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Helpful Insurance Terminology

Dr Mack Sullivan

369 White Plains Rd, 2nd Floor Eastchester, NY 10709

914-395-3691

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Affordable Care Act: A comprehensive law passed in 2010, aimed at reforming America's health care system to improve access and affordability for more Americans.

Allowed Amount: (aka Allowed/Allowable Charges, Maximum Allowable Amount, Eligible Expense, Payment Allowance, or the UCR, the ‘Usual, Customary, and Reasonable charge”) This is the amount your insurance company will pay a provider for a given service – that could be a visit, radiology, labs, stitches, draining an abscess, open heart surgery – anything that a health care professional taking your insurance might do for you and then bill for. The allowed amount is therefore what your carrier will reimburse your doctor for or what they will credit towards your deductible when you get billed for a procedure and it’s whatever rate your doctor agreed to when they signed their contract with your insurer. The dollar amount is usually what the insurer finds reasonable for the area, different areas typically reimburse slightly more or less depending on the cost of living from one area to another.

A doctor or other provider can charge your insurance company anything they want, they could charge $1,000,000 for a strep test, it doesn’t matter, the maximum that your insurer will ever pay, the maximum that doctor or provider could ever get paid is spelled out in their contract with your insurance company well in advance. The patient isn’t responsible for the difference because the doctor or provider agrees to accept whatever the insurance company allows when they sign their own contract with the insurance company to be able to treat their patients.

Sometimes you will see crazy amounts being charged for things, that could be for a number of reasons: (1) some patients have secondary insurance plans that cover charges the first plan doesn’t, often these plans only cover a portion of the balance, so the larger the balance the more likely the provider gets their full amount; (2) some providers may be Out-of-Network or do Out-of-Network procedures in other settings so they charge larger Out-of-Network rates; other times (3) they have a large population that they collect cash from and after billing everyone the same they can then negotiate payments individually. Physician’s and providers aren’t allowed to charge different rates in different instances, they’ve always got to at least charge each patient the same price, so they are at least starting with the highest amount possible when they begin to negotiate to get as much of their fee as they can.

Allowed Charges: See ‘Allowed Amount’

Annual Limit: Most health insurance plans may limit the dollar amount they might be required to pay during one year for either an entire plan and/or from one specific treatment or service to another – commonly with additional or unique services such as physical therapy, chemotherapy, speech, mental health, etc.  certain treatment or service, or for all benefits provided in a year. The PPACA (the Obamacare Health Reform Bill) limited this practice for essential benefits for plan years beginning after Sept. 23, 2010, but beware – in my experience this was mostly for advertising purposes and nearly all the ancillary services offered by almost every commercial carrier have some kind of limit that they don’t have to specifically mention any more. If you know you’re going to need one particular treatment or category of treatments CALL & CONFIRM BEFORE YOU BUY!!!!

Appeal: A request for your health insurer or plan to review a decision or a grievance again.

APTC: See ‘Premium Tax Credit’

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B

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, an In-network provider, someone your insurance company has already negotiated a rate with and has a signed contract with, is not usually allowed to balance bill you for services covered in their contract with your provider – often there are exclusions written into the fine print however – particularly with the more expensive specialties.

This tends to be an issue with Out-of-network providers. They don’t have a contract with your insurance carrier, they aren’t obligated to accept whatever your carrier pays and are subsequently allowed to bill you for whatever part of their fee that your insurance carrier doesn’t pay. This can be seen anywhere in medicine but is most commonly seen when there’s some sort of surgical involved and it’s not usually to the patient’s disadvantage.

When your insurance carrier pays for a procedure they pay the doctor, the facility, and a technical component required to complete the procedure. Those last two go to the hospital and can change without warning and in ways that are often out of the insurance provider’s control. When a provider stays Out-of-network they get paid a ‘lump-sum’ for the whole thing and then pay the facility and technical component to wherever the procedure was actually done out of whatever they get paid. Subsequently, they seemingly get paid much more by billing Out-of-network, they typically can take more home for themselves, and the insurance carrier gets a significant savings over what they would have paid one of their In-network hospital facilities.

Usually the physician will accept whatever the carrier pays them and not Balance Bill for the difference because they do much better overall if they either own their own surgical facility or have a good deal with wherever they do your procedure. Like anything else: GET IT IN WRITING BEFOREHAND and you’ll be fine. Every Out-of-network provider that I work with has no problem doing that. No one would refer them patients otherwise.

Another common instance in which you have to be careful of ‘Balance Billing’ practices involves when your benefit expires or is exhausted. For almost every ancillary service such as Physical Therapy or Mental Health, your insurance carrier will specify that they will only pay for a limited amount of visits per unit time, when you exceed those the entire cost will likely be passed directly from your provider to you. In my experience the insurance carriers save a lot of money here at their patients expense and is a place to be alert if you have a chronic condition requiring ancillary care.

Your plan might promise 24 visits per year but typically doesn’t tell you that they will dole those out over the course of the year. If you get a procedure and require 2-3 visits per week of PT for 8-12 weeks you might think you’re OK with 24 visits for the year – until they tell your PT that they only approve 6 per quarter and 12 every six months to ‘…save your benefit incase you need the visits for something else later in the year…” What are the chances of that? How many years have you ever needed rehab even once let alone twice? At six visits per 3 months you’re paying for 12-18 of those out of pocket despite having purchased a plan that advertised 24 – and worked their costs for 24 with a tidy profit into your annual premium.

