Basic Insurance Terms

Actual Charge – The amount a doctor or other health care provider actually bills a patient. You often see the phrase, "The actual charge may be different from the allowable charge." This means your health plan may only cover a portion of what your doctor charges you. For example, your doctor bills you $35.00 for an office visit. This is the actual charge. But your health plan may only accept $32.00 for an office visit. This is the allowable charge.

Allowable Charge – The most your health plan will pay for a covered service. You may see the phrase, "The actual charge may be different from the allowable charge." This means your health plan may only cover a portion of what your doctor charges you. For example, your doctor bills you $35.00 for an office visit. This is the actual charge. But your health plan may only accept $32.00 for an office visit. This is the allowable charge.

Approval – The process of deciding whether or not a person's health plan will cover a specific service. Check your health plan carefully. You may find certain procedures, like surgery, require pre-approval. This means you need to check with your health plan to see if it will cover the service before you receive it. This simple approval process could save you money!

Approved Amount – The amount your health plan says is reasonable for a covered service. This amount may be less than the actual amount. For example, your health plan may cover $29.00 for a doctor's office visit, even though your doctor may charge you $32.00 for that visit. The $29.00 is the approved amount.

Assignment –

1. When you authorize your health plan to pay benefits to your health care provider instead of sending payment to you. Are you covered by our plan? If you are, your benefits are automatically paid (assigned) to our network providers.
2. An agreement between the Medicare program and health care providers. Providers have the right to choose whether or not they want to accept assignment. When they do, it means they agree to accept Medicare's approved amount for covered services as payment in full. For example, if Medicare will pay $30.00 for a doctor's office visit, then that's what the doctor will accept. He or she won't charge you any more than the $30.00. Doctors and suppliers who do not accept assignment may charge more than Medicare's approved amount, but the law limits them as to how much more they can charge.

Beneficiary – A person who will receive insurance benefits.

Benefit – Services and supplies a health plan pays for. The term also refers to the amount a health plan will pay.

Benefit Period – The period of time a health plan will pay for covered benefits. Benefit periods are usually one year. They don't always reflect a calendar year, so be sure and check your policy. This is also a Medicare term, with a more specific definition. A Medicare benefit period covers 90 days. It begins the first day you receive inpatient hospital services that Medicare covers. The services also can be from a skilled nursing facility. It ends when you have been out of the hospital or skilled nursing facility for 60 days. A new benefit period begins the next time you get inpatient hospital care. There is no limit to the number of benefit periods you can have.

Cafeteria Plan – A health plan in which all employees may choose among two or more benefit options. This is also called a flexible benefits plan.

Case Management – A service offered by your health plan and/or insurance company. Under case management, you will have a special nurse assigned to assist with the organization of your care. This nurse will work with your doctor, your family and you to help you get the most out of your health plan benefits.

Catastrophic Coverage – A type of health insurance providing coverage for a severe or prolonged illness usually considered to be life threatening or with the threat of serious disability. Treatment of catastrophic conditions may be very involved and is frequently costly. This type of coverage usually has higher deductibles and cost less than other types of coverage.

Coinsurance – The dollar amount or percentage you pay. For example, if you have an "80/20 plan," your health plan would pay 80 percent of the bill and you would pay 20 percent. The 20 percent you pay is your coinsurance.

Comprehensive Coverage – A type of health insurance that covers a full range of personal health services for diagnosis, treatment, follow-up and rehabilitation of patients. This type of coverage usually has deductibles, coinsurance and benefit maximums.

Copayment – A small fee you pay for each doctor's office visit, medical service or prescription. For example, your health plan may have a $10 copayment for doctor's office visits. This means every time you visit your doctor, you pay just $10.

Cost Sharing – A method of dividing the cost of health care among customers, insurance companies, employers and providers. For example, your employer may pay part of the premiums for your insurance. Your health plan will pay part of your health care bills, and you will pay part. If your doctor is part of your health plan's network, then he or she will cover part of the cost by negotiating a discount for his or her services. Everyone shares in the cost to keep costs down.

Covered Service – Specific services your health plan will pay for.

Deductible – The amount of money you must pay before your health plan will pay its share. For example, if you have a health plan with a $250 deductible, you must reach that amount before your health plan begins paying.

Disease Management – Voluntary programs that give you the information and support you need to live well with chronic conditions. These programs help you understand your doctors' instructions and improve the way you care for yourself every day.

DMERC – Durable Medicare Equipment Regional Carrier.

Emergency Medical Condition – A severe injury or illness (including pain). Your illness or injury must be so severe that if you don't get medical care right away, one of these might occur:

• Serious risk to your health. If you're pregnant, this includes your health and your unborn child's health.
• Serious damage to body functions. Serious damage to any organs or body parts.

