Customer Resources Blog & News Contact Us Agent Support Center About Us Home Page Home Pagepreheader contentBtns Life, Health, & Dental Auto & Home Insurance Long Term Care & Other Insurance

Health Insurance Glossary

(If you are unable to find a definition please check our main glossary, or feel free to contact us)

Actuary- a person responsible for calculating future probabilities of risk and what premiums the company needs to charge based on potential risk (in large part based on claims paid versus amounts of premium generated). 

Admitting privilege- the right granted to a doctor to admit patients to a particular hospital.

Advance care planning consultations- a controversial provision of H.R. 3200 would have paid physicians to provide counseling to elderly or terminally ill patients who request the counseling. The provision – ultimately omitted from the passed health reform legislation – would have paid for one counseling session at least every five years, during which patients could discuss advance care planning, advance directives, living wills, palliative care and hospice and possible life-sustaining treatments for the terminally ill.

Advance directive- indicates the person designated to make medical decisions for you if you are unable physically or mentally to make those decisions yourself.

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  insurance companies and presents their products to consumers.

Associations- a private group that is established for a classification of individuals that has the purpose of assisting members with needs (Example, the American Bar Association) Some can offer group health insurance plans specially designed for their members and that give their members purchasing power because of the groups larger pool of enrollees.  State regulations influence who or what type of associations can be considered for Group Insurance.

Beneficiary- an individual who is  enrolled in a health insurance plan and receives benefits through those policies.

Benefit- refers to the 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.   Plans will frequently differentiate between levels of coverage based on the cost of both brand and generic drugs.  For Example Tier 2 and Tier 3 drugs can refer to less expensive to more expensive brand name drugs.
Broker- a licensed insurance salesperson who obtains quotes and plan from multiple insurance companies on behalf of their clients.

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 provider.

Carrier- the insurance company or HMO offering an insurance plan.

Case management- a system embraced by employers and insurance companies to ensure that individuals receive appropriate, reasonable health care services.

Certificate of insurance- a printed description of the benefits and coverage provisions forming the contract between the carrier and the customer. It discloses what is covered, what is not, and dollar limits (sometimes known as a declarations page or summary of benefits).

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 that are believed to be covered by one’s insurance policy, can be considered an application for benefits provided by your plan. You must file a claim before funds will be reimbursed to your provider. A claim may be denied based on the carrier’s assessment of the circumstance.

COBRA- is the Consolidated Omnibus Budget Reconciliation Act of 1985, federal legislation that allows you – if you work for an insured employer group of 20 or more employees – to continue to purchase health insurance for up to 18 months if you lose your job, or your employer-sponsored coverage is otherwise terminated.

Coinsurance- 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 “copayment.” Coinsurance is often specified by a percentage and typically will have a cap (but not always-especially for out of network benefits). For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.

Cooperatives-(or insurance cooperatives) were proposed in the Senate as an alternative to a proposed government plan or public option. The cooperatives, which would have been structured as non-profits and owned by their members, would offer a network of health care providers or contract out for medical services. The concept championed by some Democrats would provide “seed money” for the cooperatives, which would then be sustained by customer premiums.

Copayment- is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some HMOs (or other types of health plans) require a $10 copayment for each office visit, regardless of the type or level of services provided during the visit. Copayments are not usually specified by percentages.

Credit for prior coverage- may or may not apply when you switch employers or individual 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.

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- the refusal of an insurance company or carrier to honor a request by an individual (or his or her provider) to pay for health care services obtained from a health care professional.

Dependent- a person or persons relying on the policy holder for support may include the 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.

Effective date- the date your insurance coverage commences.

Electronic health record- a long-term aggregate of a patient’s health information and may be a record of a variety of providers and types of medical care. This record is sometimes confused with an electronic medical record, which is a record of a patient’s health maintained by a physician as a record primarily of the physician’s care of the patient. An example of this would be the Medical Information Bureau (MIB).

