Actuary: A mathematician in the insurance field. An actuary is responsible for calculating premiums and defining underwriting risk.

Brand name drug: Prescription drug, which is marketed with a specific brand name by the company that manufactures it. It usually costs individuals higher co-pay than generic drugs.

Broker: A licensed insurance professional who obtains multiple quotes and plan information in the interest of his client. Client's advocate.

Carrier: Insurance Company or HMO insuring the health plan.

COBRA: The Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA, requires group health plans with 20 or more employees to offer continued health coverage for you and your dependents for 18 months after you leave your job. Longer durations of continuance are available under certain circumstances. If you opt to continue coverage, you must pay the entire premium, plus a two percent administration charge. For more information see COBRA FAQ .

Co-insurance: The amount you are required to pay for medical care after you have met your deductible. The coinsurance rate is usually expressed as a percentage. For example, if the insurance company pays 80 percent of the claim, you pay 20 percent. Coordination of Benefits: A system to eliminate duplication of benefits when you are covered under more than one group plan. Benefits under the two plans usually are limited to no more than 100 percent of the claim.

Co-Pay / Co-Payment: Another way of sharing medical costs. You pay a flat fee every time you receive a medical service (for example, $20 for every visit to the doctor). The insurance company pays the rest. This benefit is usually available without having to satisfy the plan deductible.

Covered Expenses: Most insurance plans, whether they are fee-for-service, HMOs, or PPOs, do not pay for all services. Some may not pay for prescription drugs. Others may not pay for mental health care. Covered services are those medical procedures the insurer agrees to pay for. They are listed in the policy.

Deductible: The amount of money you must pay each year to cover your medical care expenses before the plan begins paying co-insurance benefits. Co-pays benefits are usually payable before satisfying the plan deductible.

Exclusions: Specific conditions or circumstances for which the policy will not provide benefits. These will be listed in the sales brochure and policy.

Explanation of Benefits - EOB: A carrier's written response to a claim for benefits. Sometimes accompanied by a benefits check.

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 lower co-pay.

HIPAA: The Health Insurance Portability and Accountability Act (HIPAA) provides rights and protections for participants and beneficiaries in group health plans. HIPAA includes protections for coverage under group health plans that limit exclusions for preexisting conditions; prohibit discrimination against employees and dependents based on their health status. HIPAA may also give you a right to purchase individual coverage if you have exhausted COBRA or other continuation coverage. For more information, see HIPAA FAQ .

HMO: Prepaid health plans in which you pay a monthly premium and the HMO covers your doctors' visits, hospital stays, emergency care, surgery, preventive care, checkups, lab tests, X-rays, and therapy. You must choose a primary care physician (PCP) who coordinates all of your care and makes referrals to any specialists you might need. In an HMO, you must use the doctors, hospitals and clinics that are in your plan's network. No benefits are paid for care received outside of the HMO network.

ID card/identification card: Card given to insured individuals, which advises medical providers that a patient is covered by a particular health insurance plan.

Lifetime Maximum Benefit: cap on the benefits paid by the insurance company under a policy. Many policies have a lifetime limit of $1 million, which means that the insurer agrees to cover up to $1 million in covered services over the life of the policy.

Risk: Uncertainty of financial loss.

Managed Care: The coordination of health care services to produce high quality health care for the lowest possible cost. Examples are the use of primary care physicians (PCP) as gatekeepers in HMO plans and pre-certification of hospital stays and certain surgical procedures in most all plans. All HMOs and PPOs today, have some form of managed care.


Maximum Out-of-Pocket: The most money you will be required pay a year for deductibles and coinsurance. It is a stated dollar amount set by the insurance company. Co-pays for Dr. office visits and prescriptions are in addition to this maximum amount.

Medical Savings Account - MSA: A tax-advantaged personal savings account used along with a high deductible health policy. You may deposit money into this account on a pre-tax basis to set aside money for medical care and expenses that qualify, including annual deductibles and co-payments.

Network: A group of doctors, hospitals and other healthy care providers contracted to provide services to an insurance company's members at discounted fees. Provider networks can cover large geographic markets and/or a wide range of health care services. In most all health plans, members typically receive a higher benefit level for using a network provider.

Non-cancellable Policy: A policy that guarantees you can keep your insurance, as long as you pay the premium. It is also called a guaranteed renewable policy.

Out-of-Network: Any provider of health care services that is not part of a health plan's network. Individuals usually receive a lower benefit level when using an out-of-network provider.

Out-of-Pocket Maximum: The most money you will pay in a year for deductibles and co-insurance. Co-pays for Dr. office visits and prescriptions are in addition to this maximum amount.

PPO (Preferred Provider Organization): A network of health care providers with which a health insurer has negotiated contracts for its insured population to receive health services at discounted costs. Health care decisions generally remain with the patient as he or she selects providers and determines his or her own need for services. Patients have financial incentives to select providers within the PPO network.

Pre-certification: Insurance companies require pre-approval of non-emergency hospital admission and certain surgical procedures to verify necessity and appropriateness. Pre-certification is a part of all health plans today.

Pre-existing Conditions: A health problem that existed before the date your insurance became effective. The specific definition and waiting period varies with each individual insurance company.

Premium: The amount you pay for insurance coverage.

Primary Care Physician - PCP: In an HMO plan, usually your first contact for health care. This is often a family physician or internist. A primary care doctor monitors your health, diagnoses and treats minor health problems, and refers you to specialists if another level of care is needed.

Provider: Any physicians, hospitals or outpatient facility providing health care services. Usually licensed by the state.

Third-Party Payer: Any payer for health care services other than you. This can be an insurance company, an HMO, a PPO, or the Federal Government.

Referral: In HMO plans - the insured individual must get an approval (referral) from their Primary Care Physician (PCP) in order to be seen by a specialist within the HMO.

Short-Term Medical Plan: Temporary health coverage for an individual for a short period of time, usually from 30 days to six months.

State mandated benefits: State laws requiring that health insurance plans include specific benefits.

Stop-loss: The point at which an individual has reached their maximum out-of-pocket limit of their plan. This is when the insurance company begins to pay eligible expenses at 100%.

Underwriter: Insurance company employee, who reviews applications, evaluates risk and makes decision to approve or decline coverage.

Waiver: If an individual has a specific pre-existing condition when applying for new coverage, sometimes the Insurance Company may offer to issue a policy, but exclude coverage for that condition for a period of time.

Worker's Compensation: Insurance coverage for work-related illness and injury. All states require employers to carry this insurance.

In-Network: Describes a provider or health care facility, which is part of a health plan's network. Individuals usually pay less when using an in-network provider.

Limitations: The insurance company's restrictions on the amount of benefits paid out for in certain situations. These will be listed in the sales brochure and policy.

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