ACO (Accountable Care Organization)
An ACO is a group of health care providers that coordinate their efforts with the goal of improving the quality of care for patients. This is especially pertinent when it comes to chronic disease management. The organization’s payment is directly related to achieving quality of care goals and outcomes that result in cost savings.
Affordable Care Act (ACA)
Also known as “Healthcare Reform,” “Obamacare,” and “PPACA.” On March 23, 2010, President Obama signed into law, the Patient Protection and Affordable Care Act (PPACA). The $940 billion healthcare reform law was created to extend insurance coverage to roughly 32 million additional Americans. It created insurance exchanges and provides federal subsidies for qualified individuals who buy their insurance via the exchanges. It prohibits insurers from denying coverage on the basis of pre-existing conditions. Major coverage expansion began in 2014. Most Americans are now required to have health insurance or pay a fine. Changes that we have already seen include, but not limited to, Preventive Care covered at 100% (in-network only), dependents covered to age 26, lifetime maximums eliminated, member level rating and maternity covered on all plans (group and individual).
Maximum amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance" or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference.
A request for your health insurer or plan to review a decision or a grievance again.
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 may not balance bill you for covered services.
Any person, persons, or other entity designated to receive the policy benefits upon the death of the policyholder.
A notification to your insurance company that payment is due under the policy provisions.
COBRA - Consolidated Omnibus Budget Reconciliation Act of 1986
Federal legislation that includes a requirement for groups with 20 or more employees to offer extended health insurance coverage at the member's expense to members and eligible dependents who leave the group or are otherwise no longer eligible for the group's coverage.
Your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. You pay co-insurance plus any deductibles you owe.
For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your co-insurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.
In a life insurance policy, the person designated to receive the policy benefits if the primary beneficiary dies before the insured.
Coordination of Benefits
A provision in a contract that applies when a person is covered under more than one group medical PPO program. It requires that payment of benefits will be coordinated by both programs to eliminate over insurance or duplication of benefits. For example, a person might have their own plan through their employer and also be covered on their spouse’s group plan. The two carriers will coordinate benefits and a person could, in theory, have 100% coverage. It varies depending on the carriers’ benefits.
A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.
The scope of protection provided by an insurance contract which includes any of the listed benefits in an insurance policy.
Deductible credit may be given when a group moves from one carrier to another carrier during the calendar year. If deductible credit is given, the new carrier allows any portion of the already satisfied medical deductible to transfer over to the new plan. Note, Rx deductibles never transfer from carrier to carrier within the calendar year.
An insurance company decision to withhold a claim payment or preauthorization. A denial may be made because the medical service is not covered, not medically necessary, or experimental or investigational.
Dependent Care Reimbursement Account
This plan, also a component of Section 125, allows participants to pay for dependent care (child or adult) on a pre-tax basis. The limit on these accounts, set by the IRS, is $2500 for a single person and $5000 for a couple. The dependent care provider must be qualified. In other words, a person cannot use pre-tax dollars for a caregiver not reporting the income.
A list of drugs that an insurer will pay for. Drugs that are not on the formulary ("non-formulary") are sometimes covered but are more expensive.
The date your health insurance coverage begins.
Evidence of Coverage (EOC) or Policy
An EOC or policy is the official plan contracts. They explain in full all the terms of plan coverage, including benefits, copayments or coinsurance, exclusions, limitations and how to access coverage.
Emergency Medical Condition
An illness, injury, symptom or condition so serious that a reasonable person would seek care right away to avoid severe harm.
Emergency Medical Transportation
Ambulance services for an emergency medical condition.
Emergency Room Care
Emergency services you get in an emergency room.
Evaluation of an emergency medical condition and treatment to keep the condition from getting worse.
Exclusions and/or Limitations
Conditions or circumstances spelled out in an insurance policy which limit or exclude coverage benefits. It is important to read all exclusion, limitation, and reduction clauses in your health insurance policy or certificate of coverage to determine which expenses are not covered
EPO (Exclusive Provider Organization)
An EPO is a health plan where services are generally covered if the member utilizes in network providers and facilities. In other words, there are no out-of-network benefits unless emergency services are rendered.
