GLOSSARY OF INSURANCE TERMS
A – B | C – D | E – I | J – N | O – P | Q – T | U – Z
Actuarial Value (AV) – the average value of the benefits that a certain health plan covers, calculated as a percentage of total costs
Affordable Care Act (ACA) – the comprehensive health care reform law enacted in March 2010
Appeal – the process of submitting information to justify why health insurance should cover a product or service after coverage has initially been denied
Benefit Exclusion – when a health plan refuses to cover a product or service. Benefits exclusions can typically be appealed through a defined exceptions process.
Benefit Limitation – when a health plan limits either the amount of money that will be paid for benefits or the number of benefits allowed over a set amount of time
Benefit Management — a process, such as prior authorization or step therapy, through which a suggested treatment plan must be reviewed and approved before it is implemented
Cost Limit – a limit on the amount of money an insurance company will pay for benefits
Case Management – a planned approach to manage services or treatment for an individual with a serious medical problem. Its dual goal is to contain costs and promote more effective interventions to meet the patient’s needs.
Catastrophic Coverage – coverage provided by the insurance company after the beneficiary has personally paid a certain amount of medical expenses out-of-pocket as predetermined by the payer
Certificate of Coverage – a document that specifies the benefits issued to a member of group health insurance. This can change yearly depending on what an employer group elects to purchase.
CHAMPVA – a health benefit program for the families of veterans with 100% service–connected disability and a surviving spouse or children of a veteran who dies from a service-connected disability
Children’s Health Insurance Program (CHIP) – an insurance program jointly funded by a state and the federal government that provides health insurance to low-income children and, in some states, pregnant women in families who earn too much income to qualify for Medicaid but who cannot afford to purchase private health insurance coverage
Claim – information submitted to the insurer by the member or health care provider for the payment of services under a policy
Co-insurance – an amount that an individual is required to pay out of pocket when they receive covered medical care that is a percentage of the total cost of that coverage
Consolidated Omnibus Budget Reconciliation Act (COBRA) – a federal law that allows individuals leaving a company to continue the health insurance policy they had when employed
Coordination of Benefits (COB) – a method of integrating benefits payable under more than one health insurance plan so that the insured’s benefits from all sources do not exceed allowable medical expenses
Copay – a fixed-dollar amount a person is required to pay out of pocket when they receive covered medical care
Cost Sharing – the term that insurance plans use to describe costs they “share” with the beneficiary, also often known as out-of-pocket costs
Creditable Coverage – drug coverage that pays, on average, as much as or more than the standard Medicare Part D drug coverage
Deductible – the amount of money that someone pays before their insurance plan covers any medical care or prescriptions
Department of Insurance – a state-level regulatory agency that oversees and enforces state insurance laws
Durable Medical Equipment – medical equipment that can be used repeatedly and is not disposable, examples include wheelchairs, pumps and oxygen equipment
Employee Retirement Income Security Act (ERISA) – a federal law that governs pension plans and private health insurance provided by self-funded institutions that requires insurance providers to disclose plan benefits and funding levels, as well as ways to manage and access your benefits
Essential Health Benefits (EHBs) – a set list of benefits that insurance plans must include if they are sold through a state or federal health insurance marketplace created under the Affordable Care Act
Exception Process – steps outlined by an insurance company that allow someone to petition for certain health care benefits ordinarily not covered by the insurance plan
Explanation of Benefits (EOB) – a description, sent to patients and health care providers by health plans, of benefits received and services for which the health care provider has requested payment
Family and Medical Leave Act (FMLA) – a federal law that guarantees up to 12 weeks of job-protected leave for certain employees when they need to take time off due to serious illness or disability, to have or adopt a child, or to care for another family member
Federal Poverty Level (FPL) – a measure of income level issued annually by the Department of Health and Human Services that is used to determine eligibility for certain benefits and programs, such as Medicaid
Flexible Spending Account/Arrangement (FSA) – an arrangement with an employer that allows an employee to pay for many of their out-of-pocket medical expenses with tax-free dollars
Formulary – an approved list of prescription drugs covered by a health insurance plan
Genetic Information Nondiscrimination Act (GINA) – a federal law that prohibits insurance providers and employers from discriminating on the basis of genetic information
Grandfathered Health Plan – as used in connection with the Affordable Care Act, a group health plan that was created—or an individual health insurance policy that was purchased—on or before March 23, 2010
Health Insurance – protection that provides payment of benefits for covered illness or injury
Health Insurance Exchange or Marketplace – online marketplaces where consumers can compare and purchase insurance plans
Health Insurance Portability and Accountability Act (HIPAA) – a set of laws that provides rights and protections for participants and beneficiaries in group health plans; it protects personal information while also allowing health care administrators to conduct necessary business operations
Health Maintenance Organization (HMO) – a payer that provides services for members in a particular geographic area
Health Savings Account (HSA) – a tax-free medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan
High Risk Insurance Pools – state programs that enable people with health problems to join together to purchase health insurance; even with subsidies, premium rates are high because pool members are high risk
Indemnity Plans – also known as traditional health insurance, indemnity plans pay a certain percentage of the charges billed by the provider, and the patient is responsible for the balance.
