Health Insurance Glossary of Terms
Accident:
Injuries which result from unforeseen or unintentional events. Conditions that are not caused by illness or sickness. Insurance carriers will frequently offer an option for accidents to reduce or eliminate a members out of pocket expenses.
Agent:
An individual appointed by an insurance company to solicit, negotiate, effect or countersign insurance contracts, and to provide policyholder services on its behalf. Unlike brokers, agents are typically "captive" with the insurance company they represent, meaning that they sign a contract with the company promising not to represent any competing insurance companies in that line of insurance.
Allowable charge:
The maximum charge for which a third party will reimburse a provider for a given service. An allowable charge is not necessarily the same as either a reasonable, customary, maximum, actual, or prevailing charge.
Ancillary Services:
Services other than those provided by a physician or hospital which are related to a patient’s care, such as laboratory work, x-rays and anesthesia.
Beneficiary:
Person(s) designated by the insured(s) that would receive the proceeds of an insurance policy upon death of the insured. You would typically assign a beneficiary at the time of completing the policy application.
Benefit:
Amount an insurance company pays to a claimant, assignee or beneficiary when the insured suffers a covered loss, injury, accident etc.
Benefit Period:
Benefit Period is the maximum time period up to which the plan will pay benefits for any one eligible condition. Some policies have a 12 month while others have a 6 month benefit period; usually this period can extend beyond the date of policy expiration.
Broker:
A person or company that serves as a representative for an insurance applicant. A broker, like Insurance shoppers, generally offers options from multiple health insurance carriers. Although brokers are compensated with a commission from the health insurance company, they do not represent the insurer. Their sole duty is to get the best possible coverage for their clients at the lowest possible cost. Health insurance companies cannot charge more for policies purchased through a broker.
Calendar Year:
The period beginning January 1 of any year through December 31 of the same year which most health insurance policies base the deductible and coinsurance on.
Carrier:
The insurance company that actually underwrites and issues the insurance policy. The term refers to the fact that the company carries (or assumes) certain risks for the policyholder.
Certificate of Coverage:
A statement of coverage, also known as a Certificate of Insurance that an individual receives when insured under a group contract. The certificate serves as proof of insurance, and outlines benefits and provisions.
Claim:
Request by the insured (or his/her provider) to an insurance company to pay for services obtained from a health care provider. The claim is usually submitted in a pre-determined format or a claim form.
COBRA (Consolidated Omnibus Budget Reconciliation):
Regulations requiring an employer who employs more than 20 people to offer continued group insurance coverage to former employees for up to 18 months. If the employee dies, the employer May be required to offer continued group health insurance coverage to widowed spouses and dependent children for up to 36 months.
Co-Insurance:
The portion of covered health care costs for which the covered person has a financial responsibility, usually a fixed percentage. Coinsurance usually applies after the insured meets his or her deductible. Insurance companies tend to word this differently from company to company. Example: If you have a $1,000 deductible with 20% coinsurance and a $10,000 coinsurance limit, this means that after you pay the first $1,000 (deductible) you will then pay 20% of the next $10,000. Meaning you pay twenty cents of every dollar while the insurance company pays the other eighty cents of each dollar ($.20 x 10,000 = $2,000). Once the coinsurance limit is met, the insurance company will pay 100%, giving you an out-of-pocket (OOP) maximum of $3,000 per calendar year ($1,000 deductible + $2,000 coinsurance). You will also see the coinsurance written as 80%. You will know what they mean because you will never pay more than 50% coinsurance. You will also see the coinsurance limit written as $2,000. You will know what they mean because coinsurance limits are typically $5,000, $10,000, $15,000 or $20,000, but never more than this. This means your portion (20% in this example) is $1,000, $2,000, $3,000 or $4,000 respectively.
Common carrier:
A vehicle or service licensed to carry passengers for hire on a regularly scheduled basis. Good examples are airplanes, trains etc.
Coordination of Benefits (COB):
A provision in the contract that determine which plan is considered primary and which is secondary when a person is covered under more than one medical plan. It requires that payment of benefits be coordinated by all plans to eliminate over-insurance or duplication of benefits.
Co-pay:
A predetermined flat fee that the insured pays for healthcare services, in addition to what the insurance covers. Co-pay is usually not specified in percentage of the total healthcare cost. e.g., you pay $25 for a visit to the doctor's office, regardless of the actual doctor's office visit charge.
Coverage period:
In most plans, insurance coverage can be purchased in the combination of monthly and/or 15 days increments to suit your needs. e.g., for a trip of 3.5 months, you can choose 3 monthly increments and one 15 days increment. Effective date for insurance coverage can be the date of departure from home country, or it can be any other later date specified by insured. It is wise to have the insurance effective date same as the date when you depart from home country for the destination and end date same as the date you arrive back in the home country so that you will be covered for any medical emergencies(for covered expenses) even during your journey.
Creditable Coverage:
Individual, group, Medicare or Medicaid health insurance that was in place within the last 90 days and was in effect for more than one year, or had no gaps between sequential coverage of more than 31 days. Creditable coverage excludes limited scope dental, vision, specified disease, liability, or other supplemental benefits.
