Terminology

Terminology - Acson Insurance Services, Inc. - resou

ACCUMULATION PERIOD

The period of time during which an insured person incurs eligible medical expenses toward the satisfaction of a deductible. 

ACTUARY

A person professionally trained in the mathematical and statistical aspects of the insurance industry.
Actuaries frequently calculate premium rates, reserves and dividends and assist in estimating the costs and savings of benefit changes.

ACTUARIAL VALUE

The percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an actuarial value of 70%, on average, you would be responsible for 30% of the costs of all covered benefits. However, you could be responsible for a higher or lower percentage of the total costs of covered services for the year, depending on your actual health care needs and the terms of your insurance policy.

AFFORDABLE CARE ACT (ACA)

The comprehensive health care reform law enacted in March 2010. The law was enacted in two parts: The Patient Protection and Affordable Care Act was signed into law on March 23, 2010 and was amended by the Health Care and Education Reconciliation Act on March 30, 2010. The name “Affordable Care Act” is used to refer to the final, amended version of the law.

AFFORDABLE COVERAGE

Employer coverage is considered affordable - as it relates to the premium tax credit - if the employee’s share of the annual premium for the lowest priced self-only plan is no greater than 9.56% of annual household income. People offered employer-sponsored coverage that’s affordable and provides minimum value aren't eligible for a premium tax credit.

ALLOWABLE CHARGE

Also referred to as the Allowed Amount, Approved Charge or Maximum Allowable. See also, Usual, Customary and Reasonable Charge. This is the dollar amount typically considered payment-in-full by an insurance company and an associated network of healthcare providers. The Allowable Charge is typically a discounted rate rather than the actual charge. 

AMBULATORY CARE

Medical care rendered on an outpatient basis and which may include diagnosis, certain forms of treatment, surgery and rehabilitation

AMBULATORY SETTING

Medical facilities such as surgery centers, clinics and offices in which healthcare is provided on an outpatient basis.

ASSIGNMENT OF BENEFITS

The payment of health insurance benefits to a healthcare provider rather than directly to the member of a health insurance plan. 

ATTENDING PHYSICIAN STATEMENT (APS):

A physician's assessment of a patient's state of health as outlined in office notes and test results compiled by the physician. An APS may be requested by an insurance company in lieu of a medical examination in order to determine the state of a health insurance applicant's health for underwriting purposes.

BALANCE BILLING

When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.

BENEFITS

The health care items or services covered under a health insurance plan. Covered benefits and excluded services are defined in the health insurance plan's coverage documents.  

BRAND NAME (DRUGS)

A drug sold by a drug company under a specific name or trademark and that is protected by a patent. Brand name drugs may be available by prescription or over the counter.

CARRY-OVER PROVISION

A provision of some health insurance plans allowing medical expenses paid for by the member in the last three months of the year to be carried over and applied toward the next year's deductible.

CLAIM

A request for payment that you or your health care provider submits to your health insurer when you get items or services you think are covered.

COBRA

Short for Consolidated Omnibus Budget Reconciliation Act. A federal law under which group health plans sponsored by employers with 20 or more employees must offer continuation of coverage to employees who leave their jobs and their dependents. The employee must pay the entire premium. Coverage can be extended up to 18 months. Surviving dependents can receive longer coverage.

COINSURANCE

In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20 percent health insurance coinsurance clause, the policyholder pays for the deductible plus 20 percent of his covered losses. After paying 80 percent of losses up to a specified ceiling, the insurer starts paying 100 percent of losses.

COMMUNITY RATING

A rule that prevents health insurers from varying premiums within a geographic area based on age, gender, health status or other factors.

COORDINATION OF BENEFITS (COB)

A way to figure out who pays first when 2 or more health insurance plans are responsible for paying the same medical claim.

COPAYMENT

A specific charge that your health insurance plan may require that you pay for a specific medical service or supply, also referred to as a "co-pay." For example, your health insurance plan may require a $15 co-payment for an office visit or brand-name prescription drug, after which the insurance company often pays the remainder of the charges.

COST SHARING

The share of costs covered by your insurance that you pay out of your own pocket. This term generally includes deductibles, coinsurance, and copayments, or similar charges, but it doesn't include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. Cost sharing in Medicaid and CHIP also includes premiums.

COVERAGE LIMITS

Maximum amount of insurance that can be paid for a covered loss.