Electronic medical record- a record of patient health maintained by the patient’s physician as a record of that physician’s care of the patient. This record is often confused with an electronic health record, which is a more comprehensive, long-term aggregate of a patient’s health information and may be a record of a variety of providers and types of medical care.

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.

Employer mandate- a requirement of the new health reform legislation that employers with 50 or more employees to provide health coverage to those employees and sets a minimum baseline of coverage and employer contributions. Employers who do not comply will face annual penalties based on the number of employees in the firm.

Employer-sponsored health insurance- also known as a Group health plans are mostly guaranteed issue, meaning that a carrier must cover all applicants whose employment qualifies them for coverage. In addition, employer-sponsored plans typically are able to include a range of plan options from HMO and PPO plan to additional coverage such as dental, life, short- and long-term disability. Read more about group health insurance

Essential health benefits- Beginning in 2014, under the Affordable Care Act, all health insurance policies sold in state health insurance exchanges must cover what physicians and consumer advocates call essential health benefits. The benefits include maternity coverage, substance abuse coverage, mental health coverage, and prescription drug coverage.

Exclusion- a provision (typically a rider) within a health insurance policy that eliminates coverage for certain acts, property, types of damage or locations.

Explanation of benefits- the insurance company’s written explanation regarding a claim, showing what they paid and what the client must pay or has paid.

Generic drug- once a company’s patent on a brand-name prescription drug has expired, other drug Companies are allowed to sell the same drug under a generic label. Generic drugs are less expensive, and most prescription and health plans reward clients for choosing generic drugs.

Group health insurance- coverage provided through an employer or other entity that is offered to all individuals in a pre-set group.

Guaranteed issue- refers to health insurance coverage that is guaranteed to be issued to applicants regardless of their health status, age, or income – and guarantees that the policy will be renewed as long as the policy holder continues to pay the policy premium.

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 choices administration- a federal agency that would oversee its provisions, including the establishment of health plan benefit standards, establishment and operation of the health insurance exchanges, and administration of individual affordability credits or subsidies. The commission’s additional responsibilities would include prevention of abuses within the Health Insurance Exchange system.

Health choices commissioner- Health reform legislation called for the creation of a federal agency called the Health Choices Administration. Overseeing that agency would be the Health Choices Commissioner, an individual appointed by the President to oversee provisions of health reform, including the establishment of health plan benefit standards, establishment and operation of the health insurance exchanges, and administration of individual affordability credits or subsidies. The commissioner’s additional responsibilities would include prevention of abuses within the Health Insurance Exchange system.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA)- 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.

Health maintenance organizations (HMO)- represent 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.)  Members of HMO’s typically will have a primary care physician that manages their care.  These organizations may require a referral to see a specialist.  Benefits and individual costs will vary by plan design.

Health Savings Account (HSA)- a Health Savings Account is a tax-exempt custodial account established for the purpose of paying or reimbursing qualified medical expenses for you, your dependents or your spouse. Like a regular bank account, the unused money in your HSA rolls over from year to year so you can build your savings to cover future medical expenses - you'll never lose unspent money. And since your HSA belongs entirely to you, it moves with you if you should change jobs.  In order to get a health savings account you must first have a plan that is HSA qualified.

In-network- refers to providers or health care facilities that are part of a health plan’s network of providers with which it has negotiated a contracted discount. Insured individuals usually pay less when using an in-network provider.

Indemnity health insurance plans (also called fee-for-service, or limited benefit plans)-Come in multiple forms, originally Indemnity plans primarily existed before the rise of HMOs, IPAs, POS, and PPOs. With the original 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. Currently these plans will frequently pay a set fee per service and can be reimbursed either directly to the provider or to the customer.  Indemnity health plans offer individuals the freedom to choose their health care professionals.

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 affordability credits- included in the health reform legislation to help ensure the goals of the legislation’s individual mandate. Legislation provides premium subsidies on a sliding scale to eligible individuals and families with incomes up to four times the federal poverty level to help them purchase coverage through the health insurance exchanges.

