Health Insurance Terminology

Agent:  Licensed insurance professional who represents several insurance companies and sells their products.

Benefit:  Reimbursement for covered medical expenses as specified by the plan.

Brand-name drug:  Prescription drug marketed with a specific brand name by the company that manufactures it. May cost insured individuals higher co-pay than generic drugs on some health plans.

Broker:  Licensed insurance professional who obtains multiple quotes and plan information in the interest of his client.

Carrier:  Insurance company or HMO insuring the health plan.

Certificate:  Description of the benefits and coverage provisions intended to explain the contractual arrangement between the carrier and the insured group or individual.

Claim:  Formal request made by an insured person for the benefits provided by a policy.

COBRA:  Consolidated Omnibus Budget Reconciliation Act.  Federal legislation that requires group health plans to provide health plan members the opportunity to purchase continued coverage in the event their insurance is terminated. Applies only to employer groups with 20 or more employees.

Co-insurance:  Percentage of covered expenses an insured individual shares with the carrier. (i.e., for an 80/20 plan, the health plan member's co-insurance is 20%.) If applicable, co-insurance applies after the insured pays the deductible and is only required up to the plan's Out-of-Pocket amount.

Co-pay/Co-payment:  Amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might require a $20 co-pay for each doctor's office visit.

Deductible:  Dollar amount an insured individual must pay for covered expenses during a calendar year before the plan begins paying co-insurance benefits.

Dependents:  Spouse and unmarried children (adopted, step or natural) of an applicant.

Effective Date:  Date requested and/or approved for insurance coverage to begin.

Exclusions:  Expenses which are not covered under an insurance plan. These are listed in the Certificate.

EOB:  Explanation of Benefits.  Carrier's written response to a claim for benefits.

Generic drug:  Chemical equivalent to a "brand name drug." These drugs cost less, and the savings is passed onto health plan members in the form of a lower co-pay.

Group Insurance:  Insurance contract made with an employer or other entity that covers individuals in the group.

HSA:  Health Savings Account.  A special account owned by an individual where contributions to the account are to pay for current and future medical expenses.  HSA's are used in conjunction with a "High Deductible Health Plan" (HDHP) that does not cover first dollar medical expenses (except for preventive care).

HMO:  Health Maintenance Organization. An alternative to commercial insurance that stresses preventive care, early diagnosis and treatment on an outpatient basis. HMOs are licensed by the state to provide care for enrollees by contracting with specific health care providers to provide specified benefits. Many HMOs require enrollees to see a participating primary care physician (PCP) who will refer them to a specialist if deemed necessary.

HIPAA:  Health Insurance Portability and Accountability Act of 1996, P.L. 104-91. This law relates to underwriting, pre-existing limitations, guaranteed renewal, COBRA and certification requirements in the event someone terminates from the plan. The new law, commonly known as the "Kennedy-Kassebaum Bill," establishes new requirements for self-funded, fully-insured group plans (including church plans) and Individual Health policies.

ID card:  Identification card given to insured individuals which advise medical providers that a patient is covered by a particular health insurance plan.

In-network:  Provider or health care facility which is part of a health plan's network. When applicable, insured individuals usually pay less when using an in-network provider.

Lifetime Maximum Benefit:  Maximum amount a health plan will pay in benefits to an insured individual.

Limitations:  Restriction on the amount of benefits paid out for a particular covered expense.

LTD:  Long-Term Disability.  Insurance which pays an individual a percentage of monthly earnings in the event of disability.

Managed Care:  Coordination of health care services in the attempt to produce high quality health care for the lowest possible cost.

Network:  Group of doctors, hospitals and other providers contracted to provide services to insured individuals for less than their usual fees. Provider networks can cover large geographic markets and/or a wide range of health care services. If a health plan uses a preferred provider network, insured individuals typically pay less for using a network provider.

Out-of-Network:  Provider or health care facility which is not part of a health plan's network. Insured individuals usually pay more when using an out-of-network provider, if the plan uses a network.

Out-of-Pocket Maximum:  Total of an insured individual's co-insurance payments (which may or may not include co-payments).

Point-of-Service (POS):  Health plan which allows the enrollee to choose HMO, PPO or indemnity coverage at the point of service (at the time services are received).

Pre-certification:  Pre-admission review and approval of appropriateness and medical necessity of hospitalization or other medical treatment. Insurance company requirement that an insured obtain pre-approval before being admitted to a hospital or receiving certain kinds of treatment.

Pre-existing Condition:  Illness, injury or condition for which the insured individual received medical advice, treatment, services or supplies; had diagnostic tests done or recommended; had medicines prescribed or recommended; or had symptoms of typically within 12 months (time periods may vary depending on state laws) prior to the effective date of insurance coverage.

PPO:  Preferred Provider Organization.  Network or panel of physicians and hospitals that agrees to discount its normal fees in exchange for a high volume of patients. The insured individual can choose from among the physicians on the panel.

Premiums:  Payments to an insurance company providing coverage.

Provider:  Licensed person or entity providing health care services, including hospitals, physicians, home health agencies and nursing homes.

Referral:  Transfer to specialty physician or specialty care by a primary care physician.

Rider:  Modification to a Certificate of Insurance regarding clauses and provisions of a policy. A rider usually adds or excludes coverage.

Short-Term Medical:  Temporary health coverage for an individual for a short period of time, usually from 30 days to six months.

Small employer group:  Groups with 2­ - 50 employees. The definition of small employer group may vary between states.

State Mandated Benefits:  State laws requiring that commercial health insurance plans include specific benefits.

Underwriter:  Insurance carrier that assumes responsibility for the risk, issues insurance policies and receives premiums.