BEWARE & BE READY! Your carrier is running a business and it’s on you to be alert to the details of your plan. READ & ASK QUESTIONS UP-FRONT!! It’s your only defense down the road, not because ‘so-and-so said so’ but because you figured out the catch and found another plan or carrier.

Benefit: This what you’re getting for your dollar, this is the actual amount/type of insurance you’re purchasing with the premiums you pay every month. ‘Benefit’ can be used as: (1) a specific reference to an individual item, a ‘Physical Therapy benefit’ might be 24 visits per year for instance; (2) a global reference to all the various benefits a given plan offers such as hospital coverage, a given plan may include outpatient vision, dental, and hearing benefits; and (3) a reference to the maximum dollar amount that a health insurance company has agreed to pay for a covered benefit, such as a $2,500 per year outpatient Psychiatric services benefit. Benefits vary widely from one plan to another and are of course typically directly proportional to total cost and the number and variety of different individual benefits available within each plan.

Benefit Period: When – the amount of time – during which specific services are covered under your plan. It can also be used to define 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. An example would be that the contract you’re entering with your new provider at the specified cost extends from the moment you purchase it through December 31st of that year, or that a given plan pays for 25 Speech Therapy visits from January 1st through December 31st, the 26th visit and every visit thereafter is uncovered and you can expect a bill from your provider for their services.

Billed Amount/Billed Charges: Your physician and other medical providers set charges for the various medications, items, and services they provide, in the same way that a retailer sets prices on items sold in its store. This amount is the provider’s “billed amount” or “billed charge”. It’s what their specific price is for whatever item they are charging for having done, it’s what they bill everyone – including your insurance company – and what you would pay if you had no insurance. When you do have insurance, the insurance company negotiates a discount from the provider’s billed amount/charge in exchange for that providers access to the insurance company’s patients. On the Explanation of Benefits (EOB) you receive from your insurance company, you will see the provider’s billed amount/charge, usually followed by the allowed amount/charge that the insurer (and you) has negotiated to pay that provider for that service.

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C

Catastrophic Plan: The health insurance exchange was supposed to include a catastrophic plan option but that really hasn’t happened. Catastrophic plans have lower premiums because they are designed to pay for much fewer services, typically disastrous injury and subsequent hospitalization and surgery. They were originally for healthy young adults and people willing to cover their day-to-day medical expenses out-of-pocket. The exchange doesn’t work without collecting revenue from every single person yet they excluded numerous demographics from the outset, the per person costs escalated as a result, and programs like these have been shelved today because they don’t take enough from each subscriber to pay their share of everybody else’s plan. It’s very hard to find any of these today.

Claim Form: An itemized form that either you or your doctor fill out and submit to your insurance carrier plan for payment for medical services. When a claim is submitted by a patient they are reimbursed, when its’ submitted by physician or other provider they are paid.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985): This Federal Act requires group health care plans to allow employees and covered dependents to continue their group coverage for a stated period of time following a qualifying event that causes the loss of group health coverage. Qualifying events include reduced work hours, termination of employment, a child becoming an over-aged dependent, Medicare eligibility, death or divorce of a covered employee. It allows someone to maintain their identical insurance coverage for a period of time, usually 12-18 months, after losing it for one reason or another – albeit at a grossly increased monthly rate to the point that for most it’s all but impossible and they go without – part of that is the result of the insurance carriers increasing their profits under the pretense that the you’re not under the discounted plan anymore and it costs them more money to provide the service and the rest is the Federal Government allowing them to do that. It has certainly helped some people in a jam or between jobs but it’s been much more about marketing for the politicians and profits for the carriers, most people who do take it get away from it as quickly as they can because it’s so ridiculously expensive.

Complications of Pregnancy: This is a potential benefit that can be offered in a given plan to cover a known source of potentially huge and unexpected medical bills. Conditions due to pregnancy, labor and delivery that require medical care to prevent serious harm to the health of the mother or the fetus. Morning sickness and a nonemergency caesarean section aren’t complications of pregnancy. If it’s not something your likely going to use look for a plan without it as a feature or even option.

Coordination of benefits: A system used in group health plans to eliminate duplication of benefits when you are covered under more than one group plan. Benefits under the two plans usually are limited to no more than 100% of the claim. In most instances one plan is Primary and one is Secondary, an example being that Medicare is ALWAYS Primary regardless of whom any additional coverage you may have might be with or what it’s benefits are. If the Primary denies the benefit the Secondary does not pick-up the costs – they will deny it as well. BE AWARE HERE!! A Secondary picks up a specific amount of benefits in a specific fashion and will not pay the entirety or usually anything that the Primary denies. Whatever the bill or balance of that bill may be rests entirely on the patient.

Cost-sharing: This term refers to charges for patient care from a physician or other health care: (1) that are in addition to their annual premium and (2) for which the patient is directly responsible to pay themselves. Common forms of cost-sharing include deductibles, coinsurance and co-payments. PPACA (Patient Protection and Affordable Care Act, more commonly referred to as the health reform law) prohibits total cost-sharing exceed $5,950 for an individual and $11,900 for a family within a given year. These amounts are adjusted annually to reflect the growth of premiums. In these instances you are indeed sharing your insurance carriers cost of your plan. You purchase a given plan for a given price and then they charge you again each time you use it to: (1) directly decrease their own cost fulfilling their contract to you and (2) discourage you from using your plan at all.

Cost-Sharing Reduction: A discount that lowers the amount you have to pay out-of-pocket for deductibles, coinsurance, and copayments. You can get this discount if your income is below a certain level and you choose an insurance plan from the Silver plan category. If you're a member of a federally recognized tribe, you may also qualify for additional cost-sharing benefits. An example being when President Trump eliminated any cost-sharing for COVID-19 and COVID-19 antibody testing as part of the CARES Act in 2020 to reduce the cost barrier to identifying victims who needed care and to stop the spread of the virus.