CREDITABLE COVERAGE

Health coverage you have had in the past, such as coverage under a group health plan (including COBRA continuation coverage), an HMO, an individual health insurance policy, Medicare or Medicaid, and this prior coverage was not interrupted by a significant break in coverage. 

The time period of this prior coverage must be applied toward any pre-existing condition exclusion imposed by a new health plan. Proof of your creditable coverage may be shown by a certificate of creditable coverage or by other documents showing you had health coverage, such as a health insurance ID card. 

DEDUCTIBLE

The amount of loss paid by the policyholder. Either a specified dollar amount, a percentage of the claim amount, or a specified amount of time that must elapse before benefits are paid. The bigger the deductible, the lower the premium charged for the same coverage.

DEDUCTIBLE CARRY-OVER

A provision of some health insurance plans allowing medical expenses paid for by the member in the last three months of the year to be carried over and applied toward the next year's deductible.

DEPENDENT COVERAGE

Insurance coverage for family members of the policyholder, such as spouses, children, or partners.

DISABILITY

A limit in a range of major life activities. This includes activities like seeing, hearing, walking and tasks like thinking and working. Because different programs may have different disability standards, please check the program you're interested in for its disability standards.

DOMESTIC PARTNERSHIP

Two people of the same or opposite sex who live together and share a domestic life, but aren't married or joined by a civil union. In some states, domestic partners are guaranteed some legal rights, like hospital visitation.

DRUG LIST

A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a formulary.

DURABLE MEDICAL EQUIPMENT (DME)

Equipment and supplies ordered by a health care provider for everyday or extended use. Coverage for DME may include: oxygen equipment, wheelchairs, crutches or blood testing strips for diabetics.

EFFECTIVE DATE

The date on which health insurance coverage comes into effect.

ELECTION NOTICE

Written notification that you are eligible for COBRA continuation coverage. This notice should explain how long you will have to decide whether or not to elect COBRA continuation coverage. 

The group health plan must give you at least 60 days from the date the notice is provided to you, or from the date your coverage ended, whichever is later, to elect COBRA continuation coverage. 

The election notice should explain, among many other things, how much you must pay for coverage and when and to whom the payments are due. 

ELIGIBILITY DATE

The date on which a person becomes eligible for insurance benefits. 

ELIGIBILITY REQUIREMENTS

Conditions that must be met in order for an individual or group to be considered eligible for insurance coverage.

ELIGIBLE DEPENDENT

A dependent (usually spouse or child) of an insured person who is eligible for insurance coverage.

ELIGIBLE EMPLOYEE

An employee who is eligible for insurance coverage based upon the stipulations of the group health insurance plan.

ELIMINATION PERIOD

A kind of deductible or waiting period usually found in disability policies. It is counted in days from the beginning of the illness or injury. 

EMERGENCY MEDICAL CONDITION

An emergency condition is any medical condition of recent onset and severity, including but not limited to severe pain, that would lead to a prudent layperson, possessing an average knowledge of medicine and health, to believe that his or her condition, sickness, or injury is of such a nature that failure to obtain immediate medical care could result in placing the patient's health in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of bodily organ or part.

EMERGENCY ROOM SERVICES

Evaluation of an emergency medical condition and treatment to keep the condition from getting worse.

Typically, emergency room services include all services provided when a patient visits an emergency room for an emergency condition. 

EMPLOYEE CONTRIBUTION

The portion of the health insurance premium paid for by the employee, usually deducted from wages by the employer.

EMPLOYER CONTRIBUTION

The portion of an employee's health insurance premium paid for by the employer.

EMPLOYER WAGE & TAX STATEMENT

An employer tax reporting statement submitted to the applicable governmental agency to establish and report the employer's tax responsibilities.

ENROLLEE

An eligible person or eligible employee who is enrolled in a health insurance plan. Dependents are not referred to as enrollees.

ENROLLMENT

The process through which an approved applicant is signed up with the health insurance company and coverage is made effective. This term may also be used to describe the total number of enrollees in a health insurance plan.

ENROLLMENT PERIOD

The period of time during which an eligible employee or eligible person may sign up for a group health insurance plan.

EMPLOYER MANDATE

Under the Affordable Care Act (ACA), employers with at least 50 full-time equivalent (FTE) employees could face penalties beginning in 2015 if a full-time employee purchases insurance through the state health insurance exchange/marketplace and qualifies for a premium tax credit.