Experimental and/or Investigational Medical Services
A drug, device, procedure, treatment plan, or other therapy which is currently not within the accepted standards of medical care.
Explanation of Benefits (EOB)
After you or your provider submit a medical claim, the health insurance company will send you an explanation that will give you claims payment information, including the amount paid to the provider and any amount you may owe. If a deductible and/or coinsurance applies, the amount applied to your deductible and out-of-pocket maximum will also be shown.
FSA (Flexible Spending Account)
An FSA is an arrangement between the member and their employer where the member contributes pre-tax dollars into an account managed by a third party administrator. Employees may use the money in the account to pay for out-of-pocket, un-reimbursable medical expenses such as copays, deductibles, prescriptions, dental work, eye care, etc. The employer sets the limit on the amount a member can contribute to an FSA each year. Funds do not carry over so any amount unused will be reallocated to the employer to offset administrative costs of the plan.
Fully insured plan
A plan where the employer contracts with another organization to assume financial responsibility for the enrollees’ medical claims and for all incurred administrative costs.
A drug that is similar to a name-brand drug but not covered by original patents and therefore cheaper. For example, the generic for the name-brand "Vicodin®" is "hydrocodone." If you buy a generic drug, you usually pay less co-pay.
A specified period immediately following the premium due date during which a payment can be made to continue a policy in force without interruption. This applies only to Life and Health policies. Check your policy to be sure that a grace period is offered and how many days, if any, are allowed.
A complaint that you communicate to your health insurer or plan.
Group Health Plan
When groups of individuals are covered under one insurance contract. Usually people are offered group health plans by their employers.
A health insurance policy that must be issued regardless of any pre-existing medical condition.
Health Insurance Portability and Accountability Act (HIPAA)
A federal law that outlines the requirements that employer-sponsored group insurance plans, insurance companies, and managed care organizations must satisfy in order to provide health insurance coverage in the individual and group healthcare markets.
Health Maintenance Organization (HMO)
An HMO provides comprehensive health care by network physicians to enrolled individuals and families in a particular geographic area. It is financed by fixed periodic payments, also known as “capitation”, that are determined in advance. In an HMO, you need to access care through a designated Primary Care Physician (PCP) to receive coverage.
HRA (Health Reimbursement Account or Arrangement)
An HRA is an employer funded group health plan in which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. It’s important to note that the EMPLOYER, not the employee, owns the account.
Health Savings Account (HSA)
HSAs are tax-advantaged personal savings or investment accounts intended for payment of medical expenses that may be used in combination with qualifying high-deductible health plans.
High-deductible health plan (HDHP)
This type of plan typically has a higher deductible and lower premium than a traditional health plan. Normally, the plan includes catastrophic coverage to protect against large medical expenses, but the insured is responsible for routine out-of-pocket expenses.
Home Health Care
Health care services a person receives at home.
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.
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.
This is typically proof of a person’s insurance coverage. It is sent to the member after initial enrollment.
Individual Health Plan
A form of health insurance designed to cover just one person (and often immediate family members), as opposed to someone covered by a group plan.
A physician, hospital or other health care provider that joins a managed care plan and provides services based on negotiated fees. Generally, using an in-network provider will save you money in the form of copayments, lower deductibles and a higher reimbursement level, and the provider will file claims for you.
An insurance company must be licensed by the Department of Insurance to sell health insurance. The insurer issues policies which outline coverage. An insurance policy is a contract between the insured and the insurance company. You pay your premiums to an insurance company. They then pay some or all of your medical provider's bills when you need treatment.
Insurance that pays a specified sum of money to designated beneficiaries if the insured person dies during the policy term.
The maximum amount of money the insurance company will pay towards your healthcare services in your lifetime.
These are drugs that can be ordered through the mail. As a cost containment measure, some plans use mail-order pharmacies that typically provide a 3-month supply of maintenance drugs.
Administered by the U.S. federal government, Medicare provides health insurance for those age 65 and older and those with certain disabilities.