Coinsurance: A predetermined percentage, a flat percent but a variable dollar amount, that you pay toward each medical charge that you incur after your deductible has been met. For example: if you have a 20% coinsurance and you’ve met your deductible, you pay 20% of each medical bill and your health insurance will cover the other 80%, if you haven’t met your deductible you will continue to pay 100% of each medical until you Allowable Charges exceed the dollar value of your deductible. The purpose of this is to simply save the insurance company money by making you pay for more of your health care out of pocket. The higher the bill – the more you pay!

The less expensive plans typically have the higher coinsurances because they’re not really less expensive! If you’re choosing between plans you have to seriously consider the coinsurance. A larger family that goes to their doctors more than a single healthy adult might get buried by their plan’s coinsurance, someone with a chronic condition and multiple visits to specialists or ancillary services like Physical Therapy might as well. You’ve got to look at your given situation, run some possible scenarios, and decide whether a more expensive plan with lower or no coinsurances would actually be less expensive overall than a cheaper plan that had them at every turn.

Take the time to determine if a given plan charges BOTH a copay and a coinsurance for some or all of your doctor visits and services. With cheaper plans you often get what you pay for, you get lured in with the more affordable monthly charge then buried with the higher copays and higher coinsurances for fewer benefits. You’re buying this product to help you defray your global health care costs, but they’re running a for-profit business from the premiums you pay every month, it’s an important difference you can’t forget.

BEWARE: Multiple individual items within a given doctor’s visit may have their own specific copay: a Radiology copay, an additional amount that you are responsible for any imaging done during the course of your visit; a Diagnostic copay, an additional amount that you are responsible for any testing such as for strep or mononucleosis or of your urine done during the course of your visit; in each instance you are responsible for these at the time of service.

The insurance carriers love these little payments because (1) it’s less money they have to pay on their patients behalf and (2) they can’t be collected by the doctor until after the carrier has reviewed the bill and determined what they’re going to pay if anything and subsequently the physician is looks terrible billing small portions of multiple different services weeks to months after the fact.

Condition: An injury, ailment, disease, illness or disorder that would be eligible to be covered by insurance.

Contract: This can refer to the agreement between an insurance company and the policyholder – yourself as the case may be – or a provider and an insurance company.

Copay: A predetermined rate, a flat & set dollar amount, that you pay for health care services at the time of care. For example, you may have a $25 copay every time you see your primary care physician, a $10 copay for each monthly medication and a $250 copay for an emergency room visit. The purpose for this is to save the insurance company money by decreasing what they have to pay the doctor for each visit and to discourage you from using your insurance by adding a cash burden every time you think about accessing health care or using your insurance.

Your doctor has a contract with your insurance company already, what the doctor gets paid per visit is in that contract, the insurance company will simply subtract your copay from what they owe the doctor when they pay them. Your copay, what you have to pay each time, is simply less that your insurance company has to pay in the long run. That’s why the less expensive plans have the highest copays – if they’re not going to take it from you every month when you pay for you plan then you’re going to cough it up to the doctor’s office every time you go so you pay each time to decrease whatever amount they’re going to have to pay.

BEWARE: Multiple individual items within a given doctor’s visit may have their own specific copay: a Radiology copay, an additional amount that you are responsible for any imaging done during the course of your visit; a Diagnostic copay, an additional amount that you are responsible for any testing such as for strep or mononucleosis or of your urine done during the course of your visit; in each instance you are responsible for these at the time of service.

The insurance carriers love these little payments because (1) it’s less money they have to pay on their patient’s behalf and (2) they put the physician and their office staff in the terrible position of stopping a patient after they’ve already been seen, itemizing their bill, and then charging additional fees for each service. The office needs to first have a system in place to itemize each portion of the patients visit while its occurring; then get that totaled and to the front desk before the patient leaves; and then ask for more money in addition to the copay they took from the patient when they arrived while they’re also trying to coordinate prescriptions, referrals, follow-up, and possibly emergency transport. It makes the provider and their office look absolute terrible – and over the years destroying the image of the family physician has every bit as important and lucrative to the insurance industry as saving the money in the first place.

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: The eligible person enrolled in the health care benefits plan and any enrolled eligible family members.

Covered Service: A service that is specifically listed as a covered benefit according to the terms of your contract with your insurance carrier.

Creditable Coverage: Coverage of a person under any of these:
ŸA group health plan. This includes church and governmental plans.
ŸHealth insurance coverage.
ŸMedicare (Part A or Part B of Title XVIII of the Social Security Act).
ŸMedicaid (Title XIX of the Social Security Act, other than coverage consisting only of benefits under Section 1928).
ŸThe health plan for active military personnel. This includes TRICARE.
ŸThe Indian Health Service or other tribal organization program.
ŸThe Federal Employees Health Benefits Program.
ŸA public health plan (as defined in federal regulations).
ŸA health benefit plan under section 5 (c) of the Peace Corps Act.
ŸAny other plan which gives complete hospital, medical and surgical services.
These are plans that are considered comprehensive, compliant with the Health Care Reform Act, and would not trigger the Mandatory Insurance Penalty

Customary Fee: Most health insurance plans will pay only what they call a reasonable and customary fee for a particular health care service. lf your doctor is Out-of-network and charges $1,000 for a hernia repair while most doctors in your area charge only $600 your carrier will pay what they consider a ‘Customary Fee’ for the geographic area and you may be billed for the $400 difference. This is in addition to the deductible and coinsurance you would be expected to pay. To avoid these additional costs: (1) ask your doctor to accept your health insurance company's payment as full payment and then get that in writing; or (2) find an In-network doctor. These fees are typically only an issue with Out-of-network providers of any kind and any health product that’s Out-of-network or uncovered.

