actuary - a mathematician in the insurance field.
Responsible for calculating premiums, developing plans and defining underwriting
agent - a licensed individual who represents several
insurance companies and sells their products.
benefit - reimbursement for covered medical expenses
as specified by the plan.
brand-name drug - prescription drug which is marketed
with a specific brand name by the company that manufactures it. May cost insured
individuals a higher co-pay than generic drugs on some health plans. (see
broker - a licensed insurance professional who
obtains multiple quotes and plan information in the interest of his
carrier - insurance company or HMO insuring the
Certificate Booklet - the plan agreement. A printed
description of the benefits and coverage provisions intended to explain the
contractual arrangement between the carrier and the insured group or individual.
May also be referred to as a policy booklet
claim - a formal request made by an insured person
for the benefits provided by a policy.
COBRA (Consolidated Omnibus Budget Reconciliation
Act) - Federal legislation that requires group health plans to provide
health plan members the opportunity to purchase continued coverage in the event
their insurance is terminated. Applies only to employer groups with 20 or more
employees. Learn more about COBRA
at the Department of Labor's website. - Please note this may take a few
minutes to appear.
co-insurance - the percentage of covered expenses an
insured individual shares with the carrier. (i.e., for an 80/20 plan, the health
plan member's co-insurance is 20%.) If applicable, co-insurance applies after
the insured pays the deductible and is only required up to the plan's stop loss
amount. (see "stop loss.")
co-pay/co-payment - the amount an insured individual
must pay toward the cost of a particular benefit. For example, a plan might
require a $10 co-pay for each doctor's office visit.
credit for prior coverage - any pre-existing
condition waiting period met under an employer's prior (qualifying) coverage
will be credited to the current plan, if any interruption of coverage between
the new and prior plans meets state guidelines.
deductible - the dollar amount an insured individual
must pay for covered expenses during a calendar year before the plan begins
paying co-insurance benefits.
dependents - usually the spouse and unmarried
children (adopted, step or natural) of an employee.
effective date - the date requested by an employer
for insurance coverage to begin.
exclusions - expenses which are not covered under an
insurance plan. These are listed in the Certificate Booklet.
Explanation of Benefits (EOB) - a carrier's written
response to a claim for benefits. Sometimes accompanied by a benefits
Generic drug the chemical equivalent to a "brand
name drug." These drugs cost less, and the savings is passed onto health plan
members in the form of a lower co-pay.
group insurance - an insurance contract made with an
employer or other entity that covers individuals in the group.
Health Maintenance Organization (HMO) - An
alternative to commercial insurance that stresses preventive care, early
diagnosis and treatment on an outpatient basis. HMOs are licensed by the state
to provide care for enrollees by contracting with specific health care providers
to provide specified benefits. Many HMOs require enrollees to see a particular
primary care physician (PCP) who will refer them to a specialist if deemed
HIPAA - Health Insurance Portability and
Accountability Act of 1996, P.L. 104-91. This law relates to underwriting,
pre-existing limitations, guaranteed renewal, COBRA and certification
requirements in the event someone terminates from the plan. The new law,
commonly known as the "Kennedy-Kassebaum Bill," establishes new requirements for
self-funded, fully-insured group plans (including church plans) and Individual
Health policies. The purpose of the law is to:
- Improve portability and continuity of health insurance
coverage in the group and individual markets
- To combat waste, fraud and abuse in health insurance and
health care delivery
- To promote the use of medical savings accounts
- To improve access to long-term care services and
- To simplify the administration of health insurance
- Learn more about HIPAA at the Department of Labor's website. - Please note
this may take a few minutes to appear.
pre-certification - an insurance company requirement
that an insured obtain pre-approval before being admitted to a hospital or
receiving certain kinds of treatment.
ID card/identification card - card given to insured
individuals which advises medical providers that a patient is covered by a
particular health insurance plan.
indemnity insurance plans - traditional insurance
plans (not HMOs or PPOs) which permit insured individuals to choose their
doctors and hospitals. Insured individuals do not have to choose doctors or
hospitals from a specific list of providers. Also called "fee-for-service"
in-network - describes a provider or health care
facility which is part of a health plan's network. When applicable, insured
individuals usually pay less when using an in-network provider.
lifetime maximum benefit - the maximum amount a
health plan will pay in benefits to an insured individual.
limitations - a restriction on the amount of benefits
paid out for a particular covered expense.
long-term disability (LTD) - insurance which pays
employees a percentage of monthly earnings in the event of disability.
managed care - the coordination of health care
services in the attempt to produce high quality health care for the lowest
possible cost. Examples are the use of primary care physicians as gatekeepers in
HMO plans and pre-certification of care.
Multiple Employer Trust (MET) - an arrangement
created to obtain health and other benefits for participating employer groups.
Small employers can pool their contributions to receive the advantages of large
network - a group of doctors, hospitals and other
providers contracted to provide services to insured individuals for less than
their usual fees. Provider networks can cover large geographic markets and/or a
wide range of health care services. If a health plan uses a preferred provider
network, insured individuals typically pay less for using a network
out-of-network - describes a provider or health care
facility which is not part of a health plan's network. Insured individuals
usually pay more when using an out-of-network provider, if the plan uses a
out-of-pocket maximum - the total of an insured
individual's co-insurance payments and co-payments.
plan administration - overseeing the details and
routine activities of installing and running a health plan, such as answering
questions, enrolling new individuals for coverage, billing and collecting
point-of-service (POS) - health plan which allows the
enrollee to choose HMO, PPO or indemnity coverage at the point of service (time
the services are received).
pre-certification - Pre-admission review and approval
of appropriateness and medical necessity of hospitalization or other medical
pre-existing condition - an illness, injury or
condition for which the insured individual received medical advice, treatment,
services or supplies; had diagnostic tests done or recommended; had medicines
prescribed or recommended; or had symptoms of typically within 12 months (time
periods may vary depending on state laws) prior to the effective date of
Preferred Provider Organization (PPO) - A network or
panel of physicians and hospitals that agrees to discount its normal fees in
exchange for a high volume of patients. The insured individual can choose from
among the physicians on the panel.
premiums - payments to an insurance company providing
provider - any person or entity providing health care
services, including hospitals, physicians, home health agencies and nursing
homes. Usually licensed by the state.
referral within many managed care plans, transfer
to specialty physician or specialty care by a primary care physician.
rider - a modification to a Certificate of Insurance
regarding clauses and provisions of a policy. A rider usually adds or excludes
risk - uncertainty of financial loss.
short-term medical - temporary health coverage for an
individual for a short period of time, usually from 30 days to six
small employer group - groups with 1 99 employees.
The definition of small employer group may vary between states.
state mandated benefits - state laws requiring that
commercial health insurance plans include specific benefits.
stop-loss - the dollar amount of claims filed for
eligible expenses at which the insurance begins to pay at 100% per insured
individual. Stop-loss is reached when an insured individual has paid the
deductible and reached the out-of-pocket maximum amount of co-insurance.
Third Party Administrator (TPA) - An organization
responsible for marketing and administering small group and individual health
plans. This includes collecting premiums, paying claims, providing
administrative services and promoting products.
underwriter - entity that assumes responsibility for
the risk, issues insurance policies and receives premiums.
waiver of coverage - a section on the enrollment form
which states that an employee was offered insurance coverage but opted to waive
Worker's Compensation Insurance - insurance coverage
for work-related illness and injury. All states require employers to carry this