This Glossary serves as a resource which will help in understanding some of the terms frequently associated with health insurance coverage
Actuarial Value: The percentage of total average costs for covered benefits a health plan will cover. If a plan has an actuarial value of 80%, on average, you would be responsible for 20% of the cost of all covered benefits. (This can vary with the terms of your policy)
Affordable Coverage: Employer sponsored coverage is considered affordable if any employee’s share of the “employee only premium” is less than 9.5% of the employee’s household income.
Allowed Amount: Maximum amount of which payment is based for a covered health care service. This may also be known as “negotiated rate”. If your provider charges more than the allowed amount, you may be responsible for the difference. (see Balance Billing)
Annual Open Enrollment: The annual open enrollment period during which you may choose to change your medical coverage level or switch plans for the next plan year.
Annual Out-of-Pocket Maximum: The maximum amount of coinsurance you pay for covered PPO medical expenses in any single calendar year. Once you have paid the out-of-pocket maximum, the PPO pays 100% of expenses (except for any required if applicable).
Balance Billing: The difference between the provider’s charge and the allowed amount. Ex: If the provider charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. Preferred Providers/In-Network Providers may not balance bill you for covered services.
Brand-Name Drugs: A drug sold by a drug company that carries a trademark or brand name. Brand-name drugs may be significantly higher in cost than generic drugs, even though, by law, both must have the equivalent active ingredients.
Calendar Year Maximum: The maximum dollar amount for a particular benefit that will be payable over a calendar year. When the dollar amount is reached, payments for that benefit terminate until the next calendar year begins.
Cal-COBRA: California health coverage protection that requires employers of 2 to 19 employees to provide their employees (and their dependents) the right to continue health insurance benefits when a qualifying event occurs
COBRA: A federal law that allows continuation of health coverage after your employment ends; you lose coverage as a dependent or experience another qualifying event. You are responsible for 100% of the premiums that were previously shared by the employer, and a small administrative fee.
Coinsurance: Once the deductible is satisfied, this describes the percentage amount the insurance company & the covered member pay toward the covered service. In plans with no deductible, it is again, the cost share between the insurance company and the member. The insurance company generally pays the higher percentage.
Copay (also known as copayment): A fixed dollar amount required from you when medical services are used or prescription drugs are purchased.
Covered Expenses: Any expense for medical services or products that is eligible for benefits under your medical plan.
Deductible: The amount you owe for health care services before the plan begins to pay.
Dependent: An individual who receives health insurance through a spouse, parent, or other family member.
Disability: Physical or mental condition that prevents a person from performing one or more or all occupational duties short-term (temporarily) or long-term.
Durable Medical Equipment (DME): Equipment & supplies ordered by a health care provider for everyday or extended use. This can include: crutches, wheelchairs, walkers, and blood testing strips for diabetics.
Emergency Room Care: Emergency services you get in an emergency room.
Emergency Medical Condition: An illness, injury or symptom so serious that a reasonable person would seek immediate care to avoid severe harm.
Employee Contribution: The portion of the insurance premium paid by the employee for their health benefit coverage.
Essential Health Benefits (EHB): A set of health care service categories that must be covered by certain plan, starting 2014. 10 categories include: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorder – including behavioral health treatment, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services, chronic disease management, and pediatric services including oral and vision care.
Exchange: See Health Insurance Marketplace
Exclusive Provider Organization (EPO): A managed care plan where services are covered only if you to doctors, specialist or hospitals in the plans network. (Except in an emergency)
Explanation of Benefits (EOB): The document you receive highlighting your claim information. The EOB shows how much of the expenses the Plan paid and how much you are expected to pay.
Excluded Services: Health care services that your health plan doesn’t pay for or cover.
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. When on leave under FMLA, you can continue coverage under your job-based plan. FMLA applies to employers who employ 50 or more employees.
Flexible Spending Account (FSA): An account under a cafeteria plan through which you are reimbursed for medical and other expenses not covered by insurance. FSAs may not be used to accumulate funds in one year in order to pay benefits in future years. Separate FSA accounts must be maintained for medical expenses and eligible dependent care expenses.
Formulary Drugs: Formulary drugs are specified alternative prescription drugs for specific brand name drugs. Formulary drugs have been reviewed for safety, quality, effectiveness, and cost. The formulary drug list is periodically reviewed and modified by a panel of physicians and pharmacists.
Full-Time Employee: An employee who works an average of at least 30 hours per week.
Generic Drugs: A prescription drug that has the same active ingredient formula as a brand name drug. Generic drugs usually cost less and the FDA rates these drugs to be safe and effective as their equivalent brand name drug.
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. Grandfathered plans are exempted from many changes required under the Affordable Care Act. Plans or policies may lose their “grandfathered” status if they make certain significant changes that reduce benefits or increase costs to consumers. A health plan must disclose in its plan materials whether it considers itself to be a grandfathered plan and must also advise consumers how to contact the U.S. Department of Labor or the U.S. Department of Health and Human Services with questions. (Note: If you are in a group health plan, the date you joined may not reflect the date the plan was created. New employees and new family members may be added to grandfathered group plans after March 23, 2010).