Deductible:
Amount to be paid by the insured person before the insurance company begins to pay for the covered expenses. Deductible may be either per sickness/injury or once per policy period or once per year depending upon the insurance policy you purchase. You will not get receive any reimbursement later from insurance company for the deductible you pay. e.g., Let us consider that you have purchased an insurance policy with a $50,000 policy maximum, $250 deductible per policy period and 80/20 co-insurance. Suppose you incur a covered expense of $10,250; then the insurance company will pay the covered expenses according to policy terms (in this example, the insurance would pay 80%) after member pays the $250 deductible payment.
Denial of claim:
Refusal by an insurance company to honor a request by an insured (or his/her healthcare provider) to pay for healthcare services. This would usually be due to pre-existing conditions.
Effective Date:
The date insurance coverage begins.
Eligible Dependent:
A dependent of a covered person (spouse, child, or other dependent) who meets all requirements specified in the contract to qualify for coverage and for which premium payment is made.
Exclusions:
Healthcare services not covered by an insured's health insurance policy. This would usually be due to pre-existing conditions or due to the limitation of the insurance plan.
Explanation of Benefits (EOB):
The statement sent to an insured by their health insurance company listing services provided, amount billed, eligible expenses and payment made by the health insurance company
Financial exposure:
The potential loss of money or assets due to a series of events.
Formulary
An approved list of prescription drugs that managed care plans may provide to their enrollees. Some plans restrict prescriptions to those contained on the formulary and others also provide non formulary
prescriptions. Drugs contained on the formulary are generally those that are determined to be cost effective and medically effective.
Free look:
The period of time during which a policy owner may examine a newly issued policy and, if not satisfied, surrender it in exchange for a full refund of premium.
Generic Drug:
Generic drugs are marketed without brand names are generally less expensive than brand-name drugs, even though they are chemically identical to brand-name drugs and meet the same standards of the FDA (US Food and Drug Administration) for safety, purity and effectiveness. Generic drugs can be legally produced in the US if a patent has expired, or for drugs which have never been patented. The expiration of a patent removes the monopoly of the patent holder on drug sales licensing.
Guarantee Issue Health insurance:
Insurance coverage which is issued without health questions and no underwriting.
Hazardous sports coverage:
Coverage for injuries incurred during amateur athletic activities which are non-contract and engaged in by an insured person solely for leisure, recreation, entertainment or fitness purposes. However, activities not covered include amateur or professional sports or other athletic activity which is organized and/or sanctioned, or which involves regular or scheduled practices, games or competition. Usually, following hazardous activities can be included by optional sports rider at additional premium cost: scuba diving, mountain climbing (up to 4500 meters or where ropes or guides are normally used), jet, snow and water skiing and snowboarding, sky diving, amateur racing, piloting an aircraft, bungee jumping and spelunking.
Health Maintenance Organization (HMO): An HMO is a prepaid medical service plan which provides services to plan members. Medical providers contract with the HMO to provide medical services to plan members. Members must select a primary care physician (PCP). The PCP can refer the member to a specialist if necessary. Contracted providers must be utilized.
Health Savings Account (HSA):
Health Savings Accounts are an option for people wanting a high deductible health insurance plan that has two parts. The first part is a health insurance policy that covers large hospital bills. Note that if you have a family, the deductible on HSA qualified plans is for the entire family. The second part of the Health Savings Account is an investment account or retirement account from which you can withdraw money tax-free for medical care. Otherwise, the money accumulates with tax-free interest until retirement, when you can withdraw for any purpose and pay normal income taxes.
Indemnity:
Term used to describe a benefit that pays a specific dollar amount (typically by reimbursement) rather than actual charges or a percentage of the charges. This type of health insurance coverage can leave the insured with more out-of-pocket exposure because there aren't any network negotiated rates and the insured is responsible for any charges above the specific dollar amount that the insurance company reimburses.
Individual policy:
An insurance policy (life, health, or disability) that provides coverage for an individual person (and, in some cases, his/her immediate family members); as opposed to a group policy that provides coverage for a group of individuals such as coverage through an employer.
Insured:
The person that purchases the insurance policy or enrolls into the insurance plan. The insured may be the Primary (policy holder) or a dependent.
Medicare:
A U.S. Government program setup to provide health care to people age 65 and older, and also people with certain disabilities specified by congress who are under 65.
Network:
A list of physicians, hospitals and other providers who have contracted to provide health care services to the beneficiaries of a specific managed care organization (usually at a pre-negotiated, reduced fee).
Out-of-Network Provider:
A health care provider which has not contracted with a specific managed care organization (network). Because of this, the insured must pay either all of the costs of care from an out-of-network provider or their cost-sharing requirements are greatly increased, depending on the particular plan a beneficiary is in.
Out of pocket maximum:
Maximum amount of money that the insured must pay on his own before the insurance company will pay 100% for insured's healthcare expenses.
Participating Provider:
A medical provider who has been contracted to render medical services or supplies to insureds at a reduced (pre-negotiated) fee. Providers include hospitals, physicians, and other medical facilities.
