Benefits Glossary

Accountable Care Organization (ACO)

A network of doctors and hospitals that provide coordinated patient care.

Aggregate Stop Loss

A form of reinsurance used in self-funded groups. Provides a ceiling for overall claims liability and protects against higher than predicted usage or frequency of claims from the entire group.

Ambulatory Care

Medical care provided on an outpatient basis, for example, same day surgeries.

Authorization

The process of getting a medical procedure or medication approved by the healthcare reimbursement source.

Balance Billing

When a provider charges you the difference between what the patient’s health insurance chooses to reimburse and what the provider chooses to charge.

Cafeteria Plan

A corporate benefits plan which allow employees to select among two or more benefits that consist of cash and certain qualified benefits. This reimbursement plan is governed by IRS Section 125.

Catastrophic Coverage

A type of health plan under the Affordable Care Act. This is a high Deductible plan for individuals under 30 years old or for those who qualify for a “hardship exemption.”

Certificate of Insurance (COI)

The document received from the insurance company that verifies insurance coverage for a business.

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

Insurance program that allows employees to continue the medical coverage that they received from the employer for a certain period of time under specific circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.

In order for the individual to continue coverage they must pay the entire premium. COBRA applies to groups of 20 or more individuals.

Coinsurance

A health care cost sharing between you and your insurance company. For example, if your coinsurance is 80/20, the plan pays 80% while you pay 20%. Cost sharing between you and the plan stops when you hit the out-of-pocket maximum (See out-of-pocket maximum for more).

Copayment (copay)

Fixed amount for a covered service, paid by a patient to the provider of service before receiving the service. The copay may vary for in-network vs out-of-network care.

Coordination of Benefits (COB)

A process that takes place if an individual has more than one health plan. The process determines which of two or more insurance policies will have the primary responsibility of processing/paying a claim and the extent to which the other policies will contribute.

Current Procedural Terminology (CPT) Code

Language used by healthcare professionals to describe the task and/or service given to a patient including medical, surgical, and diagnostic services. These codes are then used by insurers to determine the amount of reimbursement that a practitioner will receive by an insurer for that service. The same codes are used by everyone to create consistency.

Deductible

The amount of money you pay each calendar year before the plan begins to pay coinsurance.

Disease Management

Coordination of care for individuals with chronic conditions with an effort to better manage their chronic disease and to maintain and improve quality of life.

Effective Date

The date on which an employee’s coverage is officially active. The date is dependent on the provisions defined in the Certificate of Insurance.

Eligibility Date

The date that the individual and the dependents are able to begin receiving benefits.

Employer Mandate

As directed by the healthcare reform law, starting in 2015 employers with 50 or more full time employees must offer healthcare benefits or pay a penalty. As defined by this law, full time employees are defined as working 30 hours per week, averaged over the course of a month, rather than the traditional definition of 40 hours per week.

Enrollee

A person who is enrolled in a benefit plan. They may also be referred to as members.

Essential Health Benefits

The 10 essential benefits that must be included in a Qualified Health Plan (QHP). These 10 benefits are Preventative and wellness visits, maternity and newborn care, mental and behavior health treatment, rehabilitative and habilitative services, emergency room services, hospitalization, lab test, prescription drugs, pediatric care and outpatient care. This ACA mandate applied to all plans created after March 23, 2010.

Evidence of Coverage (EOC)

A document that describes a subscriber’s coverage under a health plan.

Evidence of insurability (EOI)

An application process in which you provide information on the condition of your health or your dependent’s health in order to be considered for certain types of insurance coverage. This process is most common for life insurance.

Excluded Services

Services that the health insurance does not pay for or cover.

Exclusive Provider Organization

Health insurance plan that combines aspects of an HMO and PPO plan. It does not require a PCP (like a PPO), however there is no out-of-network coverage (like an HMO).

Explanation of Benefits (EOB)

A statement sent to the insured by the insurance company providing explanation of what services were performed by a healthcare provider and that they are requesting payment for.

