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Glossary of Health Insurance TermsHealth insurance can sometimes be a complicated coverage if you don't have a basic understanding of some of its terms. To get the most from a health care plan, it is important to understand the terms and phrases used by those providing health care coverage - the insurance companies and your provider. Hopefully, this glossary may be of help. Click on a letter to quickly get to the appropriate section and find an explanation for the terms you might find confusing. A B C D E F G H I J K L M N O P Q R S T U V W X Y ZAAccidental death and dismemberment rider A supplementary benefit rider or endorsement that provides for an amount of money in addition to the basic death benefit of a life insurance policy. This additional amount is payable if the insured dies or loses any two limbs or the sight of both eyes as the result of an accident. Some riders pay one half of the benefit amount if the insured loses one limb or the sight in one eye. Admitting privileges The right granted to a doctor to admit patients to a particular hospital. Adverse selection The tendency of people with a greater-than-average likelihood of loss to apply for or continue insurance to a greater extent than do other people. Advocacy Speaking or writing in support of something. Agency The legal relationship between an agent and a principal. In law, the relationship between two parties by which one party, the agent, is authorized to perform certain acts on behalf of the other party, the principal. Agent A party who is authorized by another party, the principal, to act on the principal's behalf in contractual dealings with third parties. Agent of record The agent or broker who is recognized by the insurer as the person acting on behalf of the insured and to whom the commission is to be paid. Age of majority The age at which a person has the legal capacity to enter into and be bound by a contract. Applicant The party applying for an insurance policy. Application A form that must be completed by an individual or other party who is seeking insurance coverage. This form provides the insurance company with much of the information it will need to decide whether to accept or reject the risk. Association An organization of persons having common interests, purposes, etc. BBasic services Under dental insurance, dental services, such as fillings, periodontics, and oral surgery, which are often covered at 80 percent of their reasonable and customary charges. Beneficiary The person or other party designated to receive life insurance policy proceeds. Benefits Payments made by an insurance company, public agency, welfare society, etc. as during sickness, retirement, unemployment, etc. or for death. Broker An insurance salesperson agent who sells insurance products for more than one insurance company. CCafeteria plan An employee benefit plan which gives each employee several choices as to the types and/or amounts of group benefits. Also known as a flexible spending plan. Capitation A set dollar limit 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 is 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.) Captive agents Agents who are under contract with one insurance company only and who are not permitted to sell the products of other insurers. Carry-over provision A provision found in most medical expense policies stating that expenses incurred during the last three months of a benefit period that are used to satisfy the current benefit period's deductible may be used to satisfy any or all of the following benefit period's deductible. Case management A cost-containment program designed to identify alternate, less costly methods of treatment for seriously ill patients without sacrificing the quality of care a patient receives. 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. Co-insurance Money 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. Commission The amount of money paid to an insurance agent for selling an insurance policy. A commission is almost always calculated as a percentage of the premium. Community rating Applying the same premium rate structure to certain group insurance subscribers, regardless of their past or potential loss experience. See pooling. Comprehensive major medical insurance A form of health insurance coverage that combines the features and benefits of a hospital-surgical expense policy and the features and benefits of a major medical policy. Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) In the United States, a statute which requires that employers sponsoring group health plans offer continuation of coverage under the group plan to employees and their spouses and dependent children who have lost coverage because of the occurrence of a "qualifying event." Qualifying events include reduction in work hours, many types of termination of employment, death, and divorce. Coordination of benefits A provision in a group health insurance policy specifying that benefits will not be paid for amounts reimbursed by other group health insurers. The purpose of a coordination of benefits provision is to assure that an insured's benefits from all sources do not exceed I00 percent of allowable medical expenses. Copayment A predetermined (flat) fee an individual pays for health care services, in addition to what the insurance covers. For example, some HMO’s 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. DDeductible A flat amount that an insured must pay before the insurance company will make any benefit payments under a health insurance policy. 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. Dependent Relying on another for support or aid. EElection period 60-day period following notification of an insured's eligibility for COBRA continuation coverage, during which the individual can accept or decline the coverage. Eligibility period In contributory group insurance plans, the period of time, usually 31 days, during which a new employee may apply for group insurance coverage. Eligibility requirements The conditions a person must meet in order to be a participant in a group life insurance, group health insurance, or retirement plan. Exclusions Medical services not covered by an individual's insurance policy, the losses for which an insurance policy does not provide benefits, such as those related to pre-existing conditions, cosmetic surgery or self-inflicted injuries. FFederally qualified HMO In the United States, a Health Maintenance Organization which satisfies specific requirements set forth in the Health Maintenance Organization Act of 1973. Federally qualified HMOs are entitled to certain grants and loans from the federal government and are eligible to be used by employers to satisfy the dual choice provision. First-dollar coverage Medical expense insurance under which no deductible or coinsurance is applicable to covered expenses. GGrace period The length of time (usually 31 days) after a premium is due and unpaid during which the policy, including all riders, remains in force. If a premium is paid during the grace period, the premium is considered to have been paid on time. Guaranteed-issue insurance Insurance coverage for which there is usually no individual underwriting. All eligible members of a particular group of proposed insureds who apply for the policy and who meet certain conditions are automatically issued a policy. HHealth insurance Insurance covering medical expenses or income loss resulting from injury or sickness. Health insurance is a general category that includes many different types of insurance coverage, including hospital confinement insurance, hospital expense insurance, surgical expense insurance, major medical insurance, disability income insurance, dental expense insurance, prescription drug insurance, and vision care insurance. Health Maintenance Organization (HMO) A "pre-paid" or "capitated" insurance plan 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. IIndependent Practice Associations IPA’s are similar to HMO’s, except that individuals receive care in a physician's own office, rather than in an HMO facility. Insurance A system of protection against loss in which a number of individuals agree to pay certain sums of money, called premiums, to create a pool of money which will guarantee that the individuals will be compensated for losses caused by events such as fire, accident, illness, or death. Insurance agent A representative of an insurance company who sells insurance. An insurance agent locates prospective insurance customers, determines the insurance needs of each customer, and assists the customer in applying for insurance. Typically, an insurance agent will deliver the policy when the application is approved, will collect the initial premium, and will provide customer service to policyowners. Indemnity health plan Also called "fee-for-service," these plans primarily existed before the rise of HMO's, IPA's and PPO's. 