EPO (EXCLUSIVE PROVIDER ORGANIZATION)

An EPO is a Exclusive Provider Organization. As a member of an EPO, you can use the doctors and hospitals within the EPO network, but cannot go outside of the network for care. There are no out-of-network benefits. 

ERISA

ERISA (Employee Retirement Income Security Act of 1974)is a federal law that regulates employee benefit plans, such as group health plans, that private sector employers, employee organizations (such as unions), or both, offer to employee s and their families. 

EXTENDED COVERAGE

A provision of some health insurance plans allowing for coverage of certain healthcare services after the member is no longer covered on the plan. For example, a member's maternity benefits may be extended beyond the expected end of coverage if the woman was already receiving covered maternity services.

EXTENSION OF BENEFITS

A provision of some health insurance plans allowing for coverage to be extended beyond a scheduled termination date. The extended coverage is made available only when the member is disabled or hospitalized as of the intended termination date, and continues only until the patient leaves the hospital or returns to work.

ESSENTIAL HEALTH BENEFITS

A set of health care service categories that must be covered by certain plans, starting in 2014.

The Affordable Care Act ensures health plans offered in the individual and small group markets, both inside and outside of the Health Insurance Marketplace, offer a comprehensive package of items and services, known as essential health benefits. 

Essential health benefits must include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

Insurance policies must cover these benefits in order to be certified and offered in the Health Insurance Marketplace. States expanding their Medicaid programs must provide these benefits to people newly eligible for Medicaid.

EXCLUSION

A provision in an insurance policy that eliminates coverage for certain risks, people, property classes, or locations.

FORMULARY

A formulary, or drug list, is a list of drugs covered by your Medicare Part D plan benefit. A drug list may also be referred to as a covered medications list (CML), a preferred drug list (PDL), a select drug list or a formulary. These drugs are dispensed through participating pharmacies to covered members. Drug lists may differ between Medicare prescription drug plans.

FSA (FLEXIBLE SPENDING ACCOUNT)

An arrangement you set up through your employer to pay for many of your out-of-pocket medical expenses with tax-free dollars. These expenses include insurance copayments and deductibles, and qualified prescription drugs, insulin and medical devices. You decide how much of your pre-tax wages you want taken out of your paycheck and put into an FSA. You don’t have to pay taxes on this money. Your employer’s plan sets a limit on the amount you can put into an FSA each year.

There is no carry-over of FSA funds. This means that FSA funds you don’t spend by the end of the plan year can’t be used for expenses in the next year. An exception is if your employer’s FSA plan permits you to use unused FSA funds for expenses incurred during a grace period of up to 2.5 months after the end of the FSA plan year.

(Note: Flexible Spending Accounts are sometimes called Flexible Spending Arrangements).

FTE (FULL-TIME EQUIVALENT)

Full-time equivalent (FTE) is a unit that indicates the workload of an employed person. Healthcare.gov provides a tool to calculate an organization’s FTEs using the count of their full and part time employees.

FULL-TIME EMPLOYEE

An employee who works an average of at least 30 hours per week (so part-time would be less than 30 hours per week).

GAP

GAP insurance is intended to help cover the high out-of-pocket expenses normally associated with a low premium, high deductible health plan. When a member purchases a GAP policy, the additional benefits help cover out-of-pocket expenses related to coinsurance, co-pays and deductibles for inpatient and outpatient services. 

For example, if a member has a $5,000 deductible on their major medical plan, and they have gap coverage up to $4,000, that additional gap coverage could eat up most of that deductible.

GENERIC DRUGS

A prescription drug that has the same active-ingredient formula as a brand-name drug. Generic drugs usually cost less than brand-name drugs. The Food and Drug Administration (FDA) rates these drugs to be as safe and effective as brand-name drugs.

GRACE PERIOD

A time period after the payment due date, during which insurance coverage remains in force and the policyholder may make a payment without penalty.

GRANDFATHERED HEALTH PLAN

As used in connection with the Affordable Care Act: A group health plan that was created or an individual health insurance policy that was purchased on or before March 23, 2010. Grandfathered plans are exempted from many changes required under the Affordable Care Act. 

Plans or policies may lose their “grandfathered” status if they make certain significant changes that reduce benefits or increase costs to consumers. 

GROUP

A number of individuals covered under a single health insurance contract, usually a group of employees.

GROUP INSURANCE

A single policy covering a group of individuals, usually employees of the same company or members of the same association and their dependents. Coverage occurs under a master policy issued to the employer or association. 

It provides benefits for employees of a business or members of an organization, as opposed to individual and family health insurance.