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D

Deductible: The deductible is how much you have to pay personally before your health insurance starts to cover a larger portion of your bills. In general, if you have a $1,000 deductible, your insurance company won’t begin paying on any claims until they see that you’ve already generated $1,000 in Allowed Charges for your own care. In some instances when you go to a provider that is in the plan's network, before you have met your full deductible you may be able to pay a discounted amount that has been negotiated between your insurer and the provider No matter how much you may have paid, have ‘met’, or how much you may have ended up paying above and beyond that your deductible starts all over again yearly. The purpose of this is to save your insurance company money.

The less expensive plans typically have the higher deductibles – because they’re not really less expensive! If you’re choosing between plans you have to seriously consider the deductible. If one plan is $500 per month cheaper than another but the more expensive plan has a $1,000 deductible and the cheaper plan has a $10,000 deductible then you’re likely better off with the more expensive plan. It’s going to cost you $6,000 more per year but the insurance company will begin paying after you’ve paid just $1,000 toward your health care bills, with the cheaper plan you’ve still got to pay $9,000 more before they start to pay and copays and coinsurances along the way are likely much higher as well.

You also have to check into whether there are multiple deductibles. In addition to your deductible for physician visits look for separate and additional deductibles within different specialties. For instance: a Radiology deductible would be some amount you would have to pay yourself for you X-Rays, CT scans, MRI’s, etc. before your insurer started to pay anything; an Ancillary Services deductible would apply to things like Physical Therapy, Occupational Therapy, and Speech bill sin the same way; there’s almost always a separate deductible for Emergency Room care and Hospital stays. Don’t forget to look for deductibles like this when you’re considering saving a few bucks every month by selecting a less expensive plan, they’re rarely giving you a real bargain there.

Dependent: An eligible person, other than the member (generally a spouse or child), who has health care benefits under the member's policy.

Dependent Coverage: Coverage for your dependents who qualify.

Disease management: A broad approach to trying to appropriately coordinate an entire disease treatment process that often involves shifting away from more expensive inpatient and acute care to areas such as preventive medicine, patient counseling and education, and outpatient care. The process is intended to reduce health care costs and improve the quality of life for individuals by preventing or minimizing the effects of a disease, usually a chronic condition.

Drug Formulary: A list of preferred drugs chosen by a panel of doctors and pharmacists. Both brand and generic medications are included on the formulary. See ‘Prescription Drug List’

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.

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E

Effective Date of Coverage: The date your coverage begins. Please note: The effective date can also represent the date a change in your coverage takes effect.

Eligible Expense: See ‘Allowed Amount’

Emergency Medical Care: Services provided for the initial outpatient treatment of an acute medical condition, usually in a hospital setting. Most health care plans have specific guidelines to define emergency medical care.

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:
ŸPut a person's health at serious risk.
ŸPut an unborn child's health at serious risk.
ŸResult in serious damage to the person's body and how his or her body works.
ŸResult in serious damage of a person's organ or any part of the person.

Emergency Medical Transportation: Ambulance services for an emergency medical condition.

Emergency Room Care: Emergency services you get in an emergency room.

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

Excluded Services: Health care services that your health insurance or plan doesn’t pay for or cover.

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.

Employer Responsibility: If an employer with at least 50 full-time equivalent employees doesn't provide affordable health insurance and an employee uses a tax credit to help pay for insurance through a Health Insurance Marketplace, the employer must pay a fee to help cover the cost of tax credits. If they do provide a plan they are exempt from these charges.

Essential Health Benefits: Since 2014 some benefits have been mandatory and included in every insurance plan across all plans and all carriers whether you buy on the Health Insurance Marketplace or can chose to go directly to the insurance company of your choice. It sounds wonderful that all the plans have at least some amount of conformity but that is not it’s purpose: it does not mandate each plan cover them to the same extent, the Exchange Plans often only cover token amounts; every plan is not underwritten by Federal Tax revenue, only the Exchange Plans; patients lose the ability to pay for only what they want; and patients of all income demographics are forced to pay for items they don’t need. This is designed to provide a financial sink into which patients buying insurance on the tightest budgets ultimately purchase the least expensive plans on a dollar-for-dollar basis but are also buying the least benefit, by the same token its siphoning money away from the commercial carriers and thereby driving up their costs over time. BEWARE: Make some assumptions and do direct calculations of your annual costs when comparing plans before purchasing, the cost-sharing with the Exchange Plans are designed to discourage use not assist with paying for care and your overall annualized costs over the course of an entire year could be incredibly high as a result.

Exception Request: An exception request is a written request from you to your health insurance company asking them to cover a medication, device, or service that you need as advised by your doctor. An exception request should be received before the medication, device or service has been obtained. They do not have to pay for it and the processes to submit the request is often a maze that’s timed for you but not for them. Don’t count on it! If you’re convinced you need something that’s not covered think of your health first!

Exclusions: Specific medical conditions or circumstances that are not covered under a health care plan.

Explanation of Benefits (EOB): An EOB is created after a claim payment has been processed by your health care plan. It explains the actions taken on a claim such as the amount that will be paid, the benefit available, discounts, reasons for denying payment and the claims appeal process. EOBs are available both as a paper copy and online.