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. IPA's are similar to HMO's, except individuals receive care in a physician's own office, rather than in an HMO facility. LLapse The termination of an insurance policy because premiums were not paid when they came due. Long-term disability income insurance Disability income insurance which typically provides disability income benefits that begin at the end of a specified waiting period and that continue until the earlier of the date when the insured person returns to work, dies, or becomes eligible for pension benefits. Loss ratio In pricing health insurance, the loss ratio is a means of comparing claims losses to premium earnings. To determine its loss ratio, an insurer divides the dollar amount of claims it incurred during a given year by the dollar amount of premiums it earned during the same year. 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. 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. MMajor medical insurance A type of medical expense insurance that provides broad coverage for most of the expenses associated with treating a covered illness or injury. Managed care A medical delivery system that attempts to manage the quality and cost of medical services individuals receive. Most managed care systems offer HMO's and PPO's 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 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. Medical Information Bureau (MIB) An organization that serves as a clearinghouse for medical information for the life insurance industry. When a person applies for life insurance, the insurance company sends the applicant's medical test results and any indication of health impairments to the MIB. This information is then available to other insurers when they are investigating an applicant's insurability. Access to MIB-coded information is restricted to authorized medical, underwriting, and claim personnel in member companies. No member company can request information from the MIB unless the individual being investigated gives written consent. An insurance company cannot base its underwriting decision solely on information provided by the MIB. Medigap insurance policies Offered by private insurance companies, not the government, these policies are designed to pay for some of the costs Medicare does not cover. Not to be confused with Medicare or Medicaid. OOpen-ended HMOs HMO’s 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 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 for services provided by out-of-plan health professionals may not be covered or may be covered only in part. Out-of-pocket maximum A predetermined limited amount of money an individual must pay out of their own sources, 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) without an overnight stay 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. "Outpatient" is also used synonymously with "ambulatory" to describe health care facilities where procedures are performed. PPooling In group insurance, the practice of underwriting a number of small groups as one large group. Premium The payment, or one of a series of payments, required by the insurer to put an insurance policy in force and keep it in force. Pre-admission certification Approval by a case manager or insurance company representative (usually a nurse) for a person to be admitted to a hospital or inpatient 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 a nurse) in cooperation with the individual, his or her physician or health care provider and hospitals. Pre-existing condition A medical condition excluded from coverage by an insurance company, because the condition was believed to exist prior to the individual obtaining a policy. Preferred Provider Organization (PPO) Pre-selected group of health care providers to choose from for medical attention. In most plans, you or your employer receive discounted rates within this group; if you use a physician outside the PPO group, you will probably have to 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, referring the individual for specialist care when necessary. Provider Health care professionals that provide health care services: physicians, hospitals, nurse practitioners, chiropractors, physical therapists and others offering specialized health care services. RRated policy A policy issued to insure a person classified as having a greater-than-average likelihood of loss. The policy may be issued (a) with special exclusions, (b) with a premium rate that is higher than the rate for a standard policy, or (c) with exclusions and a higher than standard premium rate. 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 charged are higher than the approved amount, the individual receiving the service is responsible for paying the difference. Sometimes, however, if an individual questions a-physician about their fee, the provider will reduce the charge to the amount the insurance company has defined as reasonable and customary. 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, medication side effects, exposure to infection or the chance of suffering a medical problem because of a lifestyle choice or other factors. SSecond opinion 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 An opinion provided by a second physician, when one physician recommends surgery to an individual. Second surgical opinions are now covered under standard benefits in many health insurance plans. 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 during 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 non-work-related injury or illness that prohibits the individual from working. Short-term disability income insurance Disability income insurance which provides a benefit for a short disability or for the first part of a long disability. Stop-loss A health insurance policy provision specifying that the insurer will pay I00 percent of the insured's eligible medical expenses after the insured has incurred a specified amount of out-of-pocket expenses under the coinsurance feature. TTriple-option Insurance plans offering three options from which an individual may choose, usually: traditional indemnity, HMO and PPO. UUnderwriter (1) The person who assesses and classifies the potential degree of risk that a proposed insured represents. (2) The person or organization that guarantees that money will be available to pay for losses that are insured against. In this sense, the insurance company is the underwriter. Underwriting (1) The process of assessing and classifying the potential degree of risk that a proposed insured represents. (2) Providing guarantees that money will be available to pay for losses that are insured against. Usual, customary and reasonable expenses The amount customarily charged for similar services and supplies which are medically necessary, recommended by a doctor or required for treatment. WWaiting period The period of time when you are not covered by insurance for a particular problem. |
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