GUARANTEED ISSUE

A requirement that health plans must permit you to enroll regardless of health status, age, gender, or other factors that might predict the use of health services. Except in some states, guaranteed issue doesn't limit how much you can be charged if you enroll.

GUARANTEED RENEWAL

A requirement that your health insurance issuer must offer to renew your policy as long as you continue to pay premiums. Except in some states, guaranteed renewal doesn't limit how much you can be charged if you renew your coverage.

HEALTH INSURANCE MARKETPLACE

A resource where individuals, families, and small businesses can: learn about their health coverage options; compare health insurance plans based on costs, benefits, and other important features; choose a plan; and enroll in coverage. 

In some states, the Marketplace is run by the state. In others it is run by the federal government.

HEALTH PLAN CATEGORIES

Plans in the Marketplace are primarily separated into 4 health plan categories — Bronze, Silver, Gold, or Platinum -  based on the percentage the plan pays of the average overall cost of providing essential health benefits to members. 

The plan category you choose affects the total amount you'll likely spend for essential health benefits during the year. The percentages the plans will spend, on average, are 60% (Bronze), 70% (Silver), 80% (Gold), and 90% (Platinum). This isn't the same as coinsurance, in which you pay a specific percentage of the cost of a specific service.

HIGH DEDUCTIBLE HEALTH PLAN (HDHP)

A plan that features higher deductibles than traditional insurance plans. High deductible health plans (HDHPs) can be combined with a health savings account or a health reimbursement arrangement to allow you to pay for qualified out-of-pocket medical expenses on a pre-tax basis.

HIPAA 

Federal Health Insurance Portability and Accountability Act of 1996. The primary goal of the law is to make it easier for people to keep health insurance, protect the confidentiality and security of healthcare information and help the healthcare industry control administrative costs.

HIPAA ELIGIBLE INDIVIDUAL

Your status once you have had 18 months of continuous creditable health coverage. To be HIPAA eligible, at least the last day of your creditable coverage must have been under a group health plan; you also must have used up any COBRA or state continuation coverage; you must not be eligible for Medicare or Medicaid; you must not have other health insurance; and you must apply for individual health insurance within 63 days of losing your prior creditable coverage. When you're buying individual health insurance, HIPAA eligibility gives you greater protections than you would otherwise have under state law.

HMO (HEALTH MAINTENANCE ORGANIZATION)

A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.

With an HMO, members designate a primary care physician to treat and direct health care decisions and coordinate referrals to specialists within the HMO network. Typically, depending on the type of plan the group selects, the only costs members incur are share-of-costs for doctor's visits and other services such as procedures and prescriptions.

An HMO may be right for you if:

You're willing to play by the rules and coordinate your care through a primary care physician.
You're looking for comprehensive benefits at a reasonable monthly premium.
You value preventive care services: coverage for checkups, immunizations and similar services are often emphasized by HMOs.
Don’t frequently travel outside your service area.

HOSPICE SERVICES

Services to provide comfort and support for persons in the last stages of a terminal illness and their families.

HOSPITAL OUTPATIENT CARE

Care in a hospital that usually doesn’t require an overnight stay.

HOSPITAL READMISSIONS

A situation where you were discharged from the hospital and wind up going back in for the same or related care within 30, 60 or 90 days. The number of hospital readmissions is often used in part to measure the quality of hospital care, since it can mean that your follow-up care wasn't properly organized, or that you weren't fully treated before discharge.

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.

HRA (HEALTH REIMBURSEMENT ACCOUNT)

Health Reimbursement Accounts (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. 

The employer funds and owns the account. Health Reimbursement Accounts are sometimes called Health Reimbursement Arrangements. It combines high deductible/low premium health insurance with an account funded solely by the employer.

The account is set up to help employees manage the increase in out-of-pocket healthcare expenses usually associated with a high deductible plan. Money in the health reimbursement account can help pay for co-pays and other qualified expenses prior to the deductible being met.

HSA (HEALTH SAVINGS ACCOUNT)

A medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan. The funds contributed to the account aren't subject to federal income tax at the time of deposit. It combines high deductible/lower premium health insurance with a tax favored savings account set up to help employees manage the increase in out-of-pocket healthcare expenses.

Both employer and employee can contribute, on a pre-tax basis, to the savings account. Money in the savings account can help pay the deductible and other qualified medical expenses. Once the deductible is met, the insurance begins paying. The HSA and savings are the employee’s to keep year after year, even if they change jobs or healthcare plans.