Individual health insurance- health insurance coverage purchased by an individual or family.
Individual mandate- the individual mandate provision of the recently passed health reform legislation requires citizens to have insurance coverage that meets minimum standards set as part of health insurance exchanges, including guaranteed access to affordable coverage, essential benefits and other consumer protections. The legislation imposes a tax penalty on individuals (unless in a group that is eligible for an exception) who do not purchase coverage.

Insurance exchange- the health insurance exchange mechanism is a key provision of health reform legislation, established to provide a selection of competing providers, each offering different qualified plans. All qualified plans must meet standards established and enforced by the Health Choices Administration. For instance, participating plans will not be allowed to discriminate against applicants based on health history (pre-existing conditions) or future risk.

Length of stay (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.

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 or the policies lifetime.

Limitations- a limit on the amount of benefits paid out for a particular covered expense, as disclosed on the Certificate of Insurance.

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. Recent statistics show that about 90 percent of the insured populations use some form of managed care.

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.

Medicaid- a health insurance program for low-income individuals who are unable to otherwise afford Medicare or other commercial health insurance plans. Medicaid is funded in part by the government and by the state where the enrollee lives.

Medical underwriting- a process used by insurance companies to evaluate whether to accept an applicant for health coverage and/or to determine the premium rate for the policy.

Medicare-  the federal health insurance program created to provide health coverage for Americans aged 65 and older and later expanded to cover younger people who have permanent disabilities or who have been diagnosed with end-stage renal disease or amyotrophic lateral sclerosis (ALS).

Medigap insurance policies- Medigap plans offer supplemental benefits sold by private companies to extend traditional Medicare. Fifteen plans offer varying combinations of benefits, ranging from coverage of copayments and deductibles to coverage of foreign travel emergency expenses, at-home care and preventive care.

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.

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.

Non-profit cooperatives or insurance cooperatives- proposed in the Senate as an alternative to a proposed government plan. The cooperatives, which would be structured as non-profits and owned by their members, could offer a network of health care providers or contract out for medical services. The concept championed by some Democrats would provide “seed money” for the cooperatives, which would then be sustained by customer premiums.

Open-ended HMO (Health Maintenance Organization)- 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 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-pocket (OOP)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.

The Patient Protection and Affordable Care Act (PPACA)- also known as the Affordable Care Act or ACA – is the landmark health reform legislation passed by the 111th Congress and signed into law by President Barack Obama in March 2010. The legislation includes a long list of health-related provisions that began taking effect in 2010 and will continue to take effect in stages over the next four years.
Plan administration- the process of 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.  The group responsible for administrating the plan is frequently referred to as the Plan Adminsitrator.

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-existing condition- 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.  Depending on the state and the policy many customers will have to observe a look back period for pre-existing conditions.

Preadmission testing- Medical tests that are completed for an individual prior to being admitted to a hospital or inpatient health care facility.

Preferred Provider Organization (PPO) is a managed care organization of health providers who contract with an insurer or third-party administrator (TPA) to provide health insurance coverage to policy holders represented by the insurer or TPA. Policy holders receive substantial discounts from health care providers who are partnered with the PPO. If policy holders use a physician outside the PPO plan, they typically pay more for their medical care in the form of higher deductibles and standard rates.

Primary care provider (pcp)- A health care professional (usually a physician) who is responsible for monitoring an individual’s overall health care needs. Depending on the type of plan a PCP may also be responsible for things such as referring the individual to more specialized physicians for specialist care.

Private health insurance – insurance plans marketed by the private health insurance industry.  Currently in the USA approximately two-thirds of the non-elderly population is covered by private health insurance. Other forms of private health insurance coverage includes policies obtained through employer-sponsored insurance, with approximately 62 percent of non-elderly Americans receiving insurance provided as a benefit of employment. Another 5 percent of the non-elderly group bought coverage outside of the workplace on the individual health insurance market.

Provider- 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.