Exclusion – Services or items your health plan doesn't cover.

Fee for Service – This is "traditional" insurance. You pay doctors and hospitals for each service you receive. Your health plan will pay a portion of the total cost.

Flexible Benefits Plan – A health plan in which all employees may choose among two or more benefit options. Also called a cafeteria plan.

Fraud – A deception that could result in your health plan paying for something it shouldn't. For example, if your doctor files a claim for a service you didn't receive, this is fraud.

Health Savings Account (HSA) – A Health Savings Account (HSA) is an account you set up to pay for qualified out-of-pocket medical expenses. You set aside money in your HSA with tax-deductible contributions. High deductible health plans are used with HSAs. The health plan covers major medical expenses and routine expenses after you meet your deductible.

High Deductible Health Plan (HDHP) – A Health Savings Account (HSA) is an account you set up to pay for qualified out-of-pocket medical expenses. You set aside money in your HSA with tax-deductible contributions. High deductible health plans are used with HSAs. The health plan covers major medical expenses and routine expenses after you meet your deductible.

Home Health Agency (HHA) – A facility that offers skilled nursing care and other services to patients in their homes. These include occupational, physical and speech therapies, medical social services and home health aide services. For example, your Aunt Lily has a stroke and has trouble speaking. She's not hurt enough to stay in a hospital, but needs some help learning to talk clearly again. A home health agency assigns a speech therapist to visit Aunt Lily at home and work with her.

Hospice – An organization that helps dying patients and their families. Hospice programs help patients spend their last months at home instead of in a hospital or nursing home. Staff members help relieve pain, manage symptoms and offer counseling to patients and their families.

Immunosuppressive Drugs – Medicine that people who have received organ transplants must take to help prevent their bodies from rejecting the new organs.

Inpatient – A patient who is staying in the hospital and receiving room, board and general nursing care. For example, you need to have surgery so your doctor admits you to the hospital and you stay there for several days. You're getting inpatient care.

Lifetime Reserve Days – This is a Medicare term for the 91st to 150th day of a hospital stay. If you have Medicare coverage, you only have 60 lifetime reserve days. You can use them whenever you want, but you can't renew them.

Managed Care – An evolving health care process that integrates the delivery of health care services for the patient, doctor and insurance company/health plan through the use of special arrangements with selected health care providers to deliver comprehensive health care services, established fees for health care services, established incentives for members to participate within the health care plan and monitoring of the use of health care services.

Medicare Supplement Policy – A health plan for people with Medicare coverage, also known as a "Medigap" plan. Medicare doesn't cover everything. So many folks buy a Medicare supplement policy to help cover their health care bills. There are 10 standardized plans to choose from. This means that all companies can only offer the same policies, "A" through "J." "A" is the most basic plan, while "J" covers more services.

Out-of-pocket Maximum – Your share of medical expenses which are covered by this insurance plan is called coinsurance. Your out-of-pocket maximum is the highest total amount of coinsurance you will have to pay during a benefit period.

Outpatient – A patient who gets treatment at a hospital but doesn't stay there. For example, you go to the hospital in the morning for minor surgery. As soon as you wake up from the anesthesia, the doctor sends you home to recover. This is outpatient care because you didn't need to stay in the hospital. There may be some cases when you spend the night in a hospital, but still are considered an outpatient. It's always best to ask your doctor if you're getting outpatient or inpatient care, because your health plan may pay differently for each.

Pre-existing Condition – An injury or illness you had before you signed up for your current health plan for which you received a diagnosis or treatment. Many health plans do not cover pre-existing conditions. Or, they have a waiting period before you can get benefits for them. For example, you hurt your knee playing football a couple years ago and had to have surgery. When you sign up for a new health plan, you'll have to list your knee injury as a pre-existing condition.

Primary Care Physician – A doctor who treats common illnesses and injuries. If you sign up for HMO coverage, you will need to choose a primary care physician. This doctor will coordinate all your medical care. Everyone in your family doesn't have to have the same doctor. For example, you can choose a family doctor for yourself and a different one for your children. Your doctor, your HMO and you form a team. You'll work together to find the right care to help you get healthy and stay well. Primary care physicians can be in family practice, pediatrics, general practice and internal medicine.

Referral – A referral is consent from your primary care physician to see a specialist for an illness or injury. You may also need a referral to have special treatments, such as x-rays or surgery. A referral saves you money by reducing unnecessary medical costs. Your primary care physician will decide if you need to see a specialist. He or she will help you choose a specialist that is right for you.

Specialist – A specialist is a doctor who treats certain illnesses or injuries. For example, a surgeon is a specialist. A doctor who treats allergies or heart problems is also a specialist. You need a referral from your primary care physician to visit a specialist.