services. Some managed care plans attempt to improve health quality by emphasizing prevention of disease.
Maximum Dollar Limit: The maximum amount of money that an insurance company (or self-insured company) will pay for claims within a specific time period. Maximum dollar limits vary greatly. They may be based on, or specified in terms of, types of illnesses or types of services. Sometimes they are specified in a term of lifetime or in a term of one year.
Medigap Insurance Policies: Medigap insurance is offered by private insurance companies, not the government. It is not the same as Medicare or Medicaid. These policies are designed to pay for some of the costs that Medicare does not cover.
Multiple Employer Trust (MET): A trust comprising of multiple small employers in the same industry, formed for the purpose of purchasing group health insurance or establishing a self-funded plan at a lower cost than would be available to each of the employers individually.
N
Network: A group of doctors, hospitals, and other health care providers contracted to provide services to insurance companies' customers for less than their usual fees. Provider networks can cover a large geographic market or a wide range of health care services. Insured individuals typically pay less for using a network provider.
O
Open-ended HMOs: HMOs that allow enrolled individuals to use out-of-plan providers and still receive partial or full coverage and payment for the professional's services under a traditional indemnity plan.
Out-of-Plan (Out-of-Network): This phrase usually refers to physcians, hospitals or other health care providers who are considered nonparticipants in an insurance plan (usually an HMO or PPO.) Depending on an individual's health insurance plan, expenses incurred by services provided by out-of-plan health professionals may not be covered, or covered only in part, by an individual's insurance company. Out-of-plan coverage may also raise the percentage you pay for co-insurance, for instance 60/40 instead of 80/20.
Out-of-Pocket Maximum: A predetermined limited amount of money that an individual must pay out of their own savings before an insurance company or (self-insured employer) will pay 100% for an individual's health care expense. Usually out of pocket reflects the sum total of the deductible plus the co-insurance amount.
Outpatient: An individual (patient) who receives health care services (such as surgery) on an outpatient basis; that is, they do not stay overnight in a hospital or inpatient facility. Many insurance companies have identified a list of tests and procedures (including surgery) that will not be covered (paid for) unless they are performed on an outpatient basis. The term outpatient is also used synonymously with ambulatory to describe health care facilities where procedures are performed.
P
Plan Administration: Supervision of the details and routine activities of installing and running a health plan. This includes answering questions, enrolling individuals, billing and collecting premiums, and other dutes.
Pre-Admission Certification: Also called pre-certification review, or pre-admission review, this is the approval given by a case manager or insurance company representative (usually a nurse) for a person to be admitted to a hospital or in-patient facility. Granted prior to admittance, pre-admission certification must often be obtained by the individual. Sometimes, however, physcians will contact the appropriate approver. The goal of pre-admission certification is to ensure that individuals are not exposed to inappropiate health care services (services that are medically unnecessary).
Pre-Admission Review: A review of an individual's health care status or condition, prior to an individual's admission to an inpatient facility, such as a hospital. Pre-admission reviews are often conducted by case managers or insurance company representative (usually nurses) in coorperation with the individual, his or her physcian or health care provider, and a hospital.
Pre-admission Testing: Medical tests that are completed for an individual prior to being admitted to a hospital or inpatient care facility.
Pre-existing Ondition: A medical condition that is excluded from coverage by an insurance company because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company.
Preferred Provider Organizations (PPOs): You and/or your employer or as an individual receive discounted rates if you agree to use doctors from a pre-selected group. Under a PPO, if you use a physcian outside the PPO plan, you may pay more for that medical care except for emergencies.
Primary Care Provider (PCP): A health care professional (usually a physcian) who is responsible for monitoring an individual's overall health care needs. Typically, a PCP serves as a "quarterback" for an individual's medical care, referring the individual to more specialized physcians for specialist care.
Provider: Provider is a term used for health professionals who provide health care services. Sometimes, the term refers only to physcians. Often, however, the term also refers to other health care professionals such as hospitals, nurse practitioners, chiropractors, physical therapists, and other specialized health care services.
R
Reasonable and Customary Fees: The average fee charged by a particular type of health care practitioner within a geographic area. The term is often used by medical plans as the amount of money they will approve for a specific test or procedure. If the fees are higher that the approved amount, the individual receiving the service is usually responsible for paying the difference. Sometimes, however, if an individual questions his or her physcian about a fee, the provider will reduce the charge to the amount that the insurance company has defined as reasonable and customary. Sometimes particular insurance companies will do the negoiating for the individual.
Rider: A modification made to a Certificate of Insurance regarding the clauses and provisions of a policy (usually adding or excluding coverage).
Risk: The chance of loss, the degree of probability of loss, or the amount of possible loss to the insuring company. For an individual, risk describes the likelihood of surgical complications, medication side effects, exposure to infection, or the chance of suffering a medical problem because of a lifestyle or other choice. For example an individual increases his or her risk getting cancer if he or she chooses to smoke cigarettes.
S
Second Opinion: It is a medical opinion provided by a second physcian or medical expert after the first physcian provides a diagnosis or recommends surgery to an individual. Individuals are encouraged to obtain second opinions whenever a physcian recommends surgery or presents an individual with a serious medical diagnosis.
Second Surgical Opinion: These are now standard benefits in many health insurance plans. It is an opinion provided by a second physcian after one physcian recommends surgery to an individual.
Short-Term Disability: An injury or illness that keeps a person from working for a short time. The definition of short-term disablility (and the time over which coverage extends) varies among insurance companies and employers. Short-term disability insurance coverage is designed to protect an individual's full or partial wages during a time of injury or illness(that is not work-related) that would prohibit the individual from performing their normal work related duties. Some insurance plans cover just in the case of accidents not illness.
Short-Term Medical: Temporary coverage for an individual for a short period of time, usually a term between 30 days and six months. Some short-term policies extend to 12 months, and may be renewed. These plans should, however, not be a replacement for full long-term policies.
Small Employer Group: Generally means groups with 199 or fewer employees. The definition may vary between states.
State Mandated Benefits: When a state passes laws requiring that health insurance plans include and cover without subject to deductible or co-insurance specific benefits. These benefits are usually related to preventive care, such as mammograms, Pap smear testing, PSA (prostate) testing, and children's immunizations.
Stop-loss: The point at which you've paid 100% of your out-of-pocket eligible expenses and at which the insurance begins to pay eligible expenses at 100%. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance. Stop-loss can also mean the limit (ceiling) at which your portion of the co-insurance may be charged or figured against.
T
Triple-Option: Insurance plans that offer three options from which an individual may choose. usually, the three options are traditional Indemnity, HMO, and PPO.
U
Underwriter: The company that assumes responsibility for risk, issues insurance policies, and receives premiums. Sometimes this is a separate department of the insurance company or can be a separate company altogether. They make the final decision whether an individual is issued a policy and under what terms.
Usual, Customary and Reasonable (UCR) or Covered Expenses: Charges for service and supplies which are medically necessary, recommended by a doctor, or required treatment. The set dollar amount according to a geographical locations' average amount charged for particular services.
W
Waiting Period: A period of time when you are not covered by insurance for a particular problem.
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