We want to help you to understand health insurance so you can make the most of your health plan.
If you need help with health insurance jargon and terminology, please see the information below for definitions of important health insurance terms, abbreviations, and acronyms.
Accountable Care Organization (ACO): An organization, made up of a network of healthcare providers that coordinate patient care and provide the full range of healthcare services for patients.
Accreditation: Certification by a non-governmental accrediting organization that a given healthcare provider meets that organization's standards.
Accumulation Period: A specified period during which a covered employee must accumulate eligible expenses to meet the plan's deductible amount.
Actuarial: Refers to the statistical calculations used to determine the insured rates and premiums based on projections of utilization and costs for a defined population.
Actuarial Value: The percentage of benefit costs the health insurer expects to pay toward a health plan. It is based on an average for a population or area, and may not necessarily reflect actual cost sharing.
Advanced Premium Tax Credit (APTC): Tax credit for individuals who purchase a health plan through the Health Insurance Marketplace and have an income of between 100–400 percent of the Federal Poverty Level. Also known as a subsidy.
Affordable Care Act: See Patient Protection and Affordable Care Act.
All-Clause Deductible: Application of a deductible under a healthcare plan to all covered expenses incurred by a person as a result of the same or related causes within a given time.
Allowed Amount: The maximum amount on which payment is based for covered healthcare services. This may be called "eligible expense," "payment allowance," or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference. See Balance Billing.
Allowable Charge: The amount of money the insurance company will pay a non-participating provider based on that provider's geographic region.
Ambulatory Care: Healthcare services rendered to persons who are not kept overnight in a healthcare facility.
Ancillary Services: Hospital services exclusive of such services as room and board, dietary, nursing and supplies; some examples are radiography and laboratory services.
Appeal: A request for your health insurer or health plan to review a decision or a grievance again.
Assignment of Benefits: A procedure whereby a person authorizes payment of any allowable benefits directly to the healthcare provider.
Authorization: The process by which medical care or a specific service is approved by a healthcare reimbursement source.
Balance Billing: The practice of charging full fees in excess of the insurer's reimbursable amounts, then billing the patient for that portion of the bill which the insurer does not cover.
Basic Health Program: A state-created health plan designed to cover individuals with incomes between 133 and 200 percent of the Federal Poverty Level who choose not to enroll in the Health Insurance Marketplace and receive a subsidy.
Benefits Package: The list of covered services an insurance company offers to a group or individual.
Benefit Period: Period for application of deductibles, after which time a deductible must again be satisfied.
Board Certified: Physicians or other health professionals who have passed an examination given by a medical specialty board and have been certified by that board as a specialist in the subject in question.
Bridge: Same meaning as Deductible, but is used in reference when discussing Consumer-Directed Health Plans.
Broker: A licensed insurance professional who represents the insurance purchaser in the acquisition of insurance coverage.
Cafeteria Plan: A corporate benefits plan where employees are permitted to choose among two or more benefits that consist of cash and certain qualified benefits. Cafeteria plans are also called flexible benefit plans, Flex plans or Section 125.
Calendar Year Plan: A plan on a calendar year runs from January 1 - December 31. Items like deductible, maximum out-of-pocket expense, etc. will reset every January 1.
Capitation: A per-member, monthly payment to a provider that covers contracted services, and is paid in advance of the delivery of the service. In essence, a provider agrees to provide specified services to HMO members for this fixed, predetermined payment for a specified length of time (usually a year), regardless of how many times the member uses the service.
Carryover: Provision in major medical plans to avoid two deductibles applied to covered medical expenses when expenses are incurred toward the end of one calendar year and sickness or injury continues into the next year.
Catastrophic Coverage: A health plan with limited benefits, a high deductible, and a generally lower premium. Available to persons under 30, it provides coverage for unforeseen and expensive illness or injuries.
Centers of Excellence: A network of healthcare facilities selected for specific services based on criteria such as experience, outcomes, efficiency, and effectiveness. For example, an organ transplant managed care program, wherein member's access selected types of benefits through a specific network of medical centers.
Certificate of Insurance (COI): The legal document describing the coverage a member receives from the insurance company.
CHIP: The Children's Health Insurance Program (CHIP) provides funds to states for health insurance to low-income families with children. It is administered by the U.S. Department of Health and Human Services.
