Health Care Terms

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Health Care Terms

While all healthcare plans are designed different from the next, many work in similar ways.

The following definitions are provided so you may have a better understanding of your benefits.

Please see your group’s Plan Document for detailed information regarding your benefits or contact our office.

Please contact us if you have any questions.

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Coinsurance			A form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any, has been paid.
Copayment			A form of medical cost sharing in a health insurance plan that requires an insured person to pay a fixed dollar amount when a medical service is received. There may be separate copayments for different services.
Deductible			A fixed dollar amount during the benefit period – usually twelve (12) months – that an insured person pays before the insurer starts to make payments for covered medical services. Plans may have both per individual and family deductibles.
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.
Preferred Provider Organization (PPO)			An indemnity plan where coverage is provided to participants through a network of selected health care providers (such as hospitals and physicians). The enrollees may go outside the network, but would incur larger costs in the form of higher deductibles, higher coinsurance rates, or non-discounted charges from the provider.
Health Maintenance Organization (HMO)			A health care system that assumes both the financial risk associated with providing comprehensive medical services (insurance and service risk) and the responsibility for health care delivery in a particular geographic area to HMO members, usually in return for a fixed, prepaid fee. Financial risk may be shared with the provider participating in the HMO.
Managed Care Provisions			Features within health plans that provide insurers with a way to manage the cost, use and quality of health care services received by group members. Examples of managed care provisions include: Preadmission Certification (Pre-Cert) – An authorization for hospital admission given by a health care provider to a group member prior to their hospitalization. Failure to obtain a preadmission certification in non-emergency situations reduces or eliminates the health care provider’s obligation to pay for services rendered. Utilization Review – The process of reviewing the appropriateness and quality of care provided to patients. Utilization review may take place before, during, or after the services are rendered. Preadmission Testing – A required designed to encourage patients to obtain necessary diagnostic services on an outpatient basis prior to non-emergency hospital admission. The testing is designed to reduce the length of a hospital stay. Non-emergency Weekend Admission Restriction – A requirement that imposes limits on reimbursement to patients for non-emergency weekend hospital admissions. Second Surgical Opinion – A cost-management strategy that encourages or requires patients to obtain the opinion of another doctor after a physician has recommended that a non-emergency or elective surgery be preformed. Programs may be voluntary or mandatory in that reimbursement is reduced or denied if the participant does not obtain the second opinion. Plans usually require that such opinions be obtained from board-certified specialists with no personal or financial interest in the outcome.
Maximum Plan Dollar Limit			The maximum amount payable by the insurer for covered expenses for the insured and each covered dependent while covered under the health plan. Healthcare Reform has removed this cap over a period of time beginning 01/01/2011. See your plan administrator for details on how this affects you and your covered dependents.
Maximum Out-of-Pocket Expense			The maximum dollar amount a group member is required to pay out of pocket during a year. Until this maximum is met, the plan and group member shares in the cost of covered expenses. After the maximum is reached, the insurance carrier pays all covered expenses for services covered under the plan. Some plans have separate Maximum Out-of-Pocket Expenses for services provided under both In-Network providers and Out-of-Network providers.
Premium			Agreed upon fees paid for coverage of medical benefits for a defined period. Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor.
Premium Equivalent			For self-insured plans, the cost per covered employee, or the amount the firm would expect to reflect the cost of claims paid, administrative costs, and stop-loss premiums.
Primary Care Physician (PCP)			A physician who services as a group member’s primary contact within the health plan. In a managed care plan, the primary care physician provides basic medical services, coordinates and, if required by the plan, authorizes referrals to specialists and hospitals.
Reinsurance			The acceptance by one or more insurers, called reinsurers or assuming companies, of a portion of the risk underwritten by another insurer that has contracted with an employer for the entire coverage.
Self-Insured Plan			A plan offered by employers who directly assume the major cost of health insurance for their employees. Some self-insured plans bear the entire risk. Other self-insured employers insure against large claims by purchasing stop-loss coverage. Some self-insured employers contract with insurance carriers or third party administrators (TPA) for claims processing and other administrative services; other self-insured plans are self-administered. Minimum Premium Plans (MPP) are included in the self-insured health plan category. All types of plans (Conventional Indemnity, PPO, EPO, HMO, POS, and PHOs) can be financed on a self-insured basis. Employers may offer both self-insured and fully insured plans to their employees.
Stop-Loss Coverage			A form of reinsurance for self-insured employers that limits the amount the employers will have to pay for each person’s health care (individual limit) or for the total expenses of the employer (group limit).
Third Party Administrator (TPA)			An individual or firm hired by an employer to handle claims processing, pay providers, and manage other functions related to the operation of health insurance. The TPA is not the policyholder or the insurer.
Types of Health Care Provider Arrangements			Exclusive Providers – Enrollees must go to providers associated with the plan for all non-emergency care in order for the costs to be covered. Any Providers – Enrollees may go to providers of their choice with no cost incentives to use a particular subset of providers Mixture of Providers – Enrollees may go to any provider but there is a cost incentive to use a particular subset of providers.
Usual, Customary, & Reasonable (UCR) Charges			Conventional indemnity plans operate based on usual, customary, and reasonable (UCR) charges. UCR charges mean that the charge is the provider’s usual fee for a service that does not exceed the customary fee in that geographic area, and is reasonable based on the circumstances. Instead of UCR charges, PPO plans often operate based on a negotiated (fixed) schedule of fees that recognize charges for covered services up to a negotiated fixed dollar amount.