Health Insurance – Glossary of Terms

Allowable Fee, or Usual and Customary Reimbursement (UCR): The maximum amount a health insurer will pay for a service or procedure.

Balance Billing: A billing practice in which you are billed for the difference between what your insurer pays and the fee that the provider normally charges.

Certificate of Creditable Coverage: Documentation provided by your health plan that verifies you had coverage under that plan. Certificates of Creditable Coverage will usually be provided automatically when you leave a health plan. You can obtain certificates at other times as well.

COBRA: The Consolidated Omnibus Budget Reconciliation Act, a federal law in effect since 1986. COBRA permits you and your dependents to continue in your employer’s group health plan after your job ends. If your employer has 20 or more employees, you may be eligible for COBRA continuation coverage when you retire, terminate employment, or work reduced hours. Continuation coverage also extends to surviving, divorced or separated spouses and dependent children. COBRA continuation coverage generally lasts 18 months, or 36 months for dependents in certain circumstances.

Coinsurance: Some insurance coverage requires you to pay a percentage of the cost of covered medical services, usually 20-30 percent. For example, you pay 20 percent of the cost, and your insurance pays 80 percent of the cost. Your portion of the cost is the coinsurance.

Continuous Coverage: This refers to health insurance coverage that is not interrupted by a break of 63 or more consecutive days. Employer waiting periods do not act as gaps in health insurance coverage for the purpose of determining if coverage is continuous.

Contractual Adjustment: A contractual adjustment is the amount that the carrier agrees to accept as a participating provider with your insurance carrier.

Copayment: A flat fee for specified medical services required by some insurers. For example, you pay a $20 copayment for a doctor visit or a $100 copayment for an Emergency Room visit.

Creditable Coverage: Most health coverage is creditable coverage, such as coverage under a group health plan (including COBRA continuation coverage), individual health insurance policy, Medicaid or Medicare or short term policies.
Creditable coverage does not include coverage consisting solely of excepted benefits, such as coverage solely for limited-scope dental or vision benefits.
Days in a waiting period during which you have no other coverage are not creditable coverage under the plan, nor are these days taken into account when determining a significant break in coverage (generally a break of 63 days or more). This 63-day break period may be extended under state law if your coverage is insured through an insurance company or offered through an HMO. Check with your State Insurance Commissioner’s Office to see whether a longer break period applies to you.

Deductible: The amount you must pay each year for your medical expenses before your insurance policy starts paying. Deductibles are common in fee-for-service coverage and PPOs.

Explanation of Benefits (EOB): The insurance company’s written explanation to a claim showing what they paid and what the client must pay

Family Medical Leave Act (FMLA): A federal law that requires employers to provide an employee with up to 12 weeks of unpaid leave during a 12 month period of time for the birth or adoption of a child, or for a serious health condition of the employee or their immediate family member. The employer must allow the employee to return to the same or an equivalent position with the same benefits in which they were eligible for prior to the leave. There are exceptions to the FMLA – the most notable is that only employers with 50 or more employees are covered.

Formulary / Non-Formulary: A Formulary is a list of preferred medications that a committee of pharmacists and doctors deem to be the safest, most effective and most economical. This committee meets regularly to discuss new drugs and trends in drug therapy, and the formulary list changes annually to reflect its findings. Formulary drugs, including preferred brand-name and generic medications, provide a safe, effective and affordable alternative to non-formulary drugs, which have the highest co -payment.
A Non- Formulary drug is a medication that has a preferred alternative listed in the drug formulary. Some benefits provide coverage for non-formulary drugs at a higher non-formulary co -payment. If you do not have coverage for non-formulary drugs at a higher co -payment, your physician may request authorization for a non-formulary drug

Fee-for-Service (FFS): Also known as indemnity insurance, FFS is a type of health coverage that typically allows you to go to any doctor or provider. Your insurance company will reimburse your provider for each covered service provided. Deductibles and coinsurance usually apply in FFS coverage.

Fully Insured Group Health Plan: Health insurance contract purchased by an employer from an insurance company. Fully insured health plans are regulated by state law.

Group Health Plan: Coverage through an employer or other entity that covers all individuals in the group.
Guaranteed Issue: A requirement that group health plans must allow you to enroll regardless of your health status, age, gender, or other factors that might predict your use of health services. Most health plans sold to small employers are guaranteed issue. If you are HIPAA eligible, insurance companies must offer you a choice of basic and standard individual health plans that are guaranteed issue.

Guaranteed Renewability: A provision in a health plan that means your coverage cannot be canceled because you get sick. HIPAA requires all health plans to be guaranteed renewable. Your coverage can be canceled for other reasons unrelated to your health status.
Health Insurance (or health plan): Insurance against loss by illness or bodily injury. Health insurance provides coverage for medicine, visits to the doctor or emergency room, hospital stays and other medical expenses. Policies differ in what they cover, the size of the deductible and/or co-payment, limits of coverage and the options for treatment available to the policyholder.
Health Plan Year: That calendar period during which your health plan coverage is in effect. Some group health plan years begin on January 1, while others begin in a different month. Typical group health plans are written for a 12 month timeframe.