Clinically Integrated Network (CIN): A defined network of doctors and facilities who deliver services focused on quality, performance, efficiency, and value to the patient. The common goals of the CIN are to enhance the patient experience of care (including quality, access, and reliability); improve the health of the members; and control costs.
COBRA: Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA permits eligible employees and beneficiaries to continue their health coverage for a period of time after it would normally terminate. The continuation of coverage requires the individual to pay a premium. COBRA applies to groups of 20 or more people.
Coinsurance: Form of cost sharing between the member and the insurance company. An insured individual pays a percentage of the cost of covered medical services, and the insurance company pays a percentage.
Consumer-Directed Health Plans: Health plans with usually a high deductible accompanied by either a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) plan.
Contract Year Plan: A plan on a contract year (also called benefit year) runs for any 12-month period within the year. Items like deductible, maximum out-of-pocket expense, etc. will reset at the plan's renewal date. For example, ABC Company renews on July 1 every year. The deductible would start July 1 and end on June 30. The deductible would reset every July 1 for ABC Company members.
Conversion: Privilege given to a participant to convert to individual policies on termination of group coverage without evidence of insurability.
Coordination of Benefits (COB): A process if an individual has two group health plans, the amount payable is divided between the plans so that the combined coverage amounts to, but does not exceed, 100 percent of the charges.
Copayment: Form of cost sharing whereby an insured person pays a specified flat amount per unit of service or unit of time (for example $15 per visit, $100 per day) while the insurer pays the remaining costs.
Cost Sharing: A health plan where the member is required to pay a portion of the cost of care. Examples include Copayments, Coinsurance, and Deductibles.
Cost-Sharing Reduction: Health plans with reduced Copayments, Coinsurance, and Deductible amounts for individuals who purchase a silver-level plan through the Health Insurance Marketplace and have an income of between 100–250 percent of the Federal Poverty Level. Also known as a subsidy.
CPT Code: Stands for Current Procedural Terminology code and was designed by the American Medical Association as a method to communicate, by a five-digit number, specific medical care, and services. The numbering system covers the majority of recognized medical services a physician can provide and be reimbursed. The CPT code is used to report services on the claim form.
Credentialing: The process of determining eligibility for hospital, physician, or other medical staff membership, and privileges to be granted to physicians. Credentials and performance are periodically reviewed, which could result in a doctor's privileges being denied, modified, or withdrawn.
Custodial Care: Care provided primarily to assist a patient in meeting the activities of daily living, but not care requiring skilled nursing services.
Deductible: A set dollar amount that a person must pay before insurance coverage for medical expenses can begin.
Discount: A method of cost reduction used by reimbursement sources to save on payment amounts to providers. The discount can be a percentage of the fee or set fees for specific services. Discounts are either attached to CPT codes or an entire claim amount.
Disease Management: For persons with chronic conditions (diabetes, COPD, etc.) it is the coordination of care for the entire disease treatment process, including patient education, inpatient and outpatient care, preventive care, and acute care.
Dual Choice / Dual Option: The opportunity for an individual within an employed group to choose from two or more types of healthcare coverage such as an HMO and a traditional insurance plan.
Durable Medical Equipment (DME): Equipment and supplies ordered by a healthcare provider for everyday or extended use. Coverage for DME may include oxygen equipment, wheelchairs, crutches, or blood testing strips for diabetics.
Electronic Health Record/Electronic Medical Record: Computerized patient health records, including medical, demographic, and administrative information that can be shared across multiple healthcare facilities and physicians for overall continuity in care.
Eligibility Date: The date an individual and/or dependents become eligible for benefits under an employee benefit plan.
Emergency Medical Condition: An illness, injury, symptom, or condition so serious that a reasonable person would seek care right away to avoid severe harm.
Emergency Medical Transportation: Ambulance services for an emergency medical condition.
Emergency Services: Services provided in connection with an unforeseen acute illness or injury requiring immediate medical attention.
Employer Mandate: Employers with 51 or more employees must offer affordable coverage to its full-time employees or pay a penalty.
Enrollee: An individual who is enrolled in a benefit plan. Enrollees are also referred to as members and beneficiaries.
Essential Health Benefits: A set of 10 benefits including ambulatory patient services, emergency services, maternity and newborn care, hospitalization, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services, laboratory services, pediatric services, and preventive care that must be included in a qualified health plan (QHP) for individuals and small groups.
