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Beneficiary: the recipient of the benefits of the policy
Benefit maximum: the most a policy pays for a specified loss or covered service. This can be expressed as either a period of time, a dollar amount, or a percentage of the approved amount.
Claim: a request from the insured to the insurance company for payment
Co-insurance: is the share of the covered charges, usually a percentage, that the insured and plan each pay. If the plan has a deductible, the coinsurance is applied after the deductible has been satisfied. For example, if the insured has bills amounting to $400 and the plan has a $100 deductible amount; the insured is responsible for paying the first $100 and the insurer will begin paying after that. But because of the coinsurance, the company will pay only a percentage of the covered expenses and the insured must pay the remaining percentage. Between the two of them, they will pay 100%. So, in our example, if the plan pays 80% of the $300 remaining after the deductible, the insurer will pay $240 (80% of $300) and the insured will pay $60 (20% of $300).
Co-Pay: are fixed dollar payments that the insured must pay directly to the provider at the time services are received. For example, the contract for a certain network of doctors may require that patients pay $10 co-pay each time they visit one of the doctors who is a member of that network. Or, the insured may have to pay $10 for each pharmacy prescription filled.
Deductible: is the amount the insured is required to pay before the insurer begins paying benefits. For example, if the insured has bills amounting to $400 and the plan has a $100 deductible amount; the insured is responsible for paying the first $100 and the insurer will begin paying after that. The higher deductible, lower the premium.
Evidence of insurability: proof that you’re in good health
Grace period: a specified period of time after a premium is due during which you can still make a payment without losing the insurance. Check your policy to be sure what it provides.
Guarantee issue: an insurance policy that is issued to anyone, regardless of prior medical history.
Guaranteed renewable: an agreement by an insurance company to insure a person for as long as premiums are paid.
HIPAA: Health Insurance Portability & Accountability Act, a federal law that guarantees health care plan eligibility for people who change jobs, if the new employer offers group insurance.
HMO (Health Maintenance Organizations): provide health services through a network of hospitals, doctors, laboratories, and so forth.
Hospital pre-certification: managed care plans often require prior approval before the insured enters the hospital. In the case of an emergency, or other situation where pre-certification is not possible, such plans often require prompt notification – often in 48 hours after admission.
Insured: an individual or organization protected by an insurance plan
Lifetime maximum: is the total dollar amount the plan will pay for all types of medical expenses, for all benefit periods, while the insured person is alive and covered under the plan.
Loss: the basis for a claim under an insurance policy.
Medically necessary: a provision in a health care insurance policy that excludes coverage for treatment that is not “medically necessary”. This term may be defined differently from one health care plan to another.
Medical Savings Account (MSA): an account held in trust for the account holder. The employer or employee makes annual tax-free contributions to the account that must be maintained in conjunction with a high deductible health insurance policy.
Network: all physicians, specialists, hospitals and other health care providers who agree to provide medical care to HMO/PPO members under the terms of a contract.
Out-of-pocket limit: is a dollar limit on the portion of covered medical expenses that the insured must pay during a benefit period (usually a calendar year). When the out of pocket limit is met, the insured will not have to pay further deductibles or coinsurance for that year. To illustrate, say the out of pocket is $1000 per calendar year and the insured’s coinsurance is 20%. When $5000 of covered medical expenses have been incurred, the $1000 out of pocket limit will be met ($5000 at 20%). Thereafter, the plan will pay benefits at 100% and the insured’s portion will be $0 for the remainder of that year.
Outpatient services: services usually provided in clinics, physician or provider officers, ambulatory surgical centers, hospices, home health services, and so forth.
Physical examination: physical examination, as well as information about your medical history, may be required to qualify for health insurance. The requirements will vary for individual or group coverage, for different insurance companies, and for very large or very small groups.
Pre-certification: a requirement that you notify the insurance company for its approval before you check into a hospital, have elective surgery, visit specialists, have expensive tests (e.g., MRI). Pre-certification does not guarantee the insurance company will pay the medical bills. Also called “utilization review”.
Pre-existing condition: health problem/condition/illness you had prior to applying for insurance and for which you received medical advice, diagnosis, care or treatment. Policies can exclude coverage of any medical condition for a period of time.
Preferred Provider Organization (PPO): a network of doctors, hospitals, and suppliers (preferred providers) who agree to provide services to members of a health plan for discounted fees.
Premium: the amount you pay each year for insurance coverage
Reasonable and customary fees: when a doctor or other provider of medical services submits a bill, the insurer will make an evaluation of whether the charges are reasonable and customary for that medical service provider and for the type of service performed. What is reasonable and customary depends on factors such as the specific medical service provided, the qualifications and skill level of the doctor (or other care provider), the geographic area (fees can vary widely in different areas) and anything else that the insurer may consider to be pertinent to the evaluation. Companies maintain large computerized databases of information and sophisticated computer programs to determine what is reasonable and customary in a specific situation.
Reinstatement: policies which have lapsed can usually be reinstated by paying the past due premiums and giving appropriate evidence of insurability.
Stop-loss clause: the clause in the contract between the insurer and the insured that specifies the maximum payment that will be made for particular types of coverage’s – for example the total payments for psychiatric coverage or surgery may be limited to some maximum dollar amount. Sometimes the term stop-loss is also used to refer to an arrangement of risk management where the risk is shared among several insurance companies.
Underwriting: the process by which an insurer establishes and assumes risks.
Usual, customary & reasonable (UCR): the dollar amount the insurance companies believe to be a fair price for the medical service/procedure in a specific geographic area. Companies have developed their own UCR, which often do not reflect the doctor’s actual bill. If the doctor’s chargers are higher than the companies UCR charge, you generally have to pay the balance.
Waiting period: has two meanings: (1) the time period you must wait before you can get health insurance from a new employer; and (2) the time that must pass after becoming insured before the policy will begin to pay benefits for a pre-existing condition or specified illness.
Waiver: an amendment to a policy that excludes coverage for certain medical conditions.
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Polski