Below is a list of terms and definitions used in the medical insurance community:
Actuary: A mathematician who works for insurance companies. Their main job is to price insurance so that it’s profitable. They use historical claim and premium data for each exposure to develop rates.
Advocate: Any person or group trying to get their constituency what they want.
Agent: Insurance salespersons who are licensed to represent and sell their health insurance company products to consumers and employers.
Association: A group who can sometimes can offer individual health insurance plans specially designed for their members.
Benefit: The amount the insurance company has to pay to a claimant when a loss is suffered.
Brand-name drug: Prescriptions or over the counter drugs marketed and sold as a brand name. They are usually more expensive than comparable generic drugs.
Broker: Licensed insurance salesperson who represents different insurance companies and can quote and sell their products.
CAP: A cap represents a set dollar threshold above which you (in out of pocket expenses) or the insurance company (in benefit limits) do not have to pay.
Carrier: An insurance company or organization offering insurance.
Case Management: A system to help ensure individuals receive reasonable and fair health care services.
Certificate of Insurance: A summary description of benefits and coverage provisions on the health insurance policy.
Claim: A formal request by an individual for the insurance company to pay for services obtained from a health care provider.
Co-Insurance: Money that an individual is required to pay for services, after a deductible has been paid. For example, coinsurance might be stated that the insurance company pay 80% and the insured pay 20% of the next $10,000 worth of charges after the deductible has been met.
Co-Payment: A flat fee that an individual pays for health care services at the point of service. For example, an HMO may require that the insured make a $25 copayment for a doctor’s visit.
COBRA: Federal legislation that allows you, if you’re a member of an employer sponsored health care plan, to maintain your insurance for up to 18 months after you’re terminated. For more information, visit the Department of Labor website.
Consumer Driven Health Plan (CDHP): These new plans were founded on the belief that the consumer needs to take a more active role in managing their own health care costs. It combines protection for medical catastrophes with provisions to pay for everyday medical expenses.
An example of CDHP is where a customer sets up an HSA (Health Savings Account) to save tax free money for everyday health care costs and buys a high deductible ($5,000 or more) policy to protect them in case of a catastrophe
Deductible: The amount an insured must pay before insurance begins paying out.
Denial of Claim: A refusal by an insurance company to pay out on a claim.
Dependents: Spouse and/or unmarried children or others dependent on an insured.
Effective Date: The date and time your insurance begins.
Employee Assistance Programs (EAPs): Counseling services that are sometimes offered by insurance companies or employers. These are usually provided at no cost to the user.
Employer-Sponsored Health Insurance: About 60 percent of those who have health coverage buy it through an employer-sponsored plan. This is often called group insurance.
A group health plan must cover all people in the group.
Exclusions: Medical conditions or procedures that are not covered by an insurance policy. These are usually listed on the policy.
Explanation of Benefits: A written explanation regarding a claim, showing what the insurance company paid and what the insured must pay. These are often accompanied by summaries of the current status of the insurance.
Generic Drug: A duplicate of a brand name drug. Generic drugs are less expensive than brand name drugs.
Group Health Insurance: Insurance coverage, usually through an employer, that covers all individuals in the group.
Health Care Decision Counseling: Non-judgmental counseling services designed to help people decide what health insurance options are best for them. The services are usually free and educational in nature.
Health Maintenance Organizations (HMOs): HMO’s are member organizations designed to provide comprehensive health care for their members.
The doctors and hospitals in the network must be used by the members in order for them to be covered.
HIPAA (The Health Insurance Portability and Accountability Act): This is a Federal law passed in 1996 that allows, among other provisions, persons to immediately qualify for comparable health insurance coverage when they change their employment or relationships.
In-network: A network of health care providers including doctors and health care facilities which are part of a health insurance organization (like a PPO or an HMO).
Usually, insureds have to stay within the network for treatment to be covered by the insurance policy. Some organizations will allow the insured to use out of network providers but they will pay reduced benefits.
Indemnity Health Plan: Indemnity health insurance plans are also called fee-for-service plans. The insured pays a percent for all the services the use.
For example, the insured may pay 20 percent of all services and the insurance company the other 80 percent.
Under these plans, the insured can go to any provider they wish.
Independent Practice Associations: IPAs are similar to HMOs. In an IPA the insured’s receive health care services in a physicians office, rather than a HMO facility.
Individual Health Insurance: Health insurance coverage for an individual, not a part of a group.
It may be harder to get individual insurance and the premiums cost more than group plans.
Lifetime Maximum Benefit: The maximum amount a health plan will pay out in benefits to an insured in his/her lifetime.
Limitations: The limit on the amount of benefits paid out for a covered medical service.
Long-Term Care Policy: Long term care insurance policies that cover services for a certain period of time for long term health care.
Long-term Disability Insurance: If an insured becomes disabled, this insurance pays out a percentage (usually 66 percent of the gross income) of the insured’s monthly earnings when not disabled.
LOS: LOS refers to the length of hospital or in-patient facility stay.
Managed Care: A health care system that seeks to provide quality medical care while effectively managing the cost of that care.
Managed care systems include PPO’s and HMO’s.
Maximum Dollar Limit: The maximum payout that an insurance company will pay for claims within a certain time frame. For example, the maximum lifetime payout for a healthcare policy might be set at $2,000,000.
