Common Health Insurance Terms
For most of us, reading a health insurance policy can be like trying to read a menu in a French restaurant-nearly impossible! With so many different terms, which mean so many different things, the following glossary may be a big help in reading and understanding your health insurance policy.
Accidental Death and Dismemberment
Either a provision in a policy, or a policy in itself, which provides for payment of disability benefits if the insured dies or loses an eye or a limb. If more than one eye or limb is lost, the benefits increase. The disability payments may be made either in a specified amount or in multiple set weekly benefit amounts.
Accidental Death Benefit
A benefit which may be payable in the event of death resulting from an accident. The benefit is usually equal to the face value of the contract or principal sum, and is payable in addition to other benefits which may be received.
The actual amount charged by a physician or medical care provider for services provided to a patient.
Medically necessary care provided by medical personnel in order to restore a person to good health.
The number of admissions to a hospital, whether it be for outpatient or inpatient care.
Patient services, developed on a case-by-case basis, which are required after hospitalization or rehabilitation.
Age Change Date
The date on which a person’s age changes for insurance purposes. In health insurance a person’s age change date will affect the cost of their insurance.
Medical care that does not require hospitalization. Similar to outpatient medical treatment. Ambulatory care is provided at surgery centers, clinics, or other facilities that provide medical care on an outpatient basis.
Additional services provided for a fee during hospital stays, other than room and board charges. Ancillary services may include additional services such as x-rays, anesthesia, and lab work.
Benefits under a policy provided to cover miscellaneous hospital charges.
Approved Health Care Facility
A health-care facility that has been specifically approved by a health care plan in its policy or contract.
Authorization to pay Medicare of other health-care benefits directly to a provider, rather than sending them through the patient first. Medicare benefits can only be assigned to participating providers.
Basic Hospital Expense Insurance
Insurance coverage that provides benefits for hospital room and board, in addition to other miscellaneous hospital expenses, for a specified number of days.
A description of the overall benefits the insurer or health plan offers to those covered under the terms of a contract for health insurance.
An insurance situation in which covered insureds must select one primary care physician to provide their initial services. That primary care physician then becomes the only physician who may refer the insured to other health care providers within the plan. This system may also be referred to as a “closed panel” or a “gatekeeper model.”
A provision in many health insurance policies stating that the insured and the insurer will cover all losses under the policy in an agreed-upon proportion. For example, a plan with a 70-30 coinsurance clause would require that the insurer pay 70% of any loss and the insured would pay the remaining 30% of the loss.
Comprehensive Major Medical
An insurance plan that is a combination of basic coverage and major medical coverage. Usually, comprehensive major medical coverage has a low deductible, high maximum benefits, and a coinsurance clause.
Short for the Consolidated Omnibus Budget Reconciliation Act of 1986. COBRA is federal legislation that provides for a continuation of health care benefits under a group plan for a specified period of time when coverage would otherwise end due to, for example, a termination of employment.
A preset arrangement in a health insurance policy whereby the insured agrees to pay a set dollar amount for medical services that are received, such as prescriptions, and the insurer pays the remainder.
A procedure that seeks to improve a person’s physical appearance, but which is not medically necessary to preserve life or health.
Health care expenses that are incurred by an insured or a covered person and that qualify for reimbursement under the terms of the policy or health care contract.
A person who pays premiums for the benefits provided and who also meets the eligibility requirements for coverage under the plan.
Insurance coverage provided on the head of a family that is also extended to the spouse and to unmarried children, whether natural, adopted, foster, or step, who are not employed on a full-time basis or who fall within the age group acceptable under the policy.
The process by which medical providers identify a disease or illness.
Disability Benefits Law
A state law requiring an employer to provide disability benefits to covered employees for non work-related injuries. Disability benefits laws exist in only a very limited number of states.
Disability Income Insurance
A type of health insurance which provides for the periodic payment of benefits to replace income when the insured party is unable to work as a result of a sickness, injury, or disease.
Dread Disease Policy
A type of health insurance that provides coverage for all types of medical expenses arising out of diseases named within the contract. For example, a dread disease policy may cover multiple sclerosis, spinal meningitis, or tetanus among others.
Duplication of Benefits
A situation in which identical or overlapping coverage exists under more than one policy provided by more than one insurance company or health care coverage service organization.
The date on which a person becomes eligible for benefits.
