Helpful Insurance Terminology

While various payers will use some of these same terms to mean slightly different things, this Glossary should help you decipher some of the more common terms used by health insurers and found in your coverage booklet.  Make sure you go to your insurance company’s website if there are terms you’re not sure about – quite often they will have a similar glossary for you to review.

Acute Care-

is care received in an inpatient hospital setting

Annual Out-Of-Pocket Maximum –

this is the “cap” on the amount of money you will have to spend for specified covered health services in a calendar year.  The amount may vary depending on the type of insurance plan you’re signed up for and is usually shown on a summary of benefits you can often access online through your insurance company’s member web portal

Balance Billing -

when an insured receives services from a health care provider that does not  participate in the member’s insurer network, the health care provider is not obligated to accept the insurer’s payment as payment in full and may bill the patient for unpaid amount.

Calendar Year –

is the time period beginning January 1 and ending December 31.  (REMEMBER that not all insurance policies start and end on a calendar year basis!)

Certificate of Creditable Coverage –

is a document you may need to show proof you had prior medical coverage.  You may need to furnish this certificate to another insurance carrier to obtain medical coverage in the future.

Coinsurance -

is usually a percentage of the total cost of care that you may need to pay when you have a covered service.  The Plan pays the rest of the cost of the service.  This is different from a Copayment.

Condition -

is a state of health which is diminished in some fashion, due to illness or injury and which may require professional treatment or services.

Copayment -

is a fixed dollar amount you pay for a covered service at the time the care is provided.  This is different from Coinsurance.

Cosmetic treatment -

is medical or surgical treatment performed primarily to improve the insured’s appearance or self esteem.

Custodial care -

services or supplies that usually do not require the skill and training of a licensed nurse.  Generally this type of care is needed to assist a patient with performing activities of daily living or personal grooming and are not intended to treat an illness, disease or condition.

Deductible -

is the amount of money an insured individual must pay out-of-pocket for medical services before the health plan is responsible to pay its portion.  Deductibles are usually divided on one or more bases:  per person or per family, per calendar year. For example, an individual may have a $200 deductible whereas a family may have a $400 deductible.

Dependent –

is a person an insured or insured spouse provided more that 50% of that person’s support , during the most recent calendar year.  Usually a child will be considered a dependent if an insured or insured spouse are required to provide medical care to a child under a qualified medical child support order, which is defined by federal law.

Durable medical equipment (DME) -

is equipment which is generally used for a medical purpose and is not useful in the absence of illness or injury.  DME items are supposed to withstand continued or repeated use and are generally considered to be safe and effective for the purpose intended.  Examples include items such as oxygen, wheelchairs, walkers and other medically necessary equipment required for the treatment of a particular illness or injury.

Emergency -

is a medical condition that presents itself through symptoms that are sufficiently severe that a reasonably prudent layperson who possesses an average person’s knowledge of health would be reasonable in thinking that failure to obtain immediate care would place someone’s health in serious jeopardy.

Employer Group -

refers to the organization whose employees are covered by a particular insurance or self-insured health plan.

ERISA  (The Employee Retirement Income Security Act of 1974) -

ERISA is a comprehensive and complex statute that federalizes the law of employee benefits. ERISA applies to most kinds of employee benefit  plans, including plans covering health care benefits, which are called employee welfare benefit plans.

External Review –

is the review of a health plan’s determination that a requested or provided health care service or treatment is not or was not medically necessary by a person or entity with no affiliation or connection to the health plan.  (PPACA requires all health plans to provide an external review process that meets minimum standards.

Family practice physician -

a licensed physician trained to diagnose and provide health care to patients of all ages. Usually a family practice doctor is trained to provide routine gynecological care (including the annual gynecological exam) and some also provide obstetric care.

Formulary –

is the list of drugs covered fully or in part by a health plan.

Grandfathered Plan -

is a health plan that an individual was enrolled in prior to March 23, 2010. Grandfathered plans are exempted from many of the changes required by PPACA.

Gynecologist -

a licensed physician specializing in the diagnosis and treatment of the diseases of a woman’s reproductive system.

Internal Review -

is a review of a health plan’s determination that a requested or provided health care service or treatment health care service is not or was not medically necessary by an individual(s) associated with the health plan.

Internist -

a licensed primary care provider who is trained to diagnose and provide health care services to adults and teens, including routine gynecological care and the annual gynecological exam for women.

Managed Care Plans -

are health insurance plans that contract with health care providers and medical- facilities to provide care for plan members at reduced costs.  The group of providers make up the plan’s “provider network.”  There are three basic types of managed care plans:

Health Maintenance Organizations (HMO) -

an HMO usually only pays for care within the network.  The member chooses a primary care doctor who coordinates the care and acts as a “gatekeeper.”

Preferred Provider Organizations (PPO) -

a PPO usually costs more in premium because it has greater flexibility than an HMO.  For instance in most PPO plans a member can pay less if they get care within the network, but they will pay more if  they seek care from outside the plan.

Point of Service (POS) -

these plans usually let you choose from the widest selection of providers compared with either HMO or PPO.