Medigap Insurance Policies: Medigap insurance is offered by private insurance companies. It’s designed to pay for some of the costs Medicare does not cover.
Mini-Meds: A health insurance plan with limited benefits. With very few restrictions, it can be issued up to the age of 64. The process is that medical bills get submitted to the insurer for reimbursements up to the policy limits per procedure specified by a dollar amount.
It can be used with any medical provider and is not limited to any specific PPO network.
Mini-meds are considered a supplemental policy. It’s commonly used in conjunction with a high deductible major medical policy.
Multiple Employer Trust (MET): A trust of multiple small employers in the same industry. The trust is usually formed for the purpose of obtaining lower cost group health insurance.
Network: A group of health care providers (doctors, hospitals and others) contracted to provide their services to customers of health insurance companies for discounted fees.
Open-ended HMOs: HMOs where enrolled individuals can use providers out of the network. If they do, they can still get partial or full coverage and some payment for the services.
Out-of-Plan (Out-of-Network): Physicians, hospitals or other health care providers who are considered nonparticipants in a member organization or network (usually an HMO or PPO) insurance plan.
Medical charges incurred by services provided by out-of-plan or out-of-network providers may not be covered or just partially covered by the insurance.
Out-Of-Pocket Maximum: The maximum amount of money that an individual must pay out themselves before an insurance company will pay 100% for health care expenses.
Outpatient: A patient who receives health care services in a place where they leave the same day.
Plan Administrator: The ones who manage the day to day operations of running a health plan.
Point of Service (POS) Plan: A POS combines elements of each an HMO and a PPO. As with an HMO, POS members choose a primary care physician (PCP) who will provide referrals when needed.
Like a PPO, members are free to visit out of network providers without a referral. At least some of the expenses will be covered it they do. However, they will pay more.
They have the cost savings of a HMO while allowing some flexibility in selecting providers.
Pre-Admission Certification: Case manager or insurance company representative (usually a nurse) approval for a person to be admitted to a hospital or in-patient facility.
Pre-Admission Review: An individual’s health care review prior to he or she being admitted to an inpatient health care facility.
Pre-existing Conditions: A medical condition that existed prior to when an individual obtained a medical insurance policy. These conditions can be excluded from coverage by an insurance company.
Preferred Provider Organizations (PPOs): A health care organization sourced with medical providers to provide less expensive health care with more managed costs. If a provider outside the PPO network is used it costs more for medical services.
Primary Care Provider (PCP): A doctor) who is responsible for monitoring an individual’s overall health care needs. The PCP provides referrals to other specialists when necessary.
Private Health Insurance: Insurance plans marketed by the private health insurance industry as opposed to government entities.
Provider: Health care professionals or organizations that provide health care services.
Reasonable and Customary Fees: The average fee charged by a health care practitioner within a geographic area for specific tests or medical procedures. If the actual fees are higher than the set amount, the individual receiving the service has to remit the difference.
Rescission: A questionable tactic used to deny coverage to policy holders.
Rider: A change made to an insurance policy affecting the policy terms. It usually adds, changes or excludes coverage.
Risk: The chance of loss, the degree of probability of loss or the amount of potential loss to the insurer.
Second Opinion: A medical opinion on a suggested procedure or diagnosis provided by a second physician or medical expert.
Second Surgical Opinion: An opinion provided by a second physician, after the first physician recommends surgery.
Short-Term Disability: An injury or illness that keeps a person from working for a short time (usually up to 52 weeks but it varies among employers).
Short-term disability insurance is designed to pay full or partial wages during a time of non-work related injury or illness that prevents the individual from working.
Short-Term Health Insurance: Temporary health insurance coverage for an individual for a short time, usually from 30 days to one year.
State Mandated Benefits: State passed laws requiring that specific benefits be included in health insurance plans that operate in that state.
Stop-loss: The dollar amount of claims filed for eligible expenses. It’s at this point that an individual has paid 100 percent of his out-of-pocket and the insurance begins to pay at 100%.
Student Health Insurance: Insurance for college students which can be obtained via their parent’s policies, through the school or with outside private insurance. It covers the student as long as they maintain full time status.
Supplemental Medical Insurance- Supplemental health insurance is also known as defined benefit insurance. This means that the maximum benefits are spelled out in specific dollar amounts.
For example, a policy like this might provide $1,000 per day for hospitalization and that’s it. This makes the policy more predictable and stable for the purpose of long term pricing of hospital services.
Triple-Option: Insurance plans that offer three options to choose from. Usually, the three options are Major Medical, an HMO, and a PPO.
Underwriter: The company that determines who will be insured and assumes responsibility for the risk. They issue the insurance policies, receive the premium and pay the claims.
Usual, Customary and Reasonable Expenses: The amount customarily charged for services and supplies which are deemed to be medically necessary, recommended by a doctor, or required for treatment.
Waiting Period: The period of time when you are not covered by insurance prior to the insurance becoming fully effective.
Steve Wyrostek -MedicalInsurance.org Expert A 20 year plus veteran of the insurance industry, Steve managed departments in the personal and commercial lines areas of major insurers. He’s familiar with how insurance—ranging from boat to workers compensation—works.