Member Level Rating
The method that Small Group carriers are using to determine premiums. This method uses the employee’s and each dependent’s exact age to determine the rate. Family caps apply.
A drug sold under a name-brand, and covered by original patents (for example, the name brand for hydrocodone is "Vicodin®"). Name-brand drugs are more expensive than generic drugs, and you usually have a higher co-pay for them than generics.
The time (usually a preset two-week or one-month period annually) when you can change health plans under your employer's group plan.
Out-of-network providers (applies to PPO plans)
Providers who have not contracted with the health insurance company to be part of their provider network. Out-of-network providers often charge members more than the insurance company’s usual and customary charges. You are responsible for the difference between the amount the out-of-network provider bills and any amount that the insurance company pays.
Out-of-Pocket Limit (or “Calendar Year Maximum”)
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.
Surgery that does not require an overnight stay in a facility.
PPO (Preferred Provider Organization)
An organization where providers are under contract to an insurance company or health plan to provide care at a discounted or negotiated rate. Typically, you can see any doctor in the PPO network without requiring special approval, and you usually do not need to choose a primary care physician. Most PPOs will also allow you to seek care outside of the PPO network; however, the benefits are usually reduced and the insured has a greater out-of-pocket expense.
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..
Any illness or health condition for which you have received medical advice or treatment during the six months prior to obtaining health insurance. Group healthcare policies cover pre-existing conditions after you have been insured for six months, and individual policies cover pre-existing conditions after you have been insured for one year. Creditable coverage must be counted towards any pre-existing condition exclusion in either an individual or group policy.
The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly or yearly.
POP (Premium Only Plan)
A POP is a component of Section 125 of the IRS code. Section 125 allows employees to pay for qualified benefit premiums before taxes are deducted from their paychecks. Premiums that are eligible to be paid with pre-tax dollars include, but are not limited to, health, dental, vision, life, etc.
Medications that, by law, require a prescription from a doctor or dentist to obtain.
There are typically 4 Tiers covered within most plans. Tier 1 is generally defined as Generic Formulary. Tier 2 is defined as Preferred Brand Formulary. Tier 3 is Non-preferred Brand Formulary. Lastly, Tier 4 are Specialty medications (injectables).
Primary preventive medical services provided by a physician for the early detection of disease when no symptoms are present.
Primary Care Physician - also known as a “Gatekeeper”
Your Primary Care Physician ("PCP") is the doctor you choose to provide basic health care. In an HMO, your PCP is responsible for the administration of your treatment; the PCP must coordinate, refer, and authorize all medical services, laboratory studies, specialty referrals and hospitalizations. PCPs typically include family / general practitioners, pediatrician and internal medicine doctors.
Any person or place that provides health care or prescription drugs. Providers can be doctors, hospitals, pharmacies, chiropractors, etc.
Qualifying Life Event
An event that causes a person to “lose” coverage. This could be a termination of employment, divorce, death, etc. Additionally, it could be an event which causes someone to be eligible for benefits off anniversary or open enrollment. This could be a birth, adoption, marriage or moving to another state. It can also be known as a Special Enrollment Period.
Surgery and follow-up treatment needed to correct or improve a part of the body because of birth defects, accidents, injuries or medical conditions.
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.
A self-funded plan is one where the employer assumes the direct risk for payment of claims for benefits. Employers typically utilize a third party administrator (TPA) to assist with the premium billing and processing of claims.
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.
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.
Summary of Benefits and Coverage (SBC)
This document is a plan specific detailed explanation of the benefits and coverage. It is a standardized federal form that all carriers must make available, and satisfies the ACA’s requirement that plan members have access to an easy-to-understand summary of their health plan’s benefits and coverage.
Third Party Administrator (TPA)
A neutral, outside company retained by an employer to handle the processing of various needs such as COBRA, Section 125, Self-funding arrangements, compliance, etc.
UCR (Usual, Customary and Reasonable)
The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.
Care for an illness, injury or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.
A well-baby care benefit provides for preventive doctors’ visits for children 2 years of age and younger. The benefit includes preventive pediatric care, routine pediatric care, and routine pediatric immunizations. Care immediately after the birth of the child is not included.