Public plan  (also referred to as a public option) was a proposal within the recently passed health reform legislation that would have created a qualified health benefit plan to compete with other plans that qualify for health insurance exchanges. The public plan, which ultimately was omitted from the passed Affordable Care Act, would have been subject to the same requirements – regarding benefit levels, provider networks, consumer protections and cost sharing – that would apply to other plans within the exchanges.

Rationing – the act of the government would restricting  (or rationing) care, by refusing to pay for certain procedures or medication or by putting limits on care for the elderly or terminally ill.

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 may reduce the charge to the amount that the insurance company has defined as reasonable and customary.

Rescission- an insurance industry practice in which an insurer takes action retroactively to cancel a policy holder’s coverage by citing omissions or errors in the customer’s application, even if the policy holder has been diligently keeping their policy current. Since September of 2010 an insurance company can only rescind a policy if they are able to prove fraud.

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.

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 a short-term disability (and the time period over which coverage extends) can differ from company to company and between 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 health insurance (aka temporary insurance)-a major medical health insurance policy designed to provide coverage for individuals who need temporary health insurance coverage for a short period of time, usually from 30 days to six months. The policies – offered by private health insurance companies – are intended to provide a safety net in the event of a health crisis that might otherwise cause a serious financial hardship.  These policies typically do not cover pre-existing conditions.

Single-payer system- a health care system in which one entity (a single payer) collects all health care fees and pays for all health care costs. Proponents of a single-payer system argue that because there are fewer entities involved in the health care system, the system can avoid an enormous amount of administrative waste. Instead, all health care providers in a single-payer system would bill one entity for their services. Within a single-payer system, it is believed that all citizens would receive high-quality, comprehensive medical care PLUS the freedom to choose providers. Paperwork would be dramatically reduced with the elimination of bills, co-pays and deductibles.

Small Business Health Care Tax Credits (aka Employer tax credits) – provide a tax credit of up to 35 percent of small business premium costs in 2010 – with that rate increasing to 50 percent in 2014. An employer must typically have fewer than 25 full-time workers and average annual wages less than $50,000 in order to be eligible.

Small employer group- a group of employees for a company with health insurance benefits ranging between 1-99 employees in size. The definition may vary between states and companies.

Socialized medicine- a health care system in which the government owns and operates health care facilities and employs the health care professionals, also paying for all health care services. Examples include the British National Health Service, and national health systems in countries such as Finland and Spain, but NOT including Canada’s Medicare system (which is publicly funded but which does not own all of the health facilities). Closer to home, the Veterans Health Administration is sometimes regarded as socialized medicine, because the government owns the hospitals and employs the doctors.

Specialty drug- high-cost prescription medications used to treat complex, chronic conditions like rheumatoid arthritis, multiple sclerosis, and cancer. These medications often require special handling and administration, and are also known as Tier 4 medications.  Some examples include cancer medications.

State mandated benefits-When a state passes laws requiring that health insurance plans include specific benefits.

Stop-loss (also known as your out of pocket maximum)-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 percent. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.

Student health insurance-In recent years, many colleges have begun requiring proof of health insurance for students. Coverage options include insurance through family policies and coverage through school-sponsored student health plans, now offered by more than 80 percent of public four-year colleges.  Students may seek outside coverage, but at times the school will mandate that the plan meet certain criteria.

Subsidies- an amount paid by a group or an organization to help offset the cost of an insurance premium.

Individual subsidies – or individual affordability credits – are included in the health reform legislation to help ensure the goals of the legislation’s individual mandate. Legislation provides premium subsidies on a sliding scale to eligible individuals and families with incomes up to four times the federal poverty level to help them purchase coverage through the health insurance exchanges.

Underwriter-The Company that assumes responsibility for the risk, issues insurance policies and receives premiums, the underwriter can also be the individual who verifies the eligibility of an applicant.

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.

Waiting period- a period of time a person has to wait for a procedure due to a single payer plan or government run health plan.  May also refer to a period of time a person has to wait for their benefits to begin.

Long Term Care Dental Insurance Auto & Home Insurance Other Insurance Life & Health Insurance
Footer Contact Us RSS Insurance Website Templates by Insurance Website Builder