Understanding healthcare terminology can be very confusing and stressful, our job is to make it easier for you. For your convenience we have provided you with a list of common terms that you will probably encounter as you go through the process of selecting a plan. As always we are here to assist you in any way that we can, so please feel free to contact us for further assistance.
Ambulatory Center / Setting: A medical facility that offers services in which healthcare is conducted as outpatient.
Coordination of Benefits: Process an insurance company takes when a patient has more than one health insurance policy, to determine who would be the primary/secondary payer of the claims accrued.
Case Management: Service provided at times by health insurance companies where members may be assigned to a case manager. Many times the case manager is assigned when a member needs additional assistance with long-term needs, follow-ups and monitoring; also ensuring that healthcare and health insurance benefits are being utilized appropriately. Service is typically offered as a courtesy.
Centers for Medicare and Medicaid Services (CMS): Regulating administration that is part of the Department of Health and Human Services. CMS is responsible for both regulations and administration of Medicaid and Medicare programs. Health insurance companies must follow standards implemented and set forth by CMS in order to be certified.
Claim: A bill submitted to the health insurance companies typically by a provider for medical services provided to a member.
Coinsurance: Amount a member must pay for a covered medical service after they have paid or met any copays or deductible that is required in accordance to the health insurance plan. Coinsurances are usually stated as a percentage of a charge, or allowable charge, for any given service rendered by a healthcare provider. (If the insurance company states they cover 80% of the charge, the remaining 20% may be charged to the member as the coinsurance.)
Cost-sharing: Charges that a member/patient is responsible for under the terms of a health insurance plan for health care services rendered. Typical methods of cost-sharing are coinsurance, co-payments, and deductibles.
Co-payment/co-pay: The amount charged to a member/patient as stated by a health insurance plan for a specific medical service, prescription drug, or supply after meeting any deductibles. The member/patient pays the co-pay and the insurance company pays the remainder of the charges on that service or drug.
Deductible: Dollar amount that a health insurance company may require their member’s pay out-of-pocket every year, prior to the health plan making payments on any claims, as stated on the terms of the plan.
Drug Formulary: List of prescription drugs that a health insurance plan has agreed to cover. Some drugs may require prior authorization/preauthorization. The drug formulary is typically arranged into tiers for purposes of pricing; and usually the health insurance plan reserves the right to alter the formulary throughout the year.
Durable Medical Equipment (DME): Medical equipment prescribed to an individual such as wheelchairs, hospital beds, oxygen, etc. during the course of treatment or for an extended time due to certain conditions. Co-pays or coinsurances may apply.
Effective Date: The date in which the health insurance coverage takes effect.
Eligibility Date: The date that a person becomes eligible for the insurance benefits.
Eligibility Requirements: Conditions that must be met for an individual to be considered eligible for plan coverage.
Eligible Expenses: Expenses the health insurance plan has determined as eligible for coverage.
Enrollment Period: The specified time frame in which an eligible person may sign up for an insurance plan.
Exclusions: Specified reasons such as diagnosed conditions, services or treatments for which a health insurance plan will not provide coverage.
Explanation of Benefits (EOB): Statement sent to the member/patient by a health insurance company explaining a list of services that were billed by a given healthcare provider. EOBs state what charges were processed and any payments the member/patient is responsible for.
Generic Drug: Drugs classified as generic can either be generic alternatives or generic equivalents. Generic alternatives are medications that are similar in nature and used to treat a similar condition. Generic equivalents are considered chemically the same medication, and can be sold by other manufacturers once the brand name drug’s patent has expired. In either case generic drugs are drugs can be used in place of a brand name prescription drug and usually less expensive than brand name.
Grace Period: Period of time extended to policyholders after a payment is due, but has not been received, where the policy remains in force and the policyholder may make a payment without a penalty.
Grievance Procedure: Process that a member or healthcare provider can file a complaint with the insurance company seeking corrective action.
Group Health Insurance: Insurance plan offered to more than one individual, usually employees of an organization, as opposed to an individual health plan.
Guaranteed Issue: Refers to when the issuance of a policy is guaranteed and cannot be rejected due to health conditions, medications, etc. May vary by state or may only be applicable during a certain period of time.
Health Maintenance Organization (HMO): A health insurance plan that usually offers several health services through a specified network of healthcare providers which are contracted sometimes exclusively with the HMO and have agreed to provide their services at a pre-negotiated rate. A member with this plan chooses a Primary Care Physician (PCP), and they provide the member with the majority of the care as well as referrals to in network specialists if needed. Some services may require copayments when services are provided, and typically services obtained outside of the network are not covered. Some HMO plans may also require a deductible to be met prior to services being covered by the plan.
Health Savings Account (HSA) : Savings account with tax advantages that is allowed, when combined with a High Deductible Health Insurance plan, to be used for qualifying medical expenses. Unused amounts may remain in the account and rollover to the next year; may also be invested. Penalties may be applied if the funds are withdrawn and used for anything other than qualifying medical expenses.
High Deductible Health Plan (HDHP): Health insurance plan that provides the benefit of lower premiums however, have greater out-of-pocket spending. The HDHP plan may be combined with an HSA account to help cover the greater out-of-pocket amounts but the plan must qualify. Maximum out-of-pocket costs must be in place but amounts may change by year.
Home Health Agency: A certified healthcare agency that provides home health care services.
Home Health Care: Service provided by medical professionals in the home setting rather than in a hospital or skilled nursing facility.