Funds must be used to pay for qualified medical expenses. Unlike a Flexible Spending Account (FSA), funds roll over year to year if you don't spend them.

IN-NETWORK COINSURANCE

The percent (for example, 20%) you pay of the allowed amount for covered health care services to providers who contract with your health insurance or plan. In-network coinsurance usually costs you less than out-of-network coinsurance.

IN-PATIENT CARE

Health care that you get when you're admitted as an inpatient to a health care facility, like a hospital or skilled nursing facility.

INDEMNITY

Also called "fee-for-service" plans, Indemnity plans typically allow you to direct your own health care and visit whatever doctors or hospitals you like. The insurance company then pays a set portion of your total charges. You may be required to pay for some services up front and then apply to the insurance company for reimbursement. Indemnity plans typically require that you fulfill an annual deductible. Because of the freedom they allow members, Indemnity plans are sometimes more expensive than other types of plans.

An Indemnity plan may be right for you if:

You want the greatest level of freedom possible in choosing which doctors or hospitals to visit
You don't mind coordinating the billing and reimbursement of your claims yourself

LAPSE

The termination of insurance coverage due to lack of payment after a specific period of time.

LIFETIME LIMIT

A cap on the total lifetime benefits you may get from your insurance company. An insurance company may impose a total lifetime dollar limit on benefits (like a $1 million lifetime cap) or limits on specific benefits (like a $200,000 lifetime cap on organ transplants or one gastric bypass per lifetime) or a combination of the two. After a lifetime limit is reached, the insurance plan will no longer pay for covered services.

LIFETIME MAXIMUM

Lifetime maximum or lifetime limits refers to the maximum dollar amount that a health insurance company agrees to pay on behalf of a member for covered services during the course of his or her lifetime. For plan or policy years beginning on or after Sept. 23, 2010, plans may not establish any lifetime limit on the dollar amount of benefits for any individual. All plans are required by PPACA to remove the lifetime maximum restrictions. 

LIMITATIONS

A term referring to any maximums that a health insurance plan imposes on specific benefits.

LONG TERM CARE

Care provided on a continuing basis for the chronically ill or disabled. Long-term care may be provided on an inpatient basis (at a long-term care facility) or in the home setting.

LONG TERM DISABILITY (LTD)

During the time an employee is unable to work due to a qualifying disability (illness or injury), LTD generally allows for payments to the employee to begin after about a 90 day waiting period, although it could be much longer depending on the policy, but will continue to pay the employee far longer than STD will--for a few years, up to age 65, or even for a lifetime.

LOSS RATIO

Percentage of each premium dollar an insurer spends on claims.

MATERNITY COVERAGE

Maternity coverage means the insurance covers part or all of the medical cost during a woman's pregnancy. Coverage is broken down into inpatient and outpatient services. Typically, inpatient coverage includes hospitalization and physician fees associated with child birth. Outpatient coverage pays for prenatal and postnatal OB-GYN office visits.

MEDICAID

A federal/state public assistance program created in 1965 and administered by the states for people whose income and resources are insufficient to pay for health care.

MEDICAL UNDERWRITING

A process used by insurance companies to try to figure out your health status when you're applying for health insurance coverage to determine whether to offer you coverage, at what price, and with what exclusions or limits.

MEDICARE

Federal program for people 65 or older that pays part of the costs associated with hospitalization, surgery, doctors’ bills, home health care, and skilled-nursing care.

MEDICARE PART D

A program that helps pay for prescription drugs for people with Medicare who join a plan that includes Medicare prescription drug coverage. There are two ways to get Medicare prescription drug coverage: through a Medicare Prescription Drug Plan or a Medicare Advantage Plan that includes drug coverage. These plans are offered by insurance companies and other private companies approved by Medicare.

MEDIGAP/MEDSUP

Policies that supplement federal insurance benefits particularly for those covered under Medicare.

MINIMUM ESSENTIAL COVERAGE (MEC)

The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage.

MINIMUM VALUE

A health plan meets this standard if it’s designed to pay at least 60% of the total cost of medical services for a standard population. Starting in 2014, individuals offered employer-sponsored coverage that provides minimum value and that’s affordable won’t be eligible for a premium tax credit.

NETWORK

The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services. You should make sure that the health care providers you visit participate in the network. Services rendered by out of network providers may not be covered or may be paid at a lower level.

