Glossary of Healthcare Terms
The following are some terms that may be helpful for you to understand, in choosing a healthcare plan that best meets your needs. Some of these words are also common across other types of insurance. However, this glossary explains what the words and phrases mean specifically for health insurance.
Accident - For health insurance purposes, an accident is an unforeseen, unexpected and unintended event resulting in bodily injury.
Accumulation Period - The period of time during which an insured person incurs eligible medical expenses toward the satisfaction of a deductible.
Actively-at-work - Most group health insurance policies state that if an employee is not "actively-at-work" on the day the policy goes into effect, the coverage will not begin until the employee returns to work.
Actual Charge - The actual dollar amount charged by a physician or other provider for medical services rendered, as distinguished from the allowable charge.
Acute Care - Medical care administered, frequently in a hospital or by nursing professionals, for the treatment of a serious injury or illness or during recovery from surgery. Medical conditions requiring acute care are typically periodic or temporary in nature, rather than chronic.
Allowed Amount (Allowed Charge) - The highest amount the plan will cover (pay) for a service. 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. Example: You have just visited your doctor for an earache. The total charge for the visit comes to $100. If the doctor is a member of your health insurance company's network of providers, he or she may be required to accept $80 as payment in full for the visit - this is the Allowable Charge. Your health insurance company will pay all or a portion of the remaining $80, minus any co-payment or deductible that you may owe. The remaining $20 is considered provider write-off. You cannot be billed for this provider write-off. If, however, the doctor you visit is not a network provider then you may be held responsible for everything that your health insurance company will not pay, up to the full charge of $100.
Allowable Costs - Charges for healthcare services and supplies for which benefits are available under your health insurance plan.
Application Fee - The health insurance company may require a one-time application fee. Some insurance companies may refund this fee if the application is not approved. See More Insurance Plan Details section for additional information.
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 - The amount you could be responsible for (in addition to any co-payments, deductibles or coinsurance) if you use an out-of-network provider and the fee for a particular service exceeds the allowable charge for that service.
Benefit - A general term referring to any service (such as an office visit, laboratory test, surgical procedure, etc.) or supply (such as prescription drugs, durable medical equipment, etc.) covered by a health insurance plan in the normal course of a patient's healthcare.
Benefit Level - The maximum amount a health insurance company agrees to pay for a specific covered benefit.
Benefit Package - A description of the healthcare services and supplies that a health insurance company covers for members of a specific health insurance plan.
Benefit Period - The time span when services are covered under your plan. It also defines the time when benefit maximums, deductibles and coinsurance limits build up. It has a start and end date. It is often one calendar year for health insurance plans. Example: You may have a plan with a benefit period of January 1 through December 31 that covers 10 physical therapy visits. The 11th or more session will not be covered.
Binding Receipt - When you submit an application for health insurance and include an initial payment, the health insurance company may provide you with a binding receipt. A binding receipt indicates that, if coverage is approved, the health insurance company is required to initiate coverage from the date on which payment was received.
Birthday Rule - One method used by health insurance companies to determine which parent's health insurance coverage will be primary for a dependent child, when both parents have separate coverage. Typically, the health insurance plan of the parent whose birthday falls earliest in the year will be considered primary.
Broker - Though sometimes used in a sense synonymous with the term agent, a broker typically works with multiple insurance companies, to match applicants with a company or plan best matched to their needs. The broker is paid a commission by the insurance company, but represents the applicant rather than the insurance company itself.
Carrier - Any insurer, managed care organization, or group hospital plan, as defined by applicable state law.
Certificate of Coverage - A document given to an insured that describes the benefits, limitations and exclusions of coverage provided by an insurance company.
COB (Coordination of Benefits) - This is the process by which a health insurance company determines if it should be the primary or secondary payer of medical claims for a patient who has coverage from more than one health insurance policy.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) - Federal legislation allowing an employee or an employee's dependents to maintain group health insurance coverage through an employer's health insurance plan, at the individual's expense, for up to 18 months in certain circumstances. COBRA coverage may be extended beyond 18 months in certain circumstances. COBRA rules typically apply when an employee loses coverage through loss of employment (except in cases of gross misconduct) or due to a reduction in work hours. COBRA benefits also extend to spouses or other dependents in case of divorce or the death of the employee. Children who are born to, adopted, or placed for adoption with the covered employee while he or she is on COBRA coverage are also entitled to coverage. All companies that have averaged at least 20 full-time employees over the past calendar year must comply with COBRA regulations.
