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Common
Insurance Terms
COBRA
The Consolidated
Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA, requires
group health plans with 20 or more employees to offer continued health coverage
for you and your dependents for 18 months after you leave your job. Longer
durations of continuance are available under certain circumstances. If you
opt to continue coverage, you must pay the entire premium, plus a two percent
administration charge.
Coinsurance
The amount
you are required to pay for medical care in a fee-for-service plan or preferred
provider organization (PPO) after you have met your deductible. The coinsurance
rate is usually expressed as a percentage of billed charges. For example,
if the insurance company pays 80 percent of the claim, you pay 20 percent.
Copayment
A cost sharing
arrangement in which a person pays a specific charge for a specific medical
service -- say $20 for an office visit or $10 for a prescription.
Deductible
The amount
of money you must pay each year to cover your medical care expenses before
your insurance policy starts paying.
Exclusions
Specific
conditions or circumstances for which the policy will not provide benefits.
Health
Maintenance Organization (HMO)
Prepaid
health plans in which you pay a monthly premium and the HMO covers your
doctors' visits, hospital stays, emergency care, surgery, preventive care,
checkups, lab tests, X-rays, and therapy. You must choose a primary care
physician who coordinates all of your care and makes referrals to any specialists
you might need. In an HMO, you must use the doctors, hospitals and clinics
that participate in your plan's network.
Lifetime
Limit
A cap on
the benefits paid under a policy. Many policies have a lifetime limit of
$1 million, which means that the insurer agrees to cover up to $1 million
in covered services over the life of the policy.
Managed
Care
An organized
way to manage costs, use, and quality of the health care system. The major
types of managed care plans are health maintenance organizations (HMOs),
point-of-service (POS) plans and preferred provider organizations (PPOs).
Medicaid
A joint
federal-state health insurance program that is run by the states and covers
certain low-income people (especially children and pregnant women), and
disabled people.
Medicare
The federally
sponsored health insurance program of hospital and medical insurance primarily
for people age 65 and over.
Out
of-Pocket Maximum
The most
money you will be required to pay in a year for deductibles and coinsurance.
It is a stated dollar amount set by the insurance company, in addition to
regular premiums.
Point-of-Service
(POS) Plan
A type of managed care plan combining features of health maintenance organizations
(HMOs) and preferred provider organizations (PPOs), in which individuals
decide whether to go to a network provider and pay a flat dollar co-payment
(say $10 for a doctor's visit), or to an out-of-network provider and pay
a deductible and/or a coinsurance charge.
Portability
The ability
for an individual to transfer from one health insurer to another health
insurer with regard to pre-existing conditions or other risk factors.
Pre-authorization
A cost containment
feature of many group medical policies whereby the insured must contact
the insurer prior to a hospitalization or surgery and receive authorization
for the service.
Pre-existing
Condition
A health
problem that existed before the date your insurance became effective. Many
insurance plans will not cover preexisting conditions. Some will cover them
only after a waiting period.
Preferred
Provider Organization (PPO)
A network
of health care providers with which a health insurer has negotiated contracts
for its insured population to receive health services at discounted costs.
Health care decisions generally remain with the patient as he or she selects
providers and determines his or her own need for services. Patients have
financial incentives to select providers within the PPO network.
Premium
The amount
you or your employer pays in exchange for insurance coverage.
Primary
Care Physician
Under a
health maintenance organization (HMO) or point-of-service (POS) plan, usually
your first contact for health care. This is often a family physician, internist,
or pediatrician. A primary care physician monitors your health, treats most
health problems, and refers you to specialists if necessary.
Provider
Any person
(doctor or nurse) or institution (hospital, clinic, or laboratory) that
provides medical care.
Third-Party
Payer
Any payer
of health care services other than you. This can be an insurance company,
an HMO, a PPO, or the federal government.
Usual
and Customary Charge
The amount
a health plan will recognize for payment for a particular medical procedure.
It is typically based on what is considered "reasonable" for that procedure
in your service area.
Utilization
Review
A cost control
mechanism by which the appropriateness, necessity, and quality of health
care services are monitored by both insurers and employers.
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