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F

Family Coverage: Health care coverage for a primary policyholder (called a ‘subscriber’) and his or her spouse and any eligible dependents.

Federal Poverty Level (FPL): A level of income issued annually by the Department of Health and Human Services – used to determine eligibility for certain programs and benefits. FPL will be used to determine the amount of tax credit you qualify for to offset the cost of purchasing health insurance.

Formulary (also known as drug or formulary list): A formulary is a list of prescription medications, both generic and brand-name, covered by your insurance plan. Prescription medications are grouped into tiers, and the tier your medication is on determines your portion of the cost. Tier 1 usually covers generic medications, making this the lowest-cost tier. Higher tiers cover preferred and non-preferred brand-name medications at a higher cost to you. If your medication is not included on a formulary tier, it is not covered by a plan.

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G

Gatekeeper: Under some health insurance arrangements, a gatekeeper is responsible for the administration of the patient’s treatment; the gatekeeper coordinates and authorizes all medical services, laboratory studies, specialty referrals and hospitalizations. Invariably it’s the licensed provider and they are typical paid by your carrier based on seniority with the organization and continuing education credits – you can count on being treated as per the latest algorithms approved by your insurance company’s risk management attorneys and not much more – my personal and professional experience working with this type of provider caring for patients together has been poor to say the least.

Generic Drug: A prescription drug that is the generic equivalent of a brand name drug listed on your health plan's formulary and costs less than the brand name drug. Generics come to the market after a brand-name medicine’s patents expire, and they usually cost less. The U.S. Food and Drug Administration (FDA) rates these to be as safe and effective as brand-name medications.

Generic Substitute: A prescription drug which is the generic equivalent of a drug listed on your health plan's formulary.

Grandfathered Health Plan: A health plan that was in place when the new health care law was passed into law. A grandfathered plan is exempt from some requirements of the new law. The grandfather rule enables businesses and families to keep the plan they have, if they wish to.

Grievance: A complaint that you communicate to your health insurer or plan.

Group: A group of people covered under the same health care plan and identified by their relation to the same employer or organization.

Guaranteed Issue: A requirement under the Affordable Care Act that health plans must permit you to enroll in some form of insurance coverage regardless of health status, age, gender or other factors.

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H

Habilitation Services: Health care services that help a person keep, learn or improve skills and functioning for daily living. Examples include therapy for a child who isn’t walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings.

Health Assessment: A health survey that measures your current health, health risks and quality of life.

Health Insurance: A contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium.

Health Reimbursement Arrangement (HRA):

High Risk Pool: Plans that provide coverage if you have a serious health condition that prevents you from getting private insurance. The new law established the Pre-existing Condition Insurance Plan. Some states also have their own high risk pool plan.

HIPPA (Health Insurance Portability & Accountability Act): A federal law that outlines the rules and requirements employer-sponsored group insurance plans, insurance companies and managed care organizations must follow to provide health care insurance coverage for individuals and groups enacted in 1996 which eased the “job lock” problem by making it easier for individuals to move from job to job without the risk of being unable to obtain health insurance or having to wait for coverage due to pre-existing medical conditions. Maintaining their medical information as personal and therefore privileged information is how it’s more commonly known today.

Home Health Care: Health care services a person receives at home.

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

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.

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

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I

Individual & Family Health Plan Out-of-Pocket Maximums: The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copays and coinsurance, your health plan pays 100 percent of the costs of covered benefits. For plans that cover more than one (1) person, individual out-of-pocket maximums count toward the family out-of-pocket maximum. Once the family out-of-pocket maximum is reached, the plan pays 100 percent of the cost of covered benefits for everyone on your plan. The out-of-pocket maximum doesn't include your monthly premium payments or anything you spend for services your plan doesn't cover.

Individual health insurance: Health insurance plans purchased by individuals to cover themselves and their families. Different from group plans, which are offered by employers to cover all of their employees.

Individual Health Plan: Health care coverage for an individual with no covered dependents. Also knows as individual coverage.

Individual Mandate: A requirement that everyone maintain health insurance coverage. PPACA requires that everyone who can purchase health insurance for less than 8% of their household income do so or pay a tax penalty.

Infusion Drug Care: Infusion drug treatments are often used for chronic "maintenance" conditions like asthma, immune deficiencies or rheumatoid arthritis. The drugs are often covered under your health plan's medical benefit, not the drug benefit. Where you get this care could change your out-of-pocket costs.

In-Network: Services provided by a physician or other health care provider with a contractual agreement with the insurance company and paid at a higher benefit level.

In-network Co-insurance: 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 co-insurance usually costs you less than out-of-network co-insurance.

In-network Co-payment: A fixed amount (for example, $15) you pay for covered health care services to providers who contract with your health insurance or plan. In-network co-payments usually are less than out-of-network co-payments.

In-network provider—a health care professional, hospital, or pharmacy that is part of a health plan’s network of preferred providers. You will generally pay less for services received from in-network providers because they have negotiated a discount for their services in exchange for the insurance company sending more patients their way.

Inpatient Services: Services provided when a member is registered as a bed patient and is treated as such in a health care facility such as a hospital.

Insured Person: The person who a contract holder (an employer or insurer) has agreed to provide coverage for, often referred to as a member/subscriber

Investigational Treatment: Investigational treatments or medications are those that are currently under review in a clinical study. Clinical studies, or trials, are part of the process by which new therapies receive approval by the FDA. Your doctor may suggest that you participate in a clinical trial as a treatment option. Ask your doctor about the current clinical trials that may be appropriate for your situation. Insurance usually does not cover costs related to investigational treatments.