Coinsurance - A certain percent you must pay each benefit period after you have paid your deductible. This payment is for covered services only. You may still have to pay a copay. Example: Your plan might cover 80 percent of your medical bill. You will have to pay the other 20 percent. The 20 percent is the coinsurance.
Coinsurance Limit (or Maximum) - The most you will pay in coinsurance costs during a benefit period.
Condition - An injury, ailment, disease, illness or disorder.
Contract - The agreement between an insurance company and the policyholder.
Copayment (Copay) - The amount you pay to a healthcare provider at the time you receive services. You may have to pay a copay for each covered visit to your doctor, depending on your plan. Not all plans have a copay.
Covered Charges - Charges for covered services that your health plan paid for. There may be a limit on covered charges if you receive services from providers outside your plan's network of providers.
Covered Person - Any person covered under the plan.
Covered Service - A healthcare provider’s service or medical supplies covered by your health plan. Benefits will be given for these services based on your plan.
Creditable Coverage - Coverage of a person under any of these:
- A group health plan. This includes church and governmental plans.
- Health insurance coverage.
- Medicare (Part A or Part B of Title XVIII of the Social Security Act).
- Medicaid (Title XIX of the Social Security Act, other than coverage consisting only of benefits under Section 1928).
- The health plan for active military personnel. This includes TRICARE.
- The Indian Health Service or other tribal organization program.
- A state health benefits risk pool.
- The Federal Employees Health Benefits Program.
- A public health plan (as defined in federal regulations).
- A health benefit plan under section 5 (c) of the Peace Corps Act.
- Any other plan which gives complete hospital, medical and surgical services.
Deductible - The amount you pay for your healthcare services before your health insurer pays. Deductibles are based on your benefit period (typically a year at a time). Example: If your plan has a $2,000 annual deductible, you will be expected to pay the first $2,000 toward your healthcare services. After you reach $2,000, your health insurer will cover the rest of the costs.
Dependent Coverage - Health insurance coverage extended to the spouse and unmarried children of the primary insured member. Certain age restrictions on the coverage of children may apply.
Durable Medical Equipment (DME) - Medical equipment used in the course of treatment or home care, including such items as crutches, knee braces, wheelchairs, hospital beds, prostheses, etc.. Coverage levels for DME often differ from coverage levels for office visits and other medical services.
Effective Date - The date on which health insurance coverage comes into effect.
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.
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.
Emergency Medical Condition - A medical problem with sudden and severe symptoms that must be treated quickly. In an emergency, a person with no medical training and an average knowledge of health/medicine could reasonably expect the problem could:
- Put a person's health at serious risk.
- Put an unborn child's health at serious risk.
- Result in serious damage to the person's body and how his or her body works.
- Result in serious damage of a person's organ or any part of the person.
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.
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.
Essential Benefits - The ACA requires all health insurance plans sold after 2014 to include a basic package of benefits including hospitalization, outpatient services, maternity care, prescription drugs, emergency care, and preventive services among other benefits. It also places restrictions on the amount of cost-sharing that patients must pay for these services.
Exclusions - Specific conditions, services or treatments for which a health insurance plan will not provide coverage.
Experimental or Investigational Drug, Device, Medical Treatment or Procedure - These are not approved by the U.S. Food and Drug Administration (FDA) or are not considered the standard of care.
Explanation of Benefits (EOB) - A statement sent from the health insurance company to a member listing services that were billed by a healthcare provider, how those charges were processed, and the total amount of patient responsibility for the claim.
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.
FSA (Flexible Spending Account) - An FSA is often set up through an employer plan. It lets you set aside pre-tax money for common medical costs and dependent care. FSA funds must be used by the end of the term-year. It will be sent back to the employer if you don't use it. Check with your employer's Human Resources team. The can provide a list of FSA-qualified costs that you can purchase directly or be reimbursed for. A few common FSA-qualified costs include:
- Copays for doctors’ visits, chiropractor and psychological sessions
- Hospital fees, medical tests and services (like X-rays and screenings)
- Physical rehabilitation
- Dental and orthodontic expenses (like cleaning, fillings and braces)
- Inpatient treatment for alcohol or drug addiction
- Vaccines (immunizations) and flu shots
Group - A number of individuals covered under a single health insurance contract, usually a group of employees.