NON PREFERRED PROVIDER

A provider who doesn’t have a contract with your health insurer or plan to provide services to you. You’ll pay more to see a non-preferred provider. Check your policy to see if you can go to all providers who have contracted with your health insurance or plan, or if your health insurance or plan has a “tiered” network and you must pay extra to see some providers.

OFFICE VISIT COPAY

An office visit is the amount you pay when you see the doctor or dentist for routine care.  Higher office visit copay amounts will lower your monthly premiums.

OPEN ENROLLMENT PERIOD (EXCHANGE)

The period of time during which individuals who are eligible to enroll in a Qualified Health Plan can enroll in a plan in the Marketplace. For coverage starting in 2016, the Open Enrollment Period is November 1, 2015–January 31, 2016. 

Individuals may also qualify for Special Enrollment Periods outside of Open Enrollment if they experience certain events. 

OPEN ENROLLMENT PERIOD (GROUPS)

A time period during which eligible persons or eligible employees or their dependents may opt to sign up for coverage under a group health insurance plan. During an open enrollment period, applicants typically will not be required to provide evidence of insurability.

Employees/Dependents who had previously declined coverage can elect to enroll and coverage will become effective on the renewal date for the group.

It is only during the open enrollment period that employees can elect to join the group insurance plans. That is unless there is a qualifying event that results in a change in their status.

OUT-OF-POCKET EXPENSES

Your expenses for medical care that aren't reimbursed by insurance. Out-of-pocket costs include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren't covered.

OUT-OF-POCKET MAXIMUM/LIMIT

The most you pay during a policy period (usually one year) before your health insurance or plan starts to pay 100% for covered essential health benefits. This limit must include deductibles, coinsurance, copayments, or similar charges and any other expenditure required of an individual which is a qualified medical expense for the essential health benefits. 

This limit does not have to count premiums, balance billing amounts for non-network providers and other out-of-network cost-sharing, or spending for non-essential health benefits.

OUT-OF-NETWORK CO-INSURANCE

The percentage (for example, 40%) you pay of the allowed amount for covered health care services to providers who don't contract with your health insurance or plan. Out-of-network coinsurance usually costs you more than in-network coinsurance.

PLAN YEAR

A 12-month period of benefits coverage under a group health plan. This 12-month period may not be the same as the calendar year. To find out when your plan year begins, you can check your plan documents or ask your employer. (Note: For individual health insurance policies this 12-month period is called a “policy year”).

POLICY

A written contract for insurance between an insurance company and policyholder stating details of coverage.

POLICY YEAR

A 12-month period of benefits coverage under an individual health insurance plan. This 12-month period may not be the same as the calendar year. To find out when your policy year begins, you can check your policy documents or contact your insurer. (Note: In group health plans, this 12-month period is called a “plan year”).

POS (POINT-OF-SERVICE) PLAN

POS stands for "Point of Service." POS plans combine elements of both HMO and PPO plans. As a member of a POS plan, you may be required to choose a primary care physician who will then make referrals to specialists in the health insurance company's network of preferred providers. Care rendered by non-network providers will typically cost you more out of pocket, and may not be covered at all.

A POS plan may be right for you if:

You're willing to play by the rules and possibly coordinate your care through a primary care physician.

Your favorite doctor already participates in the network.

PPACA

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law, commonly referred to as the Health Reform Law. Among other things, the new law requires that all Americans maintain minimum essential coverage starting in 2014. At that time, health insurance companies will not be able to deny insurance coverage to individuals based on a pre-existing condition.

PPO (PREFERRED PROVIDER ORGANIZATION)

A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

A PPO may be right for you if:

Your favorite doctor already participates in the PPO 
You want some freedom to direct your own health care but don't mind working within a list of preferred providers

PRE-EXISTING CONDITION

A health problem you had before the date that new health coverage starts.

PRE-EXISTING CONDITION EXCLUSION

In some cases, a health insurance company may exclude a patient's pre-existing conditions from coverage under a new health insurance plan. This is more typical with individual and family health insurance plans and less common with group health insurance plans. 

HIPAA legislation imposes certain limitations on when a health insurance company can exclude coverage for a pre-existing condition. PPACA prohibits pre-existing condition exclusions for all plans beginning January 2014 and prohibits pre-existing condition exclusions for all children under the age of 19 in new policies sold on or after September 23, 2010.

PREAUTHORIZATION

A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.

PREMIUM

The price of an insurance policy, typically charged annually or semiannually.