The period of time in which potential members of a group life or health program may enroll without providing evidence of insurability. Under a major medical policy, the eligibility period might be the period of time during which reimbursable expenses may be accrued.
A dependent of an insured person who is eligible for coverage according to the terms and requirements of the plan.
Emergency Accident Benefit
A type of group medical benefit that reimburses the insured for the expenses incurred in obtaining emergency treatment for accidents.
Employee Certificate of Insurance
Written evidence provided to employees of their participation in a group insurance plan. Each employee is given a certificate of insurance, rather than the actual insurance policy.
That portion of the cost of a health insurance plan that is paid by the employee.
The portion of the cost of a health insurance plan that is paid by the employer.
The medical examination that an applicant for health insurance may be required to undergo before coverage is provided.
Explanation of Benefits
A statement sent to a participant in a health insurance plan that lists the medical services provided, the amounts paid by the plan, and the total amount that is being billed to the participant.
Flexible Benefit Plan
A type of benefit plan wherein the covered employees can tailor the benefits to meet their own individual needs or the needs of their respective families.
A generic, inclusive term for insurance provided to cover losses caused by sickness or bodily injury.
Short for Health Maintenance Organization. An HMO is a prepaid medical service plan that provides medical services to plan members. Medical providers contract with the HMO to provide medical services to plan members. Plan members may only receive medical care from contracted providers.
Hospital Income Insurance
A type of health insurance that provides a stated periodic payment while the insured is hospitalized, regardless of the expenses which are incurred or whether other insurance is in effect.
Hospitalization Expense Policy
A type of health insurance that provides payment for hospital room and board charges, and also covers ancillary hospital expenses such as x-ray and laboratory charges. A hospitalization expense policy may also provide coverage for emergency treatment charges or surgical expenses.
A type of health insurance that provides reimbursement, within specific contractual limits, for hospital and specific related expenses arising from hospitalization caused by injury or illness.
Injuries that are not accidental but which are instead caused on purpose or with intent. An intentional injury may be excluded from coverage under some types of health insurance policies. For example, an accident insurance policy will likely not cover intentional injuries because they are not “accidental.”
Long-Term Disability Insurance
A type of group or individual health insurance policy which provides coverage for a period of time longer than a “short-term.” Often, a long-term policy will provide coverage for a person suffering from illness until they reach the age of sixty-five or, in the case of an accident, for the rest of the person’s life.
Benefits payable for an inability to work due to illness, disease, or injury.
Major Medical Insurance
A type of health insurance that provides benefits up to a certain limit for most types of medical expenses incurred. Usually, a major medical insurance policy carries with it a high deductible. It may also be referred to as a Major Hospitalization Policy.
A system of health care wherein the stated goal is the delivery of cost-effective health care through the monitoring and recommendation of services.
Anyone covered under a health care plan, whether an enrollee or an eligible dependent of an enrollee.
Non-duplication of Benefits
A provision in some types of health insurance polices which specifies that the insurer will not pay benefits for any amount that is reimbursed by others. In group insurance, this may be referred to as coordination of benefits.
The amount that covered persons under a health insurance policy must pay, themselves, for their medical care and treatment. An out-of-pocket cost may include such things as coinsurance, copays, or deductibles.
Health insurance that is issued at ages above the usual limit, which is generally sixty-five.
A drug that can be purchased without a prescription.
Place of Service
The actual location where health services are being provided.
A physical condition that existed prior to the effective date of the policy.
A drug that can only be dispensed by prescription. Prescription medication must be approved by the Food and Drug Administration.
Medical care that emphasizes preventing illnesses before they occur.
Basic health care provided by doctors who are in the practice of family care, pediatrics, and internal medicine.
Primary Care Network
A group of primary care physicians who provide care to members of a particular health care plan.
Insurance coverage that pays expenses first, without consideration of whether there is any other coverage.
The person or medical service provider to whom a participating provider has referred a member of a health care plan.
Medical services that are provided by physicians who do not have the initial contact with the patient.
Coverage that provides payment for medical service charges that are not covered by the primary policy or plan.
Short-Term Disability Income Policy
A type of disability income policy that provides benefits payable for “short-term” disabilities, or those usually lasting less than two years.
A type of health insurance that provides coverage for losses caused by illness or disease, but does not cover accidental bodily injury.
The period of time between the beginning of a disability and the start of disability insurance benefits. This may also be referred to as the elimination period.