.                                                                                                Glossary of Health Insurance Words and Phrases

Actual charge: the charge(s) for a particular service/treatment by a health care provider

Alternative medicine: some medical techniques once considered outside the boundaries of standard practice have become more accepted in recent years and may now be eligible for coverage. Acupuncture, midwives, and osteopathic treatments are examples of formerly excluded treatments that are now covered under many health insurance policies.

Annual limits: are maximums on the dollar amounts the plan will pay for any given year

Approved charge: the dollar amount on which your insurer bases its payments and your co-payments.

Assignments of benefits: the insured allows a hospital or doctor to collect your health insurance benefits directly from your insurance company.

Associated group plans: fully insured plans issued to employee groups, including those formed by labor unions, nonprofit membership corporations, etc.

Beneficiary: the recipient of the benefits of the policy

Benefit maximum: the most a policy pays for a specified loss or covered service. This can be expressed as either a period of time, a dollar amount, or a percentage of the approved amount.

Benefit period: the time period for which payments for benefits of an insurance policy are available.

Capitation to providers: a system where an HMO pays a doctor or hospital a flat monthly fee for the care of each health plan member, whether or not any services are delivered.

Chronic condition: prolonged conditions or illness, such as asthma, diabetes, etc.

Claim: a request from the insured to the insurance company for payment

Closed practice: a primary care physician that is not accepting new patients.

COBRA: Federal law that gives the right to workers to continue group health care coverage for a specified period for themselves if the worker loses coverage because of reduced work hours or loses the job (if the employer has 20 or more employees).

Conversion privileges: group plans generally have a conversion privilege that allows an employee to covert to an individual conversion policy upon termination of employment. Alternatively, coverage under a COBRA plan may be available.

Co-insurance: is the share of the covered charges, usually a percentage, that the insured and plan each pay. If the plan has a deductible, the coinsurance is applied after the deductible has been satisfied. For example, if the insured has bills amounting to $400 and the plan has a $100 deductible amount, the insured is responsible for paying the first $100 and the insurer will begin paying after that. But because of the coinsurance, the company will pay only a percentage of the covered expenses and the insured must pay the remaining percentage. Between the two of them, they will pay 100%. So, in our example, if the plan pays 80% of the $300 remaining after the deductible, the insurer will pay $240 (80% of $300) and the insured will pay $60 (20% of $300).

Coordination of benefits (COB): When the insured is covered under more than one plan (for example under a group plan at work, and as a family member on a spouse’s plan) the benefits from the plans are coordinated so as to limit the total benefits from all plans. Usually, the benefits from all plans will not exceed 100% of the covered medical expenses.

Covered dependents: traditionally, under group health insurance plans dependent coverage was only available for spouses and children. More recently, reflecting the changing lifestyles of Americans, some groups have also begun covering domestic partners of homosexuals and lesbians, children of divorced parents, and dependent parents of employees. Also, common law marriages have been recognized by some plans because they need to be in compliance with legal requirements.

Co-Pay: are fixed dollar payments that the insured must pay directly to the provider at the time services are received. For example, the contract for a certain network of doctors may require that patients pay a $10 co-pay each time they visit one of the doctors who is a member of that network. Or, the insured may have to pay $10 for each pharmacy prescription filled.

Covered services and supplies: Usually, the insured will receive a booklet that describes the services and supplies that are covered and reimbursable under the plan. This booklet will probably also describe the types of services and supplies that are not covered and reimbursable under the plan.

Covered services generally include the professional services of standard medical practitioners such as doctors, nurses, and midwives. Other types of care providers may also be covered under the plan.

For a hospital plan, covered services would probably include confinement in hospitals and possibly other facilities such as hospices, rehabilitation centers and nursing homes.

Covered supplies refers to certain medical equipment and supplies that may be medically necessary for treatment and therefore are covered under the terms of the plan. For example, the plan might include coverage for such items as prescription drugs, diabetic supplies, walkers, crutches and other items of this nature.

The specifics of what items are covered vary from plan to plan. Also, such details of coverage as dollar limitations and deductibles and coinsurance percentages vary. So you need to check your own plan to determine exactly what is covered, and what is not, as well as exactly how much the plan will pay for covered services and supplies.

Deductible: is the amount the insured is required to pay before the insurer begins paying benefits. For example, if the insured has bills amounting to $400 and the plan has a $100 deductible amount, the insured is responsible for paying the first $100 and the insurer will begin paying after that. Higher deductible, lower the premium.

Discount fees for service to providers: HMOs contract with health providers to provide services at discounted rates.

Enrollment period: the period during which individuals may enroll for an insurance policy, Medicare, HMO benefits.

ERISA: Employee Retirement Income Security Act, a federal law that regulates employer-sponsored pension and insurance plans for employees.

Evidence of insurability: Certificate of prior coverage, proof you had health insurance in the last 63 days.