PREMIUM TAX CREDIT

The Affordable Care Act provides a new tax credit to help you afford health coverage purchased through the Marketplace. Advance payments of the tax credit can be used right away to lower your monthly premium costs. If you qualify, you may choose how much advance credit payments to apply to your premiums each month, up to a maximum amount. 

If the amount of advance credit payments you get for the year is less than the tax credit you're due, you’ll get the difference as a refundable credit when you file your federal income tax return. If your advance payments for the year are more than the amount of your credit, you must repay the excess advance payments with your tax return.

PRESCRIPTION DRUG COVERAGE

Health insurance or plan that helps pay for prescription drugs and medications.

Prescription drug coverage varies by carrier and plan type. Typically, prescription drugs are covered in one of the two ways below:

Insurance covers a percentage after plan deductible is met.
Insurance covers cost of the drug but a copay is required with prescription.

PRESCRIPTION MEDICATION

A drug that may be obtained only with a doctor's prescription and which has been approved by the Food and Drug Administration.

PREVENTIVE BENEFITS

Covered services that are intended to prevent disease or to identify disease while it is more easily treatable. PPACA requires insurers to provide coverage for certain preventive benefits without deductibles, co-payments, or coinsurance. This rule does not apply to Grandfathered Plans. HHS is continuing to update what it defines as Preventative Benefits.

PREVENTIVE CARE

Medical care rendered not for a specific complaint but focused on prevention and early-detection of disease. This type of care is best exemplified by routine examinations and immunizations. Some health insurance plans limit coverage for preventive care services, while others encourage such services. Note that well-baby care, immunizations, periodic prostate exams, pap smears and mammograms, though considered preventive care, may be covered even if your health insurance plan limits coverage for other preventive care services.

PREVENTIVE SERVICES

Routine health care that includes screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems.

PRIMARY CARE PHYSICIAN (PCP)

A physician who directly provides or coordinates a range of health care services for a patient. A patient may be required to choose a primary care physician (PCP). A primary care physician usually serves as a patient's main healthcare provider. The PCP serves as a first point of contact for healthcare and may refer a patient to specialists for additional services.

PRIMARY COVERAGE

If a person is covered under more than one health insurance plan, primary coverage is the coverage provided by the health insurance plan that pays on claims first. 

PRODUCER

An insurance producer (also called an agent or insurance broker) is an individual licensed by a State's Insurance Division or Department to sell insurance in that State. There are different categories of insurance and a producer must be licensed in each category he or she wishes to transact business. Health Insurance is one category.

PROVIDER

A term commonly used by health insurance companies to designate any healthcare provider, whether a doctor or nurse, a hospital or clinic.

QUALIFYING EVENTS

During the open enrollment period, employees and dependents can elect to join group insurance plan. Open enrollment usually occurs during the month prior to the group plan renewal.

However, if there is a qualifying event, an employee can elect to add themselves or their dependents in the middle of the plan year.

Some common examples of qualifying events include:
new employee hire or rehire
loss of other coverage
marriage, divorce, separation or death of spouse
birth, adoption of a child  
court order to provide medical coverage, usually for a child
reduction or increase in hours of employment by the employee (eg. part time to full time)

REFERRAL

A written order from your primary care doctor for you to see a specialist or get certain medical services. In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don’t get a referral first, the plan may not pay for the services.

REINSURANCE

A reimbursement system that protects insurers from very high claims. It usually involves a third party paying part of an insurance company’s claims once they pass a certain amount. Reinsurance is a way to stabilize an insurance market and make coverage more available and affordable.

RENEWAL

Renewal occurs when a group continues coverage under a health insurance plan beyond the original time frame of the contract. At the end of each benefit year, insurance companies generally provide a renewal offer inviting the group to renew it’s coverage.

RENEWAL DATE

The date on which a member's health insurance plan benefit year renews.

RIDER

An amendment or modification to an insurance contract. 

SECONDARY COVERAGE

When a person is covered under more than one health insurance plan, this term describes the health insurance plan that provides payment on claims after the primary coverage. See also Primary Coverage and COB.

SELF-INSURED (SELF-FUNDED) PLAN

A health insurance plan that is funded by an employer rather than through a health insurance company. A health insurance company will typically handle the administration of such a plan, but the cost of claims will be paid for by the employer through a fund set up for this purpose.