Evidence of Coverage (EOC): The legal document describing a subscriber's coverage under a health plan such as a Health Maintenance Organization (HMO).
Exchange (Health Insurance Exchange): General term for the online marketplace all states are required to have for individuals and small businesses. They serve as an Expedia or Orbitz for the health insurance market, where private insurers can offer health plans. See also Health Insurance Marketplace and Small Business Health Options Program.
Excluded Services: Healthcare services that your health insurance or plan does not pay for or cover.
Explanation of Benefits (EOB): A description, sent to patients by the health plan, of benefits received and services for which a healthcare provider has requested payment.
Family Deductible: A deductible which is satisfied by the combined expenses of all covered family members. For example, a program with a $200 individual deductible may limit a maximum of three deductibles ($600) for the family, regardless of the number of family members.
Federal Poverty Level (FPL):The reference point established by the federal government that determines the number of people with income below poverty level and income level for eligibility for subsidies on the Health Insurance Marketplace, and government-sponsored programs.
Fee: A charge or price for professional services.
Fee-for-Service: A method of payment that is based on charges for each individual service or treatment rendered.
First dollar coverage: Medical expenses covered by a benefit plan with no deductibles.
Flexible Spending Account (FSA): A tax-advantaged financial account that can be set up through a cafeteria plan of an employer that allows an employee to set aside a portion of earnings to pay for qualified medical expenses as established in the cafeteria plan. Money deducted from an employee's pay into an FSA is not subject to payroll taxes.
Formulary: A list of prescription drugs covered by a prescription drug plan offering prescription drug benefits. Also called a drug list.
Fully Insured: An insurer collects premiums from an employer group or individual and assumes financial risk for medical expenses incurred. The employer or individual bears no risk.
Grandfathered Plan: A health plan that was in place on March 23, 2010, when Health Care Reform began. Grandfathered plans are exempt from complying with some parts of the law, as long as the plan does not make certain changes.
Grievance: A complaint that an individual communicates to his or her health insurer or plan.
Group Health Plan: Health insurance offered by a group, typically an employer or an association.
Guaranteed Issue: A law that states that a health plan cannot deny you coverage because of pre-existing conditions or past medical history.
Habilitative Services: Healthcare services that help a person keep, learn, or improve skills and function for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology, and other services for people with disabilities in a variety of inpatient and/or outpatient settings.
Health Insurance: A contract that requires your health insurer to pay some or all of your healthcare costs in exchange for a premium.
Health Insurance Marketplace: The section of the Exchange that is specifically for individuals to purchase health plans for themselves and/or their families.
Health Insurance Portability and Accountability Act of 1996 (HIPAA): The law that sets standards regarding the security and privacy of person health information.
Health Reimbursement Arrangement (HRA): Used in reference to Consumer-Directed Health Plans. An employer sets aside a fixed dollar amount for employees to use towards their medical coverage. Once the HRA has been exhausted, the member's Bridge amount begins.
Health Care Reform: See Patient Protection and Affordable Care Act
Health Savings Account (HSA): A tax-advantaged medical savings account available to taxpayers enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit.
Health Employer Data and Information Set (HEDIS®): A set of performance measures designed to help healthcare purchasers understand the value of healthcare purchases and measure health plan performance.
Health Maintenance Organization (HMO): A legal corporation that offers health insurance and medical care. HMOs typically offer a range of healthcare services at a fixed price (see capitation).
Health Plan: A generic term to refer to a specific benefit package offered by an insurer.
High-Deductible Health Plan: Health plans with higher deductibles and usually lower premiums than traditional plans.
Home Health Care: Healthcare services a person receives at home.
Hospice Services: Services to provide comfort and support for persons in the last stages of a terminal illness and their families.
Hospitalization: Care in a hospital that requires admission as an inpatient and usually requires an overnight stay. An overnight stay for observation could be outpatient care.
Individual Mandate: Law that states most individuals will be required to have health insurance or pay a penalty.
In-Network Provider (Participating Provider): Any physician, hospital, pharmacy, laboratory, or other diagnostic center under contract with the health plan to provide services to members at a specified cost.
Insurance Company: Organization assuming risk for paying the group's medical claims, regardless of the amount. Insurance companies set the premium and determine the benefit plan coverage.
Managed Care: A healthcare system that reduces the cost of providing health benefits and improves the quality of care.