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K

L

Limitation: See ‘Exclusion’

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.

Long-term Insurance: A type of health insurance that covers certain services over a set amount of time (typically a 12-month period).

Lifetime Limit: A cap on the total lifetime benefits you may get from your insurance company for certain conditions. A health plan may have 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. Under the health care law, lifetime limits are no longer allowed on essential health benefits, such as emergency services and hospital stays.

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M

Mandated Benefit: A requirement in state or federal law that all health insurance policies provide coverage for a specific health care service.

Maximum Allowable Amount: See ‘Allowed Amount’

Maximum Plan Dollar Limit: The maximum amount payable by the insurer for covered expenses for the insured and each covered dependent while covered under the health plan. Plans can have a yearly and/or a lifetime maximum dollar limit. The most typical of maximums is a lifetime amount of $1 million per individual.

Maximum Out-of-Pocket Expense: The maximum dollar amount a group member is required to pay out of pocket during a year. Until this maximum is met, the plan and group member shares in the cost of covered expenses. After the maximum is reached, the insurance carrier pays all covered expenses, often up to a lifetime maximum.

Medicaid: A joint federal and state funded program that provides health care coverage for low-income children and families, and for certain aged and disabled individuals.

Medical Group: A licensed health care facility, program, agency, doctor or health professional that contracts with a health plan to deliver health care services to plan members.

Medical Care: Medical services received from a healthcare provider or facility to treat a condition.

Medically Necessary: Health care services or supplies needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms and that meet accepted standards of medicine.

Medically Necessary (or Medical Necessity): Services, supplies or prescription drugs that are needed to diagnose or treat a medical condition. Also, the insurer then must decide if this care is:
ŸAccepted as standard practice. It can't be experimental or investigational.
ŸNot just for your convenience or the convenience of a provider.
ŸThe right amount or level of service that can be given to you.
ŸIn accordance with the generally accepted standards of medical practice
ŸClinically appropriate in terms of type, frequency, extent, site and duration
ŸConsidered effective for the patient’s illness, injury or disease
ŸNot primarily for the convenience of the patient or doctor
ŸNot more costly than alternative services that are at least as likely to produce equivalent therapeutic or diagnostic results for that patient’s illness, injury or disease.
Example: Inpatient care is medically necessary if your condition can't be treated properly as an outpatient service.

Medicare: The federal program established to provide health care coverage for eligible senior citizens and certain eligible disabled persons under age 65.

Medicare supplement plans—plans offered by private insurance companies to help fill the "gaps" in Medicare coverage.
Medicare Supplement (Medigap) Insurance: Private insurance policies that can be purchased to “fill-in the gaps” and pay for certain out-of-pocket expenses (like deductibles and coinsurance) not covered by original Medicare (Part A and Part B).

Medicare Part A: Covers inpatient hospital stays, skilled nursing facility care, hospice care, and certain home care services. Part A is available without monthly premiums if you are over the age of 65 and you or your spouse paid Medicare taxes for at least 10 years.

Medicare Part B: C overs outpatient services like doctor visits, lab tests, screenings, preventive services, medical equipment, and ambulance transportation. Part B requires a monthly premium. The standard monthly premium for Medicare Part B coverage in 2020 is $144.60, and the annual deductible is $198.

Medicare Part C: More commonly referred to as Medicare Advantage. If you are enrolled in Medicare Parts A and B, you can enroll in Medicare Advantage for additional coverage. This gives you the opportunity to select a private HMO or PPO insurance plan approved by Medicare. Most, but not all, Medicare Advantage plans also include prescription medication coverage. These plans carry additional costs that will depend on the type of private plan you select.

Medicare Part D: Covers some of your prescription medication costs. The amount you’ll pay for this additional coverage depends on a range of factors.

Medicare Prescription Drug “Donut Hole”: The period in which your prescription drug plan will not help with medication costs. This can occur after you and your plan have already paid a certain amount for medications. Depending on your needs, you might not even reach the donut hole.

Medication Discount Card (also known as prescription or drug discount card): Medication discount cards are one way to help lower your prescription medication costs. Companies providing these cards offer discounts on any FDA-approved medication by leveraging the power of group purchasing to help negotiate lower costs for their customers. Each program manages this in different ways, and your program may have restrictions on what pharmacies you use. Costs for your medications may also vary depending on how you receive them—if you go to a local pharmacy or if you get them via mail-order—so make sure to check those details before using a discount card. Also, you should be aware that the discounted amounts you pay toward these medications may not count toward your deductible if you are insured. Usually, once you meet your deductible, your costs can drop, so it can be an advantage to pay down the deductible first.

Member: The person to whom health care coverage has been extended by the policyholder (generally their employer) or any of their covered family members. Sometimes referred to as the insured or insured person.

Minimum Essential Coverage (MEC): The type of health coverage an individual needs to maintain throughout the year in order to meet the individual responsibility requirement under the Affordable Care Act. Health plans that are considered MEC include individual and family plans bought through the Health Insurance Marketplace: Qualified Health Plans bought directly through an insurance company, such as Blue Cross and Blue Shield of Illinois; job-based coverage; Medicare; Medicaid; and certain other coverage. If you have minimum essential coverage throughout the year, you don’t have to pay the tax penalty for being uninsured.

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N

Network: The group of doctors, hospitals, and other health care providers that insurance companies contract with to provide services at negotiated rates. You will generally pay less for services received from providers in your network.

Network Provider/In-network Provider: A healthcare provider who is part of a plan’s network.