Exclusions: conditions or procedures that are not covered. Every health care plan has its own list of exclusions and limitations. Some of the more common ones are experimental medications/treatments/procedures, sickness or injury as a result of war, attempted suicide, cosmetic surgery, etc.

Experimental and investigational procedures: health insurance coverage generally excludes medical treatments that are deemed to be unproven, ineffective, or non-standard. This includes surgical techniques and medicines not approved by the Food and Drug Administration. Sometimes such treatments may be available by traveling to another country, but these treatments would generally not be covered.

Explanation of benefits (EOB): the insurance company’s explanation of its decision regarding your claim.

Fee for service: a health plan that allows you, as the patient, to use any doctors you want, but requires you pay for the services yourself and file (or your provider files) claims for reimbursement.

Free look: the period during which you may reconsider the purchase of an insurance policy, cancel, and get a full refund. The clock starts running the day you receive the policy. Check your state’s insurance law for the specific provisions that apply in your state.

Gatekeeper: a term applied to a primary care physician

Grace period: a specified period of time after a premium is due during which you can still make a payment without losing the insurance. Check your policy to be sure what it provides.

Grievance procedure: the required appeal process an HMO/insurance company provides to protest a decision regarding a claim payment

Guarantee issue: an insurance policy that is issued to anyone, regardless of prior medical history.

Guaranteed renewable: an agreement by an insurance company to insure a person for as long as premiums are paid.

Health care reimbursement accounts: accounts that allow you to set aside pre-tax dollars to pay for medical care or costs

HIPAA: Health Insurance Portability & Accountability Act, a federal law that guarantees health care plan eligibility for people who change jobs, if the new employer offers group insurance.

HMO (Health Maintenance Organizations): provide health services through a network of hospitals, doctors, laboratories, and so forth.

Hospital indemnity policy: pays a fixed dollar amount for each day you are hospitalized, regardless of the actual costs.

Hospital pre-certification: managed care plans often require prior approval before the insured enters the hospital. In the case of an emergency, or other situation where pre-certification is not possible, such plans often require prompt notification – often in 48 hours after admission.

Individual practice associations (IPAs): a network of individual practitioners who have entered into contracts (generally an HMO) to provide medical services to enrolled members. Visits take place in the doctor's office.

Insured: an individual or organization protected by an insurance plan

Lifetime maximum: is the total dollar amount the plan will pay for all types of medical expenses, for all benefit periods, while the insured person is alive and covered under the plan.

Limitations: the conditions or circumstances for which benefits are not payable or are limited.

Loss: the basis for a claim under an insurance policy.

Loss ratio: the dollar amount an insurer pays in claims compared to the amount it collects in premiums.

Managed health care plans: a system that organizes a network of doctors, hospitals, and other providers to provide comprehensive health services to their members at lower costs.

Mandated benefits: health care benefits that state or federal law says must be included in health care plans.

Medically necessary: a provision in a health care insurance policy that excludes coverage for treatment that is not “medically necessary”. This term may be defined differently from one health care plan to another.

Medical Savings Account (MSA): an account held in trust for the account holder. The employer or employee makes annual tax-free contributions to the account that must be maintained in conjunction with a high deductible health insurance policy.

Multiple employer plans: benefit plans that serve employees of more than one employer and are set up under collective bargaining agreements.

Multiple Employer Welfare Arrangements (MEWA): a type of employee association plan that provides benefits to employees of more than one employer.

Network: all physicians, specialists, hospitals and other health care providers who agree to provide medical care to HMO/PPO members under the terms of a contract.

Open enrollment: a specified period of time when existing non enrolled employees may enroll in thier group health insurance plan.

Out-of-pocket limit: is a dollar limit on the portion of covered medical expenses that the insured must pay during a benefit period (usually a calendar year). When the out of pocket limit is met, the insured will not have to pay further deductibles or coinsurance for that year. To illustrate, say the out of pocket is $1000 per calendar year and the insured’s coinsurance is 20%. When $5000 of covered medical expenses have been incurred, the $1000 out of pocket limit will be met ($5000 at 20%). Thereafter, the plan will pay benefits at 100% and the insured’s portion will be $0 for the remainder of that year.

Outpatient services: services usually provided in clinics, physician or provider officers, ambulatory surgical centers, hospices, home health services, and so forth.

Physical examination: physical examination, as well as information about your medical history, may be required to qualify for health insurance. The requirements will vary for individual or group coverage, for different insurance companies, and for very large or very small groups.

Point-of-service (POS) plans: these plans allow members the option of using services outside the HMO network without prior approval

Portability: under HIPAA, workers with pre-existing medical conditions must receive credit for time in a previous health plan if they enroll in another employer plan

Pre-certification: a requirement that you notify the insurance company for its approval before you check into a hospital, have elective surgery, visit specialists, have expensive tests (e.g., MRI). Pre-certification does not guarantee the insurance company will pay the medical bills. Also called “utilization review”.