This type of plan is usually implemented in larger companies where the employer itself collects premiums from enrollees and takes on the responsibility of paying employees’ and dependents’ medical claims. These employers can contract for insurance services such as enrollment, claims processing, and provider networks with a third party administrator, or they can be self-administered.

SERVICE AREA

The geographic area in which a health insurance plan's benefits are made available. Some health insurance plans will not provide coverage outside of a plan's service area.

SHORT TERM DISABILITY (STD)

During the time an employee is unable to work due to a qualifying disability (illness or injury), STD generally allows for payments to the employee to begin after about a two week waiting period and will continue to pay the employee until he/she recovers or maxes out the benefits, usually anywhere between one month to two years, depending on the policy. 

SIC (STANDARD INDUSTRIAL CLASSIFICATION) CODES

These are codes used to describe or classify businesses based upon the products or services they provide. When you apply for group health insurance coverage, you may be asked to provide the SIC code for your business. This code provides the insurance company with information about the kind of work your employees are likely to perform and may be used to help determine a monthly premium.

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 health care.

STATE CONTINUATION COVERAGE

A state-based requirement similar to COBRA that applies to group health insurance policies of employers with fewer than 20 employees. In some states, state continuation coverage rules also apply to larger group insurance policies and add to COBRA protections. For example, in some states, if you're leaving a job-based plan, you must be allowed to continue your coverage until you reach the age of Medicare eligibility.

SUBSCRIBER

This term may be used in two senses: First, it may refer to the person or organization that pays for health insurance premiums; Secondly, it may refer to the person whose employment makes him or her eligible for group health insurance benefits.

SUMMARY OF BENEFITS & COVERAGE (SBC)

An easy-to-read summary that lets you make apples-to-apples comparisons of costs and coverage between health plans. You can compare options based on price, benefits, and other features that may be important to you. You'll get the "Summary of Benefits and Coverage" (SBC) when you shop for coverage on your own or through your job, renew or change coverage, or request an SBC from the health insurance company.

TERM INSURANCE

A form of life insurance that covers the insured person for a certain period of time, the “term” that is specified in the policy. It pays a benefit to a designated beneficiary only when the insured dies within that specified period which can be one, five, 10 or even 20 years. Term life policies are renewable but premiums increase with age.

TERMINALLY ILL

In healthcare and insurance usage, this term is used to describe a person who is not expected to live beyond six months due to a specific illness.

THIRD-PARTY ADMINISTRATOR

Outside group that performs clerical functions for an insurance company.

TREATMENT FACILITY

May refer to any facility, either residential or non-residential, which is authorized to provide treatment for mental illness or substance abuse.

UCR (USUAL, CUSTOMARY & REASONABLE)

The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.

UNDERWRITING

Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.

URGENT CARE

Care for an illness, injury or condition serious enough that a reasonable person would seek care right away, but not so severe it requires emergency room care.

UTILIZATION

This term refers to how frequently a group uses the benefits associated with a particular health insurance plan or healthcare program.

VISION CARE COVERAGE

An insurance plan typically offered only on a group basis which covers routine eye examinations and which may also cover all or part of the costs associated with contact lenses or eyeglasses.

WAIVER

An agreement under which a member agrees to waive coverage completely or waive coverage for a specific pre-existing conditions or for specific future conditions.

WAITING PERIOD

The time that must pass before coverage can become effective for an employee or dependent who is otherwise eligible for coverage under a job-based health plan.

WELLNESS PROGRAMS

Programs intended to improve and promote health and fitness that's usually offered through the work place, although insurance plans can offer them directly to their enrollees. The program allows your employer or plan to offer you premium discounts, cash rewards, gym memberships, and other incentives to participate. 

Some examples of wellness programs include programs to help you stop smoking, diabetes management programs, weight loss programs, and preventative health screenings.

WELL-BABY/WELL-CHILD CARE

Regularly scheduled, preventive care services, including immunizations, provided to children up to an age specified by a health insurance company or mandated by a government agency. HMO and POS plans typically provide coverage for well-baby care, though coverage for these services may be limited under a PPO plan.

PPACA requires health insurers to provide coverage for certain recommended preventive care services, screenings, and immunizations with no cost sharing requirement for plan or policy years beginning on or after September 23, 2010. 

WELL-WOMAN CARE

A term sometimes used by insurance companies and healthcare providers to refer to mammograms and pap smears and other preventive care services rendered to a woman.

PPACA requires health insurers to provide coverage for certain recommended preventive care services and screenings with no cost sharing requirement.