Non-contracting Hospital: A hospital that has not contracted with a particular plan to provide hospital services to members within that plan.

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. Always consult your plan for more information AND confirm it with the providers staff – in writing if possible.

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.

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O

Off-Exchange Health Plan: A health insurance plan that meets the Minimum Essential Coverage (MEC) requirements under the Affordable Care Act. These plans are offered through Blue Cross and Blue Shield of Illinois or a health insurance agent. These plans are not offered on the Health Insurance Marketplace and are not eligible for the Premium Tax Credit: If you qualify for a premium tax credit and want to use it, you must enroll in an On-Exchange Plan.

On-Exchange Plan: A health insurance plan that meets the Minimum Essential Coverage (MEC) requirements under the Affordable Care Act. On-Exchange Plans are offered through Blue Cross and Blue Shield of Illinois; on Get Covered Illinois, the Official Health Marketplace; or through a health insurance agent.

Open Enrollment Period: The period of time set up to allow you to choose from available health insurance plans, usually once a year.

Out-of-Network: Services you receive are considered out of network when you use a doctor or other provider that does not have a contract with your health plan. When you go to an out-of-network provider, benefits may not be covered, or may be covered at a lower level. You may be responsible for all or part of the bill when you use out-of-network providers.

Out-of-Network Co-insurance: The percent (for example, 40%) you pay of the allowed amount for covered health care services to providers who do not contract with your health insurance or plan.

Out-of-Network co-insurance: Like anything that start’s with “co-“, there’s some sort of sharing implied, in this case you are ‘sharing’ what’s usually a fixed percentage of the remaining cost with your insurance company. Out-of-network co-insurance almost always costs more than in-network co-insurance because your insurance company hasn’t already worked out a deal to pay the doctor of the hospital less for the same service. That doesn’t mean avoid Out-of-network providers however; see the little explanation there at the end of this Glossary.

Out-of-Network Co-payment: A fixed amount (for example, $30) you pay for covered health care services from providers who do not contract with your health insurance or plan. Out-of-network copayments usually are more than in-network co-payments.

Out-of-Network provider: A health care professional, hospital, or pharmacy that is not part of a health plan's network of providers. You will generally pay more for services received from out-of-network providers.

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.

Out-of-Pocket Maximum: The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copays and coinsurance, your health plan pays 100 percent of the costs of covered benefits. The out-of-pocket maximum doesn't include your monthly premium payments or anything you spend for services your plan doesn't cover.

Out-of-Pocket Limit: The most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100% of the allowed amount. This limit never includes your premium, balance-billed charges or health care your health insurance or plan doesn’t cover. Some health insurance or plans don’t count all of your co-payments, deductibles, co-insurance payments, out-of-network payments or other expenses toward this limit.

Outpatient Services: Treatment that is provided to a patient who is able to return home after care without an overnight stay in a hospital or other inpatient facility.

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P

Patient Protection and Affordable Care Act (PPACA):Legislation (Public Law 111-148) signed on March 23, 2010. Commonly referred to as the Health Reform Law.

Payer: The health insurance company whose plan pays to help cover the cost of your care. Also known as a carrier.

Payment Allowance: See ‘Allowed Amount’

PCP: See ‘Primary Care Provider’

Pharmacy Benefit Manager: (aka ‘PBM’) A separate, or third-party, company that handles your health plan’s pharmacy benefit. A PBM processes and pays for your prescription drug claims based on the terms of your pharmacy benefit.

Pharmacy Benefit Manager (PBM): A pharmacy benefit manager (PBM) is a third-party administrator of prescription medication programs. The PBM’s role is to negotiate and manage prescription services for its customers, which include commercial health insurance plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program and state government employee plans. PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with manufacturers and processing and paying prescription claims.

Physician Services: Health care services a licensed medical physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine) provides or coordinates.

Plan: A benefit your employer, union or other group sponsor provides to you to pay for your health care services.

Preauthorization: The process by which members or their primary care physicians (PCP) notify the health plan in advance of treatment plans, such as a hospital admission or a complex diagnostic test. Also called pre-notification.

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.

Prior Authorization: Prior authorization is a term used by health insurance companies to convey a process for obtaining certain healthcare services. Before a health insurance company will agree to cover some services, it may require patients to seek approval or permission. Many plans have specific forms that you must complete for your prior authorization request to be processed.

Preferred Provider: A provider who has a contract with your health insurer or plan to provide services to you at a discount. “We worked out a good deal here! If you go here we both save money!!” That’s not necessarily a bad thing! You’re being incentivized by your insurance company to go to one type of provider – a physician, a radiology place, a neighborhood clinic, etc. – it may be obvious why like the location; it might not be, like some kind of recent disciplinary action or scandal. Usually something a biller or bookkeeper did so the place could make a little extra money to get by one week, or a doctor did who hasn’t worked there is 3 years, or having not had the proper pressure in more than 2 out of 30 fire extinguishers is not a direct reflection of the quality of the services you might be getting. An MRI is an MRI, the same machine is going to take the same picture anywhere else; a positive Strep test and Augmentin is the same everywhere you go; bucolic Japanese Maple trees with Cardinals whistling in them might be more soothing than spray-painted walls and the sounds of sirens and the inner city but if the services are all the same the break on the prices can often be substantial and worth looking into. Check your policy to see if you can see all preferred providers or if your health insurance or plan has a “tiered” network and you must pay extra to see some providers. Your health insurance or plan may have preferred providers who are also “participating” providers. Participating providers also contract with your health insurer or plan, but the discount may not be as great, and you may have to pay more.

