Health Insurance Terms
With the open enrollment period quickly approaching, we thought we would give you some terms that you may hear.
Actuary – a mathematician for the insurance field. Accountable for calculating premiums, developing plans and defining underwriting risk.
Agent – a licensed individual who represents and sells plans for many different insurance carriers.
Benefit – reimbursement for medical expenses covered by the plan.
Brand-name drug – prescription drug which is marketed with a specific brand name by the company. May cost insured individuals more than generic drugs on some health plans. (see “generic.”)
Broker – a licensed insurance professional who attains and reviews multiple quotes and plan information in the interest of his client.
Carrier – insurance company that insuring the health plan and therefore the individual.
Certificate Booklet – the insurance 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 known as a policy booklet.
Claim – a formal request made by the insured person asking for the benefits that their plan allows.
COBRA (Consolidated Omnibus Budget Reconciliation Act) – Federal law that requires group health plans to provide health plan members the opportunity to purchase continued coverage if 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.
Co-Insurance – the percentage of covered expenses an insured individual shares with the insurance carrier. (i.e., for an 70/30 plan, the health plan member’s co-insurance is 30%.) If applicable, co-insurance applies once the insured has payed 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 $25 co-pay for each doctor’s office visit and a $50 co-pay for a specialist 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 amount an insured individual must pay for covered expenses during one calendar year before the plan begins paying the co-insurance benefits specific to the plan.
Dependents – usually the spouse and unmarried children (adopted, step or natural) of an individual.
Effective date – the date that the insurance plan begins.
Exclusions – expenses that are not covered under an insurance plan. These are listed in the Certificate Booklet/Policy Booklet.
Explanation of Benefits (EOB) – a carrier’s response to a claim for benefits. This written response is sometimes accompanied by a benefits check.
Generic drug chemically equivalent to a “brand name drug.” These drugs cost less, and the savings is passed onto the insured in the form of a lower co-pay.
Group insurance – an insurance policy created by an employer or other entity that covers individuals in the group.
Health Maintenance Organization (HMO) – HMOs are licensed by the state to provide care for enrollees by contracting with specific health care providers to provide identified benefits. Many HMOs require enrollees to see a particular primary care physician (PCP) who will refer them to a specialist if necessary. ***
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), as well as individual health policies. The goal 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
- To streamline the administration of health insurance
- Learn more about HIPAA at the Department of Labor’s website.
Pe-certification – an insurance company requirement that an insured person obtain pre-approval before being admitted to a hospital or receiving certain types of treatment.