Pre-existing condition: health problem/condition/illness you had prior to applying for insurance and for which you received medical advice, diagnosis, care or treatment. Policies can exclude coverage of any medical condition for a period of time.

Preferred Provider Organization (PPO): a network of doctors, hospitals, and suppliers (preferred providers) who agree to provide services to members of a health plan for discounted fees.

Premium: the amount you pay each year for insurance coverage

Primary care physician (gatekeeper): the physician selected by HMO members who serves as a personal doctor and provides all medical treatments and any referrals to medical specialists.

Primary plan: this is the plan that pays first when you are covered by more than one insurance plan

Prior qualifying coverage: health plan coverage that was in effect before the effective date of the current or new coverage

Provider: a doctor, hospital, x-ray company, pharmacy, etc. that provides medical health care services

Reasonable and customary fees: when a doctor or other provider of medical services submits a bill, the insurer will make an evaluation of whether the charges are reasonable and customary for that medical service provider and for the type of service performed. What is reasonable and customary depends on factors such as the specific medical service provided, the qualifications and skill level of the doctor (or other care provider), the geographic area (fees can vary widely in different areas) and anything else that the insurer may consider to be pertinent to the evaluation. Companies maintain large computerized databases of information and sophisticated computer programs to determine what is reasonable and customary in a specific situation.

Reinstatement: policies which have lapsed can usually be reinstated by paying the past due premiums and giving appropriate evidence of insurability.

Renewability: group health insurance plans are normally 1 year term. Insurers generally review the claims experience of the group at each renewal date and make a renewal offer – often at a different premium. The company then decides whether to accept the renewal offer.

Individual policies are renewed periodically (as specified in the policy). Premiums for individual health insurance plans are adjusted based on the experience of all similar individual health insurance plans issued by the insurance company. Details of renewability are spelled out in the policy.

Rider: a legal document that modifies an insurance policy

Second surgical opinion: If surgery is recommended, the insurance company may require, or in some cases the insured may request, a review of the case by a second surgeon. If a second opinion is deemed warranted the insurer would pay a second surgeon to review the case and concur with the first doctor or suggest an alternative treatment.

Secondary plan: applies only when you have more than one health insurance plan. The second plan pays only after the primary plan has processed the claim.

Self-insured plan: an organization that pays health care costs out of the organization’s own pocket

Specific disease policy: a plan that covers expenses only for a specific disease identified in the policy. Also called Dread Disease policy.

Spell of illness provision: spell of illness usually refers to a period of time during which a patient is being treated for a particular incidence of an illness. Some companies use the terminology “per cause” rather than “spell of illness.” The exact definition can also vary from plan to plan. Here is one example of how it might work: If a patient is confined in a hospital for 5 days for a specific condition, the spell of illness is 5 days. If the confinement continues for an additional 7 days because of another non-related condition, that might be considered to be another 7 day spell of illness. On the other hand, if the total confinement of 12 days (5 days plus 7 days) results from the initial condition or a related condition -- hospital plans usually have lists of conditions that are considered closely related and so constitute a single spell of illness -- the entire confinement might be considered to be one spell of illness lasting 12 days.

Spell of illness is more commonly associated with disability insurance than health insurance, but it sometimes comes into play in health insurance as a limitation on what will be covered. For instance, in the above example, there might be a limitation of 10 days hospital confinement per spell of illness, where spell of illness is defined as being for only one condition. Therefore, the plan would pay for the entire 12 days where the confinements are for non-related conditions (5 days for one spell of illness and 7 days for the other spell of illness). But if the entire 12 days is only for one condition, then benefits might be limited to covering only 10 days confinement.

Stop-loss clause: the clause in the contract between the insurer and the insured that specifies the maximum payment that will be made for particular types of coverages – for example the total payments for psychiatric coverage or surgery may be limited to some maximum dollar amount. Sometimes the term stop-loss is also used to refer to an arrangement of risk management where the risk is shared among several insurance companies.

Third party administrator: they administer employee benefit plans under contract with insurance companies, HMOs and self-funded plans.

Underwriting: the process by which an insurer establishes and assumes risks.

Usual, customary & reasonable (UCR): the dollar amount the insurance companies believe to be a fair price for the medical service/procedure in a specific geographic area. Companies have developed their own UCR, which often do not reflect the doctor’s actual bill. If the doctor’s chargers are higher than the companies UCR charge, you generally have to pay the balance.

Utilization review services: a process that reviews, on a case-by-case basis, the utilization, appropriateness, or quality of medical services provided to a person. Examples of utilization review are pre-hospital admission, pre-inpatient certification, second opinions, etc.

Waiting period: has two meanings: (1) the time period you must wait before you can get health insurance from a new employer; and (2) the time that must pass after becoming insured before the policy will begin to pay benefits for a pre-existing condition or specified illness.

Waiver: an amendment to a policy that excludes coverage for certain medical conditions