Mandated benefit: A specific coverage that an insurer or plan sponsor is required to offer by law. Mandated benefits in insurance contracts can vary from state to state according to each state's insurance laws.
Medicaid: Program administered by the state's Department of Medical Assistance Services (DMAS) under The Centers for Medicare and Medicaid Services (CMS). Payments are made for approved >healthcare services provided by hospitals, health agencies, and private practitioners for welfare recipients or persons whose income does not exceed maximum limits. Funds are derived on a state-federal shared basis.
Medical Loss Ratio: Insurers must spend a percentage (80 percent for individual and small groups and 85 percent for large groups) of your premium on medical costs.
Medically Necessary: A term used to describe the supplies and services provided to diagnose and treat a medical condition in accordance with the standards of good medical practice and the medical community.
Medicare: The federally financed hospital insurance system (part A) and supplementary medical insurance (Part B) for the aged created by the 1965 amendment to the Social Security Act.
Member: A person eligible to receive, or receiving, benefits from an HMO or insurance policy. Includes both those who have enrolled or "subscribed," and their eligible dependents.
Network: The facilities, providers, and suppliers your health insurer or plan has contracted with to provide healthcare services.
Non-Par (Non-Participating) Provider: Any physician, hospital, pharmacy, laboratory, or other diagnostic center not under contract with a plan to provide services to members at a specified cost. In some benefit plans, members may have reduced coverage (or NO coverage if care is received from non-plan providers).
Open Enrollment: The period (usually once a year) during which subscribers in a health plan may have an opportunity to select an alternative plan being offered to them; or a period when uninsured employees and their dependents may obtain coverage.
Out-of-Network-Provider(Non-Participating Provider): Any physician, hospital, pharmacy, laboratory, or other diagnostic center not under contract with a plan to provide services to members at a specified cost. In some benefit plans, members may have reduced coverage (or NO coverage if care is received from non-participating providers).
Out-of-Pocket Costs: Healthcare costs that are not covered by insurance, such as Copayments, Coinsurance, and Deductibles.
Out-of-Pocket Maximum (OOP max or MOOP): The maximum amount that an insured person will have to pay for covered expenses under the plan, usually within the plan effective dates.
Outpatient Care: Care in a hospital that usually does not require an overnight stay.
Participating Provider: Any physician, hospital, pharmacy, laboratory, or other diagnostic center under contract with the health plan to provide services to members at a specified cost.
Patient Centered Medical Home (PCMH): A team-based healthcare delivery model led by a physician that provides comprehensive and continuous medical care to patients. Some goals of a PCMH are better access to healthcare, increased satisfaction with care, and overall improved health.
Patient Protection and Affordable Care Act (PPACA): A law with a series of statues that go into effect beginning March 23, 2010 aimed at increasing access to affordable healthcare for most Americans. Health insurers, healthcare facilities, physicians, individuals, small and large businesses, Medicare, and Medicaid are all impacted by the law.
Per Diem Cost: Cost per day; hospital or other institutional cost for a day of care.
Pharmacy and Therapeutics (P&T) Committee: A group of physicians, pharmacists, and other healthcare providers who advise a managed care plan regarding safe and effective use of medications. The P&T Committee manages the prescription drug formulary and acts as the organizational line of communication between the medical and pharmacy components of the health plan.
Physician Services: Healthcare services a licensed medical physician (M.D.-Medical Doctor or D.O. – Doctor of Osteopathic Medicine) provides or coordinates.
Point of Service (POS) Plan: An HMO plan which allows the member to pay lower Copayment or Coinsurance if they stay within the established HMO delivery system, but permits member to choose and receive services from an outside doctor, any time, if they are willing to pay higher Copayments, Deductibles, and possibly monthly premiums.
Pre-admission Review: Review of an elective hospitalization prior to a patient's admission in order to ensure that the services are necessary and that they should be provided in an inpatient hospital setting.
Pre-Authorization: The authorization required by an insurance carrier before the member is eligible to receive maximum benefits for hospitalization and other specific services. With some benefit plans, the member is responsible for obtaining pre-authorization prior to receiving services.
Pre-Existing Condition: A health condition (except pregnancy) that was diagnosed and/or treated within six months prior to enrolling in a health plan. See Guaranteed Issue.
Preferred Provider Organization (PPO): A system in which a payer negotiates lower prices with certain doctors and hospitals. Patients who go to a preferred (or in-network) provider get a higher benefit-for example, 90 percent or 100 percent coverage of their costs-than patients who go outside the network.
