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Glossary of Health Insurance Terms
INDIVIDUAL
HEALTH INSURANCE DEFINITIONS
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 premium generated.
Their job is to make sure a block of business is priced to be profitable.
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 that represent one or more health
insurance companies and presents their products to consumers.
Association: A group. 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 the insured suffers a loss.
Brand-name drug: Prescription drugs marketed with a specific brand
name by the company that manufactures it, usually the company which develops
and patents it. When patents run out, generic versions of many popular
drugs are marketed at lower cost by other companies. Check your insurance
plan to see if coverage differs between name-brand and their generic twins.
Broker: Licensed insurance salesperson who obtains quotes and plan
from multiple sources information for 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. (Providers are a term used for health professionals
who provide care. Usually providers refer to doctors or hospitals. Sometimes
the term also refers to nurse practitioners, chiropractors and other health
professionals who offer specialized services.)
Carrier: The insurance company or HMO offering 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 services.
Certificate of Insurance: The printed description of the benefits
and coverage provisions forming the contract between the carrier and the
customer. Discloses what it covered, what is not, and dollar limits.
Claim: A request by an individual (or his or her provider) to an
individual's insurance company for the insurance company to pay for services
obtained from a health care professional.
COBRA: Federal legislation that lets you, if you work for an insured
employer group of 20 or more employees, continue to purchase health insurance
for up to 18 months if you lose your job or your coverage is otherwise
terminated. For more information, visit the Department of Labor.
Co-Insurance: Co-insurance refers to money that an individual is
required to pay for services, after a deductible has been paid. In some
health care plans, co-insurance is called "co-payment." Co-insurance
is often specified by a percentage. For example, the employee pays 20
percent toward the charges for a service and the employer or insurance
company pays 80 percent.
Co-Payment: Co-payment is a predetermined (flat) fee that an individual
pays for health care services, in addition to what the insurance covers.
For example, some HMOs require a $10 "co-payment" for each office
visit, regardless of the type or level of services provided during the
visit. Co-payments are not usually specified by percentages.
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 under while you were under an employer's (qualifying)
coverage can be honored by your new plan, if any interruption in the coverage
between the two plans meets state guidelines.
D
Deductible: The amount an individual must pay for health care expenses
before insurance (or a self-insured company) covers the costs. Often,
insurance plans are based on yearly deductible amounts.
Denial of Claim: Refusal by an insurance company to honor 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) of an insured.
Dependent Worker: A worker in a family in which someone else has
greater personal income.
E
Effective Date: The date your insurance is to actually begin. You
are not covered until the policies 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 directly pay for services provided
through an employee assistance program.
Exclusions: Medical services that are not covered by an individual's
insurance policy.
Explanation of Benefits: The insurance company's written explanation
to a claim, showing what they paid and what the client must pay. Sometimes
accompanied 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. Generic drugs are cheaper,
and most prescription and health plans reward clients for choosing generics.
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 that 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 separate 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.)
HIPAA: A Federal law passed in 1996 that allows persons to qualify
immediately for comparable health insurance coverage when they change
their employment or relationships. 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 (or plans), and employers
(or sponsors); and to specify the types of measures required to protect
the security and privacy of personally identifiable 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 physician to physician. Indemnity
health plans offer individuals the freedom to choose their health care
professionals.
Individual Health Insurance: Health insurance coverage on an individual,
not group, basis. The premium is usually higher for an individual health
insurance plan than for a group policy, but you may not qualify for a
group plan.
Independent Practice Associations: IPAs are similar to HMOs, except
that individuals receive care in a physician's own office, rather than
in an HMO facility.
Individual Health Insurance: Health insurance coverage on an individual,
not group, basis. The premium is usually higher for individual health
insurance than for a group policy, but you may not qualify for a group
plan.
In-network: Providers or health care facilities which are part
of a health plan's network of providers with which it has negotiated a
discount. Insured individuals usually pay less when using an in-network
provider, because those networks provide services at lower cost to the
insurance companies with which they have contracts.
L
Lifetime 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.
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 period of time. Long-term care policies (and
their prices) vary significantly. Covered services often include nursing
care, home health care services, and custodial care.
Long-term Disability Insurance: Pays an insured a percentage of
their monthly earnings if they become disabled.
LOS: LOS refers to the length of stay. It is a term used by insurance
companies, case managers and/or 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 terms of lifetime, sometimes for a 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 consisting 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 company’s 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 which 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 physicians,
hospitals or other health care providers who are considered non-participants
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-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 percent for an individual's
health care expenses.
Outpatient: An individual (patient) who receives health care services
(such as surgery) on an outpatient basis, meaning 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: Supervising the details and routine activities
of installing and running a health plan, such as answering questions,
enrolling individuals, billing and collecting premiums, and similar duties.
Pre-Admission Certification: Also called pre-certification review,
or pre-admission review. Approval 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 the admittance. Pre-admission
certification often must be obtained by the individual. Sometimes, however,
physicians will contact the appropriate individual. The goal of pre-admission
certification is to ensure that individuals are not exposed to inappropriate
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 being admitted to an inpatient health
care facility, such as a hospital. Pre-admission reviews are often conducted
by case managers or insurance company representatives (usually nurses)
in cooperation with the individual, his or her physician or health care
provider, and hospitals.
Preadmission Testing: Medical tests that are completed for an individual
prior to being admitted to a hospital or inpatient health care facility.
Pre-existing Conditions: 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 or your employer receives
discounted rates if you use doctors from a pre-selected group. If you
use a physician outside the PPO plan, you must pay more for the medical
care.
Primary Care Provider (PCP): A health care professional (usually
a physician) 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
physicians for specialist care.
Provider: Provider is a term used for health professionals who
provide health care services. Sometimes, the term refers only to physicians.
Often, however, the term also refers to other health care professionals
such as hospitals, nurse practitioners, chiropractors, physical therapists,
and others offering 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 than the approved
amount, the individual receiving the service is responsible for paying
the difference. Sometimes, however, if an individual questions his or
her physician about the fee, the provider will reduce the charge to the
amount that the insurance company has defined as reasonable and customary.
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 represents such probabilities as the likelihood of surgical complications,
medications' 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 of getting cancer if he or she
chooses to smoke cigarettes.
S
Second Opinion: It is a medical opinion provided by a second physician
or medical expert, when one physician provides a diagnosis or recommends
surgery to an individual. Individuals are encouraged to obtain second
opinions whenever a physician 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 physician,
when one physician 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 disability
(and the time period over which coverage extends) differs 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 working.
Short-Term Medical: Temporary coverage for an individual for a
short period of time, usually from 30 days to six months.
Small Employer Group: Generally means groups with 199 employees
or less. The definition may vary between states.
State Mandated Benefits: When a state passes laws requiring that
health insurance plans include specific benefits.
Stop-loss: The dollar amount of claims filed for eligible expenses
at which point you've paid 100 percent of your out-of-pocket and the insurance
begins to pay 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.
T
Triple-Option: Insurance plans that offer three options from which
an individual may choose. Usually, the three options are: traditional
indemnity, an HMO, and a PPO.
U
Underwriter: The Company that assumes responsibility for the risk
issues insurance policies and receives premiums.
Usual, Customary and Reasonable (UCR) or Covered Expenses: An amount
customarily charged for or covered for similar services and supplies which
are medically necessary, recommended by a doctor, or required for treatment.
W
Waiting Period: A period of time when you are not covered by insurance
for a particular problem.