Pre-existing conditions:
A pre-existing condition is defined as any injury, illness, sickness, disease, or other physical, medical, mental or nervous condition, disorder or ailment that existed at the time of application or during the past duration (specified by each insurance plan) prior to the effective date of the insurance, including any subsequent, chronic or recurring complications or consequences related to thereto or arising there from.
Point of Service (POS): A feature of an insurance plan that allows a patient to choose between in-network care and out-of-network care every time he or she sees a doctor. The patient is allowed the freedom to go to whichever doctor is most convenient, although the cost will vary depending upon which option the patient chooses.
Policy maximum:
Maximum amount of money that the insurance company will pay for covered expenses. Policy maximum can be either per policy period, per year, life time or per injury/sickness depending upon the insurance policy you purchase.
Preferred Provider Organization (PPO):
A health care organization composed of physicians, hospitals, or other providers which provides health care services at a reduced fee. A PPO is similar to an HMO, but care is paid for as it is received instead of in advance in the form of a scheduled fee. PPOs may also offer more flexibility by allowing for visits to out-of-network professionals at a greater expense to the policy holder. Visits within the network require only the payment of a small fee. There is often a deductible for out-of-network expenses and a higher co-payment. A policy holder will have a primary physician within the network who will handle referrals to specialists that will be covered by the PPO.
Premium:
Amount you pay to purchase medical insurance plan. Premium may be paid monthly, quarterly, semi-annually, annually or for entire duration of the coverage depending upon the insurance policy you purchase.
Reasonable & Customary:A term used to refer to the commonly charged or prevailing fees for health services within a geographic area. A fee is generally considered to be reasonable if it falls within the parameters of the average or commonly charged fee for the particular service within that specific community.
Rescind:
Cancellation of an insurance contract back to the effective date. When a health insurance contract is rescinded, coverage is cancelled and all monies are returned - minus any claims paid. This most often occurs when misrepresentations were made to the insurance company at the time of application.
Underwriting:
The act of reviewing and evaluating prospective insured for risk assessment and determining the appropriate premium.
Well Child Visit:
The American Academy of Pediatrics recommends well child visits at the following times:
Before birth (for first-time parents)
Before your newborn is discharged from the hospital. If your baby is discharged before two full days of life, your baby should be seen again within 48 and 72 hours.
During the first year of life – a visit at about 2-4 weeks of age and at 2, 4, 6, 9, and 12 months of age
During the second year of life – visits at 15, 18, and 24 months of age
In early childhood – yearly visits from 2-5 years of age
Resources
AARP—An advocacy organization comprising 35 million members. AARP focuses on issues affecting men and women aged 50 and older. Go to www.aarp.org to find many publications and other resources on health topics, including Medicare and other health insurance. Contact AARP by phone at 1-888-687-2277, or write to AARP, 601 E Street, N.W., Washington, DC 20049.
Agency for Healthcare Research and Quality (AHRQ)—An agency of the Federal Government. Go to the Agency';s Web site at http://www.ahrq.gov to find more information and tools to help you evaluate health plans, as well as many consumer publications on various health topics. Most of the consumer materials are available in English and Spanish. Call the AHRQ Clearinghouse at 1-800-358-9295 to order free copies of publications.
America's Health Insurance Plans (AHIP)—A national association that represents health insurance plans providing medical, long-term care, disability income, dental, supplemental, stop-loss, and reinsurance to more than 200 million Americans. Go to http://www.ahip.org and select "Consumer Information," where you can access many consumer guides on health insurance and link directly to companies that provide health insurance coverage. Or, contact AHIP by phone at 1-202-778-3200, or write to AHIP, 601 Pennsylvania Avenue, N.W., Washington, DC 20004.
Joint Commission on Accreditation of Healthcare Organizations (JCAHO)—Evaluates and accredits health care organizations and programs, including hospitals, long-term care facilities, and other health care facilities, as well as health plans, managed care entities, and other insurers. Go to the JCAHO Web site at www.jointcommission.org, call them at 630-792-5000, or write to JCAHO, One Renaissance Boulevard, Oakbrook Terrace, IL 60181.
Medicaid—General information about the Medicaid program is available online at http://www.cms.hhs.gov/MedicaidGenInfo/. Medicaid is a State administered program; eligibility and covered services vary from State to State. For information specific to the Medicaid program in your State, contact your State Insurance Commissioner; check out the blue pages of your local phone book for contact information.
Medicare—Go to the Medicare Web site at http://www.medicare.gov where you can search by category, keyword, or phrases to find information about Medicare. Telephone help is also available; you may call 1-800-MEDICARE 24 hours a day, 7 days a week. Assistance is available in English or Spanish. You will be able to get general information about Medicare, view Medicare booklets, and find out about plans that are ava ilable in your area.
National Committee for Quality Assurance —A group that develops quality standards, performance measures, and recognition programs for organizations and individuals, including health plans, medical groups, physician networks, and individual physicians. Visit their Web site at www.ncqa.org or call 202-955-3500.
Utilization Review Accreditation Commission—A group that accredits PPOs and other managed care networks. Visit their Web site at www.urac.org, call 202-216-9010, or write them at URAC, 1220 L Street, N.W., Washington, DC 20005.