HIPAA: Federal law passed in 1996 that 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. Full name is “The Health Insurance Portability and Accountability Act of 1996.”
HIPAA eligible: You must have had 18 months of continuous creditable coverage, at least the last day of which was under a group health plan (including those offered by public employers and churches).
• You also must have used up any COBRA or state continuation coverage for which you were eligible.
• You must not be eligible for Medicare, Medicaid or a group health plan.
• You must not have health insurance. (Note, however, if you know your group coverage is about to end, you can apply for coverage for which you will be federally eligible.)
• You must apply for health insurance for which you are federally eligible within 63 days of losing your prior coverage.

High Risk Pool (HRP): Subsidized health insurance pools that are organized by individual states. HRP pools offer health insurance to those who have been denied health insurance because of a medical condition or to individuals whose premiums are rated significantly higher than average due to health standing or claims experience. High risk pools can be a form of qualified health coverage if they are deemed state-qualified. To be considered qualified, the high risk pool must provide coverage to all individuals guaranteed coverage through HIPAA, not impose any preexisting condition exclusions, meet certain requirements for premium rates and covered benefits, and be officially qualified by the state.

Health Maintenance Organization (HMO): The HMO arranges for, or contracts with, a variety of health care providers to deliver a range of services to consumers who make up its membership. All HMOs employ managed care strategies that emphasize prevention, detection and treatment of illness. HMOs use primary care physicians as the coordinator of patient care needs. An HMO may offer consumers an HMO plan or POS plan. (See health maintenance organization plan and point of service plan.)

Health Maintenance Organization (HMO) Plan: A type of coverage that provides comprehensive health services to members in return for a monthly premium and copayment. In an HMO plan, members may choose a primary care physician (PCP) who coordinates each assigned member’s care. The PCP refers patients to specialists and provider services as needed. Although many HMOs require their members go to the doctors and other providers in the HMO provider network, some HMO plans offer the option to go out-of-network (for example in a POS plan). HMO plans often require members receive a referral from their PCP before seeing a specialist. (See primary care physician and point of service plan.)
Individual Health Insurance: Health insurance coverage on an individual, not group, basis. The premium is based on the individual’s health application and determined by the carrier.

Late Enrollment: Enrollment in a health plan at a time other than the regular or open enrollment period . If you are a late enrollee, you may be subject to a longer pre-existing condition exclusion period.
Look Back: A length of time immediately prior to enrolling in a health plan that can be examined for evidence of pre-existing conditions.

Managed Care Plans: 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.

Medicaid: A program providing inclusive health insurance coverage and other support to certain low-income residents. States are mandated to have Medicaid programs, though eligibility levels and covered benefits will vary.

Medical Home: Also known as Patient-Centered Medical Home (PCMH), is defined as “an approach to providing comprehensive primary care… that facilitate partnerships between individual patients, and their personal physicians, and when appropriate, the patient’s family” The provision of medical homes may allow better access to health care, increase satisfaction with care, and improve health.

Medicare: A federal program that pays for certain health care expenses for people aged 65 or older. Enrolled individuals must pay deductibles and co-payments, but much of their medical costs are covered by the program. Medicare is less comprehensive than some other health care programs, but it is an important source of post-retirement health care. Medicare is divided into three parts. Part A covers hospital bills, Part B covers doctor bills, and Part C provides the option to choose from a package of health care plans.

Out-of-pocket maximum: The amount of co-insurance a member must pay before out-of-network claims will be paid at 100% of the allowed amount.

Participating Provider: A health care provider (e.g., doctor, psychologist, hospital) who agrees to accept the terms, conditions and allowable payments of an insurer.

Point of Service (POS) Plan: A type of managed care coverage that allows members to choose to receive services either from participating HMO providers or from providers outside the HMO’s network. Members pay less for in-network care. For out-of-network care, members usually pay a deductible and coinsurance.

Pre-existing Condition: Any condition for which medical advice, diagnosis, care, or treatment was recommended or received within a defined period (usually six to twelve months) directly preceding enrollment in a health plan.

Preferred Provider Organization (PPO): A type of managed care coverage based on a network of doctors and hospitals that provides care to an enrolled population at a prearranged discounted rate. PPO members usually pay more when they receive care outside the PPO network.

Primary Care Physician (PCP): An internist, pediatrician, family physician, general practitioner, or in some instances an obstetrician/gynecologist.

Referral: Authorization from your primary care physician or health insurer to see a specialist or receive a special test or procedure

Schedule of Allowances: The set dollar amount the insurance policy covers for each procedure.

Self-Insured Health Plan: In this type of plan, an employer will pay for employees’ health care costs out of a fund that the company has set aside for medical expenses. Employers may contract with an outside organization, often an insurance company, to administer the plan. Under a federal statute known as ERISA, the U.S. Department of Labor has authority over self-insured employer health plans.

Specialist: A doctor who has been specially trained in and practices a specific type of medicine other than primary care (e.g., cardiologists, dermatologists, gastroenterologists).

Stop Loss: 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%. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.

Waiting Period: The time you are required to work before you are eligible for health benefits from the employer. Waiting periods do not count as gaps in health insurance for purposes of determining whether coverage is continuous. If your employer requires a waiting period, your pre-existing condition exclusion period begins on the first day of the waiting period.