Hospital Benefits: Benefits paid to a provider for hospital room and board and other charges resulting from an inpatient hospitalization.
Individual and Family Health Insurance: A health insurance plan purchased by an individual or a family that is not through an employer group plan.
Inpatient: A term used to describe a person admitted to a hospital for at least 24 hours. It may also be used to describe the care rendered in a hospital when the duration of the stay is at least 24 hours.
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.
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.
Maximum Out-Of-Pocket Costs (MOOP): An annual limit to protect members financially on the cost-sharing for which members are responsible for in a health insurance plan. Typically encompasses costs such as co-pays, coinsurances and deductibles; premiums do not apply, other limitations may also apply.
Medicaid: A state-funded healthcare program for those who are financially needy (low-income), or those who are medically needy/disabled.
Medicare: A national, federally-administered health insurance program to cover the cost of hospitalization, medical care, and some related health services for most people over age 65 and certain other eligible individuals.
Medicare Beneficiary: Someone who is entitled to Medicare benefits and has met eligibility requirements as per the Social Security Administration.
Medicare Supplement Insurance: Health insurance purchased in addition to Medicare and provided to an individual or a group to help cover the gaps that Medicare does not cover. Also known as a Medigap Policy.
Member: Anyone covered under a health insurance plan, an enrollee or eligible dependent.
Network: The list of doctors and health care providers that a health insurance company has contracted with to provide member benefits and care. Plans like HMOs require that member’s stay within the plan’s network, while PPOs give a member the flexibility to go see out-of-network providers.
Open Enrollment Period: Time period where an eligible person or employee may sign up for or opt out of coverage. For Medicare beneficiaries Open Enrollment occurs annually from Oct 15 – Dec 7.
Out-of-network Care: Healthcare rendered to a patient outside of the health insurance company’s network of preferred providers. Services obtained outside of the insurance company’s network may not be covered, or will be covered with a higher share of cost to the member.
Outpatient: A patient who receives care at a medical facility but who is not admitted to the facility overnight, or for 24 hours or less.
Outpatient Surgery: Term used to classify surgical procedures that do not require the patient to stay overnight or be admitted to the hospital. Some diagnostic procedures may also be classified as outpatient surgery under some plans.
Over-the-Counter Drugs (OTC): Medications that can be obtained without a prescription from a doctor or medical professional (aspirin, vitamins, etc.).
Physical Therapy: Services rendered by a licensed physical therapist that can include rehabilitative services that may assist in restoring bodily functions.
Point of Service Plan (POS): A POS plan typically combines elements of both HMO and PPO plans. A member may be required to select a PCP who will then refer the member to other specialists and network providers for other services, however, most POS plans may allow the member to also seek medical treatment or services from outside network providers. Seeking services through providers not in the network may result in higher costs, or having to pay for the full service.
Preauthorization/Prior authorization: Typically refers to the process by which a member/patient must be pre-approved for coverage of a specific prescription drug or procedure. Companies may require certain criteria to be met prior to approving coverage on some procedures or medications. Typically, a member/patient’s physician submits supporting documents that indicates the reasons why the procedure or medication is necessary to the health insurance company.
Preferred Provider Organization (PPO): Health insurance plan that gives you the flexibility to get your medical care from health providers on the list of the insurance companies preferred providers, or outside of that list as well. Keeping your services within the preferred list maximizes your benefits and keeps your costs lower. Typically on a PPO plan you do not need referrals and do not have to go through the Primary Care Physician to see specialists. There are many PPO plans available, several with low monthly premiums.
Premium: The total amount paid to the insurance company for health insurance coverage. Typically payments are made on a monthly basis. If payments are not received on time the plan may offer a Grace Period before a Lapse in coverage will occur.
Prescription Drug Coverage: Prescription drug coverage varies by carrier and plan type. Members may have to pay a deductible, copays and/or coinsurances.
Preventive benefits: Services that are intended to identify or prevent diseases while they are still in the early stages and more easily treatable. New legislation requires that most plans (some exclusions apply) offer preventative services without charge to the member.
Primary Care: Basic healthcare services, generally rendered by those who practice family medicine, pediatrics, geriatrics or internal medicine.
Primary Care Physician (PCP): 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. In some plans, typically HMOs, a patient must go to their PCP to obtain a referral for specialists.
Probationary Period: A waiting period determined by the health insurance company during which coverage for certain pre-existing conditions may be excluded.
Provider: A term commonly used by health insurance companies to designate any healthcare provider, whether a doctor or nurse, a hospital or clinic.
Referral: The process through which a patient under a managed care health insurance plan is authorized by his or her primary care physician to a see a specialist for the diagnosis or treatment of a specific condition.
Renewal: Occurs after the original time frame of the contract, typically at the end of every plan year, the member is asked if they would like to renew his/her converage.
Renewal Date: The date on which a member’s health insurance plan benefit year renews.
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.
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.
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.
Specialist: A doctor other than a primary care physician who provides secondary care and usually with in a specific area of care. (ex: Cardiologist, Podiatrist, etc) Depending on your plan, you may first need a referral from your primary care physician to see a specialist.
Underwriting: Process that may occur, where an insurer evaluates risks and projections to determine whether or not to accept an application; additional premium determination may be made during this time.
Waiting Period: Time period that typically begins with your effective date in which your health insurance plan does not provide coverage/benefits for pre-existing conditions.