Group Health Insurance - A health insurance plan that provides benefits for employees of a business or members of an organization, as opposed to individual and family health insurance.
HMO (Health Maintenance Organization) - Offers healthcare services only with specific HMO providers. Under an HMO plan, you might have to choose a primary care doctor. This doctor will be your main healthcare provider. The doctor will refer you to other HMO specialists when needed. Services from providers outside the HMO plan are hardly ever covered except for emergencies. An HMO may be right for you if -
- You're willing to 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
HRA (Health Reimbursement Account) - An account that lets an employer set aside funds for healthcare costs. These funds go to reimburse Covered Services paid for by employees who take part. An HRA has tax benefits for employer and employees.
HSA (Health Savings Account) - An account that lets you save for future medical costs. Money put in the account is not subject to federal income tax when deposited. Funds can build up and be used year to year. They are not required to be spent in a single year. HSAs must be paired with certain high-deductible health insurance plans (HDHP).
Health Assessment - A health survey that measures your current health, health risks and quality of life.
Health Service Agreement - An agreement between an employer and a health insurance company outlining benefits, enrollment procedures, eligibility standards, etc.
High Deductible Health Plan (HDHP) - A type of health insurance plan that, compared to traditional health insurance plans, requires greater out-of-pocket spending, although premiums may be lower. In 2018, an HSA-qualifying HDHP must have a deductible of at least $1,350 for single coverage and $2,700 for family coverage. The plan must also limit the total amount of out-of-pocket cost-sharing for covered benefits each year to $6,650 for single coverage and $13,300 for family coverage.
HIPAA (Health Insurance Portability and Accountability Act of 1996) - Legislation mandating specific privacy rules and practices for medical care providers and health insurance companies, designed to streamline the healthcare and insurance industries and to protect the privacy and identity of healthcare consumers.
Home Health Care - Part-time care that is provided by medical professionals in the home setting rather than in a hospital or skilled nursing facility.
Hospice Care - Care rendered either on an inpatient basis or in the home setting for a terminally ill patient. Often referred to as "palliative" or "supportive" care, hospice care emphasizes the management of pain and discomfort and the emotional support of the patient and family.
Hospital Benefits - Benefits payable for hospital room and board and other miscellaneous charges resulting from hospitalization.
Hospitalization - Typically, hospitalization services include services related to staying at a hospital for either scheduled procedures, accidents or medical emergencies. Hospitalization services typically do not include hospital stays for giving birth to a child.
Hospitalization Insurance - Insurance intended to provide coverage in case of hospitalization, including benefits for room and board and miscellaneous expenses, within certain limitations.
Indemnity Plan - 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
Inpatient Services - Services received when admitted to a hospital and a room and board charge is made.
Institution (Institutional) - A hospital or certain other facility.
Intermediate Care - A level of nursing care, considered less intensive than skilled nursing care, but which may be rendered in a skilled nursing or intermediate care facility.
IPA (Individual Practice Association) - An organization of physicians who may maintain separate offices but who negotiate contracts with insurance companies and medical facilities as a group. Some health insurance applications will ask you to provide your primary care physician's IPA number. It can usually be found in the health insurance plan's online directory.
Legal Guardian - The person who takes care of a child and makes healthcare decision for the child. This person is the natural parent or was made caretaker by a court of law.
Lifetime Limit (or Lifetime Maximum) - Many health insurance plans place dollar limits upon the claims that the plan will pay over the course of an individual's life. ACA prohibits lifetime limits on the dollar value of benefits deemed essential by the Department of Health and Human Services, for plan or policy years beginning on Sept. 23, 2010. All plans are required by to remove the lifetime maximum restrictions.
Long-term Insurance - A type of health insurance that covers certain services over a set amount of time (typically a 12-month period).
Major Medical Insurance - A type of medical insurance plan that provides benefits for a broad range of healthcare services, both inpatient and outpatient. Major medical insurance plans often carry a high deductible.
Managed Care - A general term used to describe a variety of healthcare and health insurance systems that attempt to guide a member's use of benefits, typically by requiring that a member coordinate his or her healthcare through a primary care physician, or by encouraging the use of a specific network of healthcare providers. There are several different types of managed care health insurance plans, including HMO, PPO, and POS plans.
Medical Care - Medical services received from a healthcare provider or facility to treat a condition.