In-Network – a list of providers who participate in a health plan’s provider network
Itemized Bill – a type of bill for inpatient hospital services that lists every charge, grouped into specific categories
Lifetime Maximum Benefit (Lifetime Cap) – a lifetime maximum benefit is the total amount of money that an insurance company will pay for an individual’s health care expenses
Managed Care Plans – a plan which implements certain health care measures to control costs associated with heath care services
Medicaid – a government health insurance program for eligible, low-income individuals; eligibility varies by state
Medical Benefits Exclusion – health care products, services and circumstances that are specifically not covered in a health insurance plan. Excluded benefits vary by plan but commonly include injuries sustained in the act of committing a felony or misdemeanor, workers comp, self-inflicted injuries or suicide attempt, cosmetic surgery and other areas.
Medical Loss Ratio – the percentage of the premium that an insurance company spends on medical care, as opposed to administrative or overhead costs
Medicare – a federal health insurance program primarily for those ages 65 and older and individuals who have been receiving Social Security disability benefits for at least 12 months. Medicare coverage can be broken down into several parts, typically referred to by the letters A, B, C and D. Learn more.
Medically Necessary – term used when the service rendered was reasonable and appropriate for the diagnosis or treatment of a medical condition or illness
Medicare Part D Coverage Gap (Donut Hole) – most plans with Medicare Part D have a coverage gap (called a “donut hole”) that requires a certain amount be paid out-of-pocket for covered prescription drugs before coverage resumes.
Medigap (Medicare Supplement) – a policy sold by private insurance companies to cover products and services that are not covered, or are covered in lower amounts, by Original Medicare (Medicare A and B).
National Drug Code (NDC) – a numeric code assigned to a prescription drug by the FDA
Navigators– people employed by their state insurance marketplace to help consumers through the process of choosing an insurance plan
Open Enrollment – the period of time set up to allow individuals to review and change their health insurance coverage without a penalty, usually once a year
Original Medicare – refers to coverage provided by Medicare parts A and B
Out-of-Pocket (OOP) Costs – costs that beneficiaries “share” with their insurance company and thus pay for out of their own “pocket,” the most common forms of OOP costs are deductibles, copayments and coinsurance
Out-of-Pocket (OOP) Maximum – the total dollar amount of the expenses a member would have to pay for covered medical charges during a specified period of time
Out-of-Network – providers who do not participate in the network of a managed care pla
Payer – a public or private organization that pays or underwrites coverage for health care expenses
Pharmacy Benefit Manager (PBM) – a company specializing in the administration of commercial pharmacy benefits
Per Diem – term that is applied to the cost of care for a day and is an average that does not reflect the true cost for each patient
Point of Service (POS) Plan – a type of plan in which an individual pays less if they use doctors, hospitals and other health care providers that belong to the plan’s network
Preferred Provider Organization (PPO) – groups of health care providers that contract with employers, insurance companies or other third-party payers to provide medical care services at a reduced fee
Premium – the monthly payment made by an employer or individual to purchase insurance
Prior Authorization (also, Pre-Certification Pre-Determination or Pre-Authorization) – review of services to determine medical appropriateness before services are rendered
Primary Care – health services that cover a range of prevention, wellness and treatment for common illnesses
Primary Care Physician (PCP) – a physician who oversees the general health care needs of a patient and may serve as the first contact in a managed care system
Provider – institutions and individuals that are licensed to provide health care services; for example, hospitals, physicians, pharmacists, etc.
Qualifying Event – an event that would cause an individual to lose health coverage under COBRA and/or become eligible to purchase or change health insurance coverage without penalty, for example marriage, divorce, adoption, job loss, etc.
Quantity Limit – a limit on the number of services, prescriptions or products allowed over the course of a particular benefit period
Reimbursement – payment made by a payer to a provider for approved medical services
Rescission – the retroactive cancellation of a health insurance policy
Rider (Exclusionary Rider) – an amendment to an insurance policy
Self-Funded (Self-Insured) Plan – a type of job-based health insurance coverage where the employer pays the claims with its own funds
Social Security Disability Insurance – cash benefits paid to individuals who the Social Security Administration determines are disabled and who have worked and paid social security taxes for a required amount of time
State and Community Health Plans – programs that provide coverage and services with minimal private commercial and federal involvement
Statement of Medical Necessity – official documentation from the medical provider to the payer that contains medical information to justify that the service rendered was reasonable and appropriate for the diagnosis or treatment of a medical condition or illness
Step Therapy – a health insurance plan requirement to “try and fail” a specific medication before the originally prescribed medication will be approved
Supplemental Security Income – cash benefits paid to individuals who the Social Security Administration determines are disabled and who have limited income
Tricare – the Department of Defense’s managed health care program for active duty military, active duty service families, retirees and their families, and other beneficiaries.
Department of Veterans Affairs (VA) – An independent agency of the federal government created in 1930 responsible for providing federal benefits to veterans and their dependents