Premium: The fee paid to a health insurance carrier by an enrolled company or individual, normally on a monthly basis, for the delivery and financing of healthcare services to the employees or the individual, and their dependents enrolled in the plan.
Preventive Care: Care received to help prevent or detect illness before it occurs, such as routine physicals, well baby care, annual gynecological exams, etc.
Primary Care Physician (PCP): A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine) who directly provides or coordinates a range of healthcare services for a patient.
Provider: A supplier of healthcare services like a hospital, nursing home, lab, or physician.
Qualified Health Plan (QHP): An insurance plan that is certified by an Exchange, provides essential health benefits, follows established limits on cost-sharing (like Deductibles, Copayments, and out-of-pocket maximum amounts), and meets other requirements. A QHP will have a certification by each Exchange in which it is sold.
Qualifying Event: An event that enables an individual to make a change to their health plan outside of the enrollment period. Examples include divorce, termination of employment, or birth of a child.
Reconstructive Surgery: Surgery and follow-up treatment needed to correct or improve a part of the body because of birth defects, accidents, injuries, or medical conditions.
Rehabilitation Services: Healthcare services that help a person keep, get back, or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt, or disabled. These services may include physical and occupational therapy, speech-language pathology, and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.
Reinsurance: Insurance obtained by a carrier from another company to protect itself against part or all the losses incurred in the process of honoring the claims of members or policyholders. Also referred to as "stop loss" insurance. The coverage may apply to an individual claim or to all claims during a specified period for an individual enrollee.
Rescission of Coverage: A health plan is voided by the insurer, and the subscriber (member) could be responsible for any medical claims made against the health plan. Recession of coverage is prohibited except in cases of fraud.
Retrospective Review: The process where Emergency Room and Urgent Care Center claims and their supporting documentation is reviewed by the clinical department to determine the plan's liability for payment based on the member's type of insurance product.
Risk: The possibility that costs associated with insuring a particular group will exceed expected levels, thereby resulting in losses for an insurance carrier or self-insurer.
Risk Pool: A financial arrangement that spreads the risk of utilization and cost among the participants generally the insurer, the hospitals, and the physicians. The pool may insure against unusually high utilization and costs. The pool may also provide incentives for controlling utilization and costs.
Rollover: deductibles paid under a previous plan that >are applied to the deductibles of the current plan.
Self-Funded: A completely non-insured or self-funded plan is one in which no insurance company or insurance plan collect premiums and assumes financial risk. Employer groups use self-funded plans where they collect premiums from employees and pay the claims, but contract with an insurer to provide the administrative services.
Service Area: The geographic area served by an insurer or healthcare provider.
Skilled Nursing Care: Services from licensed nurses in your home or in a nursing home. Skilled care services are from technicians and therapists in your home or in a nursing home.
Small Business Health Options Program (SHOP): The portion of the Exchange dedicated to small businesses with 2-50 employees. Businesses with 51-100 employees will be eligible to participate in the SHOP beginning January 1, 2016.
Specialist: A physician specialist focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent, or treat certain types of symptoms and conditions. A non-physician specialist is a provider who has more training in a specific area of healthcare.
Stop-loss: See Reinsurance.
Subsidy: See Advanced Premium Tax Credit or Cost-Sharing Reduction.
Subscriber: An individual who meets the health plans' eligibility requirement; who enrolls in the health plan; and accepts the financial responsibility for any premiums, Copayments, Coinsurance, or Deductibles.
Tertiary Care: Medical care requiring a setting outside of the routine, community standard; care to be provided within a regional medical center having comprehensive training, specialists, and research training.
Third-Party Administrator (TPA): An organization that administers healthcare benefits, mostly for self-insured employers. Services may include claims review and claims processing.
Urgent Care: Care for an illness, injury, or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.
Usual, Customary, and Reasonable (UCR) Charges: The maximum amount an insurer will consider eligible for reimbursement under group health insurance plans. Charges are generally based on customary fees paid to providers with similar training and experience in a given geographic area.
Wellness Plan/Program: An employer-sponsored program that can be part of the overall health plan or a separate program. Wellness programs aim to improve health and prevent disease while reducing overall healthcare costs, maintaining/improving employee health, and reducing illness-related absenteeism.
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