Medically necessary –

is a term which will be defined differently depending on the health insurer and/or specific contract.  In general terms “medically necessary” refers to treatment which is required to treat or care for symptoms of an illness or injury or to diagnose an illness or condition.  Medically necessary services or supplies are usually required to meet several elements including:  (1) appropriate as to place or level of care in amount, duration, and frequency for the treatment of the condition;  (2) not provided primarily for convenience of the member or the health care practitioner; (3) appropriate and in accordance with widely-accepted standards of practice in the community; and (4) likely to stabilize or improve a member’s medical condition.  Nearly all insurers will include language to the effect that the fact that services are provided, prescribed or approved by a physician or provider does not in and of itself mean that the services are medically necessary.

Medicare -

A federal government program that provides health care coverage for all eligible individuals age 65 or older or under age 65 with a disability, regardless of income or assets.  Eligible individuals can receive coverage for hospital services (Medicare Part A), medical services (Medicare Part B), and  prescription drugs (Medicare Part D).  Together, Medicare Part A and B are known as Original Medicare. Benefits can also be provided through a Medicare Advantage plan (Medicare Part C).

Medicare Advantage —

An option Medicare beneficiaries can choose to receive most or all of their  Medicare benefits through a private insurance company.  Also known as Medicare Part C.  Plans contract with the federal government and are required to offer at least the same benefits as original Medicare, but may follow different rules and may offer additional benefits. Unlike original Medicare, enrollees may not be covered at any health care provider that accepts Medicare, and may be required to pay higher costs if they choose an out-of-network provider or one outside of the plan’s service area.

Members -

are those persons who are eligible to be covered by the health plan.

Nurse Practitioner -

is a licensed nurse who has a Master’s Degree in nursing and advanced training which allows them to provide primary care services within the scope of their professional license.  Some health plans will allow nurse practitioners to act as a primary care provider in lieu of a physician.

Obstetrician -

is a physician specializing in medical care related to pregnancy and childbirth.  Some health plans will allow obstetricians to act as a primary care provider.

Open Enrollment Period -

a specified period during which individuals may enroll in a health insurance plan each year. In certain situations, such as if one has had a birth, death or divorce in their family, individuals may be allowed to enroll in a plan outside of the open enrollment period.

Patient Protection and Affordable Care Act (PPACA) -

Federal legislation (Public Law 111-148) signed into law by President Obama on March 23, 2010.  PPACA is also commonly referred to as the “health care reform law.”  The U.S. Supreme Court is currently considering a group of lawsuits challenging whether or not Congress was authorized to enact certain provisions in PPACA.  A decision is expected in mid-2012.

Participating Provider -

is a physician, other allied health care provider, hospital, or other type of medical facility which has signed a provider agreement with an insurance company, self-insured plan or other type of provider network arrangement.

Pediatrician -

is a physician specializing in medical care provided infants, children and adolescents.

Physician Assistant -

is a mid-level practitioner who is able to practice medicine under the supervision of a licensed physician, who is generally not required to be physically present during the time the PA performs their duties.  However there usually must be an ability for the supervising physician and PA to be in direct contact at all times.

Pre-existing condition exclusion -

The period of time that an individual receives no benefits under a health benefit plan for an illness or medical condition for which an individual received medical advice, diagnosis, care or treatment within a specified period of time prior to the date of enrollment in the health benefit plan.

Premium -

is the periodic payment required to keep a policy in force.

Preventive Care Services –

are routine services such as screenings and immunizations offered for the purpose of health maintenance or the early detection of an illness, conditions or disease.

Prior Authorization –

is a process required by a health plan which requires a member and/or the member’s health care provider to seek approval or benefit confirmation from the plan before a particular service, treatment or supply will be covered by the plan.

Riders -

are usually additional benefits which can be purchased by a group such as an employer, union, etc. for an additional premium.   Common examples of coverage which is often offered through a Rider include:  Vision, Alternative Care, or Chiropractic Treatment.  In many cases coverage for weight loss surgery may not be part of a health care plan’s standard benefit plan but may be offered for an additional premium as part of a Rider.

Self-insured -

Group health plans may be self-insured or fully insured.  A plan is self-insured (or self-funded), when the employer assumes the financial risk for providing health care benefits to its employees. A plan is fully insured when all benefits are guaranteed under a contract of insurance that transfers that risk to an insurer.

Skilled Nursing Facility (SNF) -

is a convalescent or chronic disease facility which is accredited by the Joint Commission on Accreditation of Hospitals or certified as an “SNF” by the Secretary of Health & Human Services according to Title XVIII of the Social Security Act as amended, section (j).

Subscriber -

is usually the employee or member of the particular group whose employment or membership in the group establishes eligibility for themselves as well as his or her dependents.

Summary Plan Description (SPD) -

refers to an outline of an employee benefit plan provided under the Employment Retirement Income Security Act (ERISA).  An SPD contains information such as the identity of the plan administrator, the requirements for eligibility and participation in the plan, circumstances that may result in disqualification or denial of benefits, and the identity of any insurers responsible for financing or administering the plan.  Health insurance benefits are often part of a standard employee benefit plan and therefore the SPD is an important document to know what is/is not covered.

Usual, customary, and reasonable (UCR) –

is the term used to describe what a health care plan believes is the amount which is commonly charged for a particular service or supply.  Most frequently UCR is substantially less than the charged amount reflected on a provider’s statement.

Waiting Period –

is the period of time that an individual must wait either after becoming employed or submitting an application for a health insurance plan before coverage becomes effective and claims may be paid.  Premiums are not collected during this period.

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