Medically Necessary (or Medical Necessity) - Services, supplies or prescription drugs that are needed to diagnose or treat a medical condition. Also, an insurer must decide if this care is:
- Accepted as standard practice. It can't be experimental or investigational.
- Not just for your convenience or the convenience of a provider.
- The right amount or level of service that can be given to you.
Medicaid - A state-funded healthcare program for low income and disabled persons.
Medicare - A federal program for people age 65 or older that pays for certain healthcare expenses.
Medicare Supplement Insurance - Health insurance provided to an individual or group that is intended to help fill in the gaps in the coverage provided by Medicare.
Network - A "Network" plan is a variation on a PPO plan. With a Network plan you'll need to get your medical care from doctors or hospitals in the insurance company's network, if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it's up to you to 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.
Network Provider/In-network Provider - A healthcare provider who is part of a plan’s network.
Non-covered Charges - Charges for services and supplies that are not covered under the health plan. Examples of non-covered charges may include things like acupuncture, weight loss surgery or marriage counseling. Consult your plan for more information.
Non-network Provider/Out-of-network Provider - A healthcare provider who is not part of a plan’s network. Costs associated with out-of-network providers may be higher or not covered by your plan. Consult your plan for more information.
Outpatient Services - Services that do not need an overnight stay in a hospital. These services are often provided in a doctor’s office, hospital or clinic.
Out-of-network Care - Healthcare rendered to a patient outside of the health insurance company's network of preferred providers. In many cases, the health insurance company will not pay for these services.
Out-of-pocket Cost - Cost you must pay. Out-of-pocket costs vary by plan and each plan has a maximum out of pocket (MOOP) cost. Consult your plan for more information.
POS (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.
PPO (Preferred Provider Organization) - A type of insurance plan that offers more extensive coverage for the services of healthcare providers who are part of the plan's network, but still offers some coverage for providers who are not part of the plan's network. PPO plans generally offer more flexibility than HMO plans, but premiums tend to be higher.
Prescription Drug - Any medicine that may not be given without a prescription because of federal or state law.
Premium - Payments you make to your insurance provider to keep your coverage. The payments are due at certain times.
Provider (Healthcare Provider) - A hospital, facility, physician or other licensed healthcare professional.
Provider Write-off - The difference between the actual charge and the allowable charge, which a network provider cannot charge to a patient who belongs to a health insurance plan that utilizes the provider network.
Respite Care - Normally associated with hospice care, respite care is a benefit often made available for family members of a patient, providing the patient's primary caretaker with a break or respite from caring for the patient. Respite care may be provided for the patient in either the home or a nursing home setting.
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.
Self-funded Health Insurance 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.
Short-term Insurance - A type of health insurance that covers certain services for a set time period (6 months or less).
Skilled Nursing Care - Intensive care usually required around the clock and rendered by, or under the supervision of, a Registered Nurse or licensed Practical Nurse. It is provided only when prescribed by a doctor and usually on an inpatient basis, at a hospital or skilled nursing facility. Skilled nursing care may include the administration of medications, tube feeding, the changing of wound dressings, and some types of minor surgery.
Small group market - The market for health insurance coverage offered to small businesses - those with between 2 and 50 employees in most states. ACA will broaden the market to those with between 1 and 100 employees, though until 2016 states may continue to limit small group to 50 employees or less.
UCR (Usual, Customary and Reasonable) Charge - This refers to the standard or most common charge for a particular medical service when rendered in a particular geographic area. It is often employed in determining Medicare payment amounts.
Urgent Care Provider - A provider of services for health problems that need medical help right away but are not emergency medical conditions.
Utilization Management/Review - This term is often used to describe a group (or the work performed by a group) of nurses and doctors who work with health insurance plans to determine if a patient's use of healthcare services was medically necessary, appropriate, and within the guidelines of standard medical practice. Utilization Management/Review may also be referred to as Medical Review.
Waiting Period - A period of time (often 12 months) beginning with your effective date during which your health insurance plan does not provide benefits for pre-existing conditions. This period may be reduced or waived based on any prior health care coverage you had before applying for your new health insurance plan.
Waiver (Exclusion Endorsement) - An agreement under which a member agrees to waive coverage for specific pre-existing conditions or for specific future conditions.
Waiver of Premium - In some cases, a waiver of premium may be granted, allowing a member to maintain health insurance coverage in full force without payment. A waiver of premium is typically only granted in cases of permanent and total disability.
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