Grievance: A complaint that you communicate to your health insurer or plan.
Habilitative/Habilitation Services: Health care services that help you 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 Insurance Marketplace: A resource where individuals, families, and small businesses can: learn about their health coverage options; compare health insurance plans based on costs, benefits, and other important features.. The Marketplace also provides information on programs that help people with low to moderate income and resources pay for coverage. This includes ways to save on the monthly premiums and out-of-pocket costs of coverage available through the Marketplace, and information about other programs, including Medicaid and the Children’s Health Insurance Program (CHIP). The Marketplace encourages competition among private health plans, and is accessible through websites, call centers, and in-person assistance. In some states, the Marketplace is run by the state. In others it is run by the federal government.
Health Savings Account (H.S.A.): A medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan. The funds contributed to the account aren't subject to federal income tax at the time of deposit. Funds must be used to pay for qualified medical expenses. Unlike a Flexible Spending Account (FSA), funds roll over year to year if you don't spend them.
High Deductible Health Plan (HDHP): A plan that features higher deductibles than traditional insurance plans. High deductible health plans (HDHPs) can be combined with a health savings account or a health reimbursement arrangement to allow you to pay for qualified out-of-pocket medical expenses on a pre-tax basis.
HMO (Health Maintenance Organization): Under an HMO plan, all access to specialists and hospitalization must be determined through the members Primary Care Physician. HMO plans typically enable members to have lower out-of-pocket healthcare expenses. You may not be required to pay a deductible before coverage starts and your co-payments will likely be minimal. You also typically won't have to submit any of your own claims to the insurance company.
In-Network: A group of doctors, hospitals, pharmacies and other health care providers who participate in a network and agree to charge discounted rates to members who use the network.
Individual Health Insurance Policy: Policies for people that aren't connected to job-based coverage. Individual health insurance policies are regulated under state law
Inpatient Hospital Care: A hospital stay (usually 24 hours or more) for which a room and board charge is made by the hospital.
Independent Physician Association (IPA): An Independent Physician Association (IPA) is a legal entity organized and directed by physicians in private practice to negotiate contracts with insurance companies on their behalf.
Lifetime limit: A cap on the total lifetime benefits you may get from your insurance company. An insurance company may impose 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.
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
Minimum Value: Employer sponsored insurance is considered to be of minimum value if it is designed to pay at least 60% of the total cost of medical services for a standard population. Starting in 2014, individuals offered employer-sponsored coverage that provides minimum value and that’s affordable won’t be eligible for a premium tax credit.
Network: The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.
Nondiscrimination: Under the ACA, nondiscrimination rules prohibit businesses from contributing more to premiums for certain highly compensated employees.
Out-of-pocket maximum (OOP): Out-of-pocket is the most you pay during a policy period (usually calendar year) before your health insurance or plan starts to pay 100% for covered services. This limit must include deductibles, coinsurance, copayments, or similar charges and any other expenditure required of an individual which is a qualified medical expense for the essential health benefits. This limit does not have to count premiums, balance billing amounts for non-network providers and other out-of-network cost-sharing, or spending for non-essential health benefits.
The maximum out-of-pocket cost limit for any individual Marketplace plan for 2014 can be no more than $6,350 for an individual plan and $12,700 for a family plan.
Outpatient Hospital Care: A hospital stay (usually less than 24 hours) for which no room and board charge is made by the hospital.
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. This can also be referred to as 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.
Preferred Provider Organization (PPO): Types of health plans that contract with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
Preventive Care: Preventive Care services may include routine physical examinations, eligible screenings and tests. Eligible services are paid at 100% of the allowed amount.
Primary Care Physician: A physician who provides a wide range of medical services and refers patients to specialists, hospitals, etc. They serve as first point of contact for patient. Usually a PCP is a general or family practitioner, internist, or pediatrician.
Primary Medical Group (PMG): All doctors participating at same location.
Qualifying Event: Events (such as marriage, divorce, childbirth or change in job status) that qualify you to change your level of medical coverage during the year without waiting until annual enrollment.
Rehabilitative Services: Health care services that help you keep, get back, or improve skills and functioning for daily living that have been lost or impaired because you were 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.
Referral: A written order from your primary care doctor for you to see a specialist or get certain medical services. In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don’t get a referral first, the plan may not pay for the services
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.
Summary of Benefits and Coverage (SBC): An easy-to-read summary that lets you make apples-to-apples comparisons of costs and coverage between health plans. You can compare options based on price, benefits, and other features that may be important to you. You'll get the "Summary of Benefits and Coverage" (SBC) when you shop for coverage on your own or through your job, renew or change coverage, or request an SBC from the health insurance company.
UCR: 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.
Urgent Care: 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. Urgent care facilities may be less costly than emergency rooms and can provide the care you need.