Pre-Existing Condition: A condition, disability or illness that you have been treated for before applying for new health coverage.

Pre-existing condition exclusion: The period of time that an individual receives no benefits under a health benefit plan for an illness or medical condition for which an individual received medical advice, diagnosis, care or treatment within a specified period of time prior to the date of enrollment in the health benefit plan. PPACA prohibits pre-existing condition exclusions for all plans beginning January 2014.

Pre-Notification: The process by which a plan member or their doctor notifies the plan, before the member undergoes a course of care, such as a hospital admission or a complex diagnostic test. Also called pre-authorization.

Premium: The ongoing amount that must be paid for your health insurance or plan to maintain the plan. You and/or your employer usually pay it monthly, quarterly or yearly. The premium may not be the only amount you pay for insurance coverage. Typically, you will also have a co-payment or deductible amount in addition to your premium. Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor.

Premium equivalent: For self-insured plans, the cost per covered employee, or the amount the firm would expect to reflect the cost of claims paid, administrative costs, and stop-loss premiums.

Premium Tax Credit: (aka ‘APTC’, Advanced Premium Tax Credit) Based on your family size and income, you may qualify for a tax credit. Unlike tax credits you claim when you file your taxes, these tax credits can be used right away to lower your monthly premium costs. Sometimes called advanced premium tax credit (APTC), or tax credit.

Prescription Drugs: Prescription drugs must be ordered by a doctor and obtained at a pharmacy. They are reviewed and approved through a formal process set by the U.S. Food and Drug Administration (FDA).

Prescription Drug List: (aka ‘Drug Formulary’)A list of commonly prescribed drugs (also known as a drug formulary). Not all drugs listed in a plan's prescription drug list are automatically covered under that plan.

Prescription Drug Payment Level Tier: A prescription drug list has different levels of payment coverage, called “tiers." These tiers determine how much you will pay out of pocket for your prescription drug, based on the terms of your pharmacy benefit and whether the drug is covered on the drug list. Drugs in a lower tier will often cost less than drugs in a higher tier.

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

Preventive Drug List: A preventive drug list is a list of medications your health insurance plan classifies as not being subject to your deductible. Unlike other services, which you will have to pay for out-of-pocket until you meet your deductible, these medications are covered by your plan even before your deductible is met.

Primary Care Physician: (aka ‘PCP’) The physician you choose to be your primary source for medical care. Your PCP coordinates all your medical care, including hospital admissions and referrals to specialists. Not all health plans require a PCP.

Provider: A licensed health care facility, program, agency, doctor or health professional that delivers health care services.

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Q

Qualified Health Plan: An insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost-sharing (deductibles, copayments, and out-of-pocket amounts) and meets other requirements.

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA): Small companies may offer their employees a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) if they don’t offer group health coverage. This kind of account may help pay for things like a monthly premium or other qualifying health care costs.

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R

Referral: As applicable to HMO or point of service (POS) coverage, a written authorization from a member's primary care physician (PCP) to receive care from a different contracted doctor, specialist or facility.

Reconstructive Surgery: Surgery and follow-up treatment needed to correct or improve a part of the body because of birth defects, accidents, injuries or medical conditions.

Rehabilitation Services: Health care services that help a person keep, get back or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt or disabled. These services may include physical and occupational therapy, speech-language pathology and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.

Rider: Coverage options that enable you to expand your basic insurance plan for an additional premium. A common example is a maternity rider.

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S

Short-term Insurance: A type of health insurance that covers certain services for a set time period (6 months or less).

Skilled Nursing Care: Services from licensed nurses in your own home or in a nursing home. Skilled care services are from technicians and therapists in your own home or in a nursing home.

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

Special Enrollment Period: A time outside of the open enrollment period during which you can sign up for a health insurance plan. You generally qualify for a special enrollment period of 60 days following certain life events that changes your family status (for example, marriage or birth of a child) or loss of other health coverage.

Specialty Drug: A prescription drug used to treat complex health conditions. These drugs are usually given as a shot, but may be added to the skin or taken by mouth. Also, they may:
ŸRequire following a specific treatment plan
ŸHave special handling or storage needs
ŸNot likely sold in retail pharmacies
Conditions like hepatitis C, hemophilia, multiple sclerosis and rheumatoid arthritis are treated with specialty drugs.

State Continuation Coverage: This health care coverage continuation program is offered by the state of Illinois. It's not the same as COBRA because it’s only for companies with less than 20 workers. If your employment ended (not due to cause), and you were on your job’s health plan for at least 3 months in a row, you and your family may choose to stay covered under a state health plan for an extra 12 months.

Subsidy: (aka ‘Premium Tax Credit’) Based on your family size and income, you may qualify for a subsidy, also known as premium tax credit. Unlike tax credits you claim when you file your taxes, these tax credits can be used right away to lower your monthly premium bill.

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U

UCR: The ‘Usual, Customary, and Reasonable charge’, see ‘Allowed Amount’

Underwriting: The process by which health insurance companies determine whether to extend coverage to an applicant and/or set the policy's premium.

Utilization Management: The way we review the type and amount of care you're getting. This involves looking at the setting for your care and its medical necessity. Examples may use prior authorization, case management, accompanying reviews or proper discharge planning.

Urgent Care Provider: A provider of services for health problems that need medical help right away but are not emergency medical conditions.

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W

Waiting period: This term can be used two different ways: (1) it may refer the period of time that an employer makes a new employee wait before he or she becomes eligible for coverage under the company's health plan; or (2) the period of time starting from a given policy's effective date during which a health plan may not pay benefits for certain pre-existing conditions.

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