Fee-for-Service

A payment model that is based on charges for each individual service or treatment rendered.

Flexible Spending Account (FSA)

A tax-advantageous account that allows employees to put money aside for out-of-pocket health care costs. Money that is contributed to the FSA is not subject to payroll taxes.

Formulary

A regularly updated list of medications associated with your health plan. Drugs covered on your formulary are cheaper than those excluded from the formulary.

Fully Insured

The company pays premium to the health insurer. In this type of insurance, the insurance company assumes the financial risk for medical expenses incurred and the employer or individual bears no risk.

Grandfathered Plan

A health plan that was in place before March 23, 2010 when health reform began. These plans are allowed to continue to offer the coverage that they did in the past as long as the plan does not make certain changes.

Group Health Plan

Health insurance offered by a group, commonly an employer or association.

Guaranteed Issue

A law that states that states that any eligible applicant shall be granted coverage and cannot be denied because of pre-existing conditions or past medical history.

Health Insurance Portability and Accountability Act of 1996 (HIPPA)

The law that provides data privacy and security provisions for protecting medical information.

Health Reimbursement Arrangement (HRA)

An account funded by the employer to help pay for certain medical costs. This type of account is contributed solely by the employer and any unused funds may be refuted to the employer at the end of the year or rolled over to the following year at the employer’s discretion.

Health Savings Account (HSA)

A tax-advantageous medical savings account available to taxpayers in the United States who are enrolled in a High-Deductible Health Plan (HDHP). Funds contributed to these accounts are not subject to federal income tax at the time of deposit. IN 2019 an individual could contribute up to $3,500 to their HSA account and for families they can contribute up to $7,000. For individuals 55 years old or older, an addition $1,000 may be contributed.

Health Maintenance Organization (HMO)

A type of health insurance plan that offers a range of healthcare services at a fixed price. These types of plans usually only cover services rendered by providers that work for or are contracted by the HMO. Generally, out-of-network care will not be covered except under emergency situations.

High- Deductible Health Plan (HDHP)

A health plan with a higher deductible and lower premium payments. These plans are usually combined with a health savings account or health reimbursement account.

Individual Mandate

Requirement under the ACA that all citizens must carry health insurance that meets minimal essential coverage standards or be subject to a tax penalty.

In-Network Provider

A provider that has a contract with a carrier to provide its members services at set rates.

Mandate benefit

Benefits legally required by federal or state law under an insurance plan. Can include services, providers or coverage.

Medical Loss Ratio

The ratio of premium dollars that was used for claims and to improve the quality of care, vs. other costs such as administration. ACA requires 80% for small groups, 85% for large.

Medically Necessary

Minimum treatment, services or supplies required for diagnosis or treatment of a medical condition.

(Provider) Network

List of providers that have contracted with a carrier to provide services at set fees.

Open Enrollment

Annual period to enroll, change or cancel coverage.

Out-of-Network Provider

A provider that is not contracted with a carrier to provide services at a set rate.

Out-of-Pocket Costs

Deductible, co-pay, co-insurance, out-of-network fees and any other charges not paid by the carrier for covered services.

Out-of-Pocket Maximum

The maximum amount of money you will pay for covered medical services in a calendar year. Once you hit this amount, the plan pays 100% of eligible network services and supplies for the rest of the year. Out-of-pocket limit may or may not include a deductible depending on insurers’ definition of the term. The maximum amount of money you may spend for health care services also may vary whether they receive it in or out-of-network.

Outpatient Care

Care that does not require an overnight stay at a facility.

Patient Protection and Affordable Care Act (PPACA)

The comprehensive health care reform law enacted on March 23,2010 with the goal to provide more access to affordable healthcare for most Americans. (sometimes known as ACA, PPACA, or “Obamacare”).

Participating Provider

An in-network provider who has a contract to provide services for a carrier at set rates.

Per Diem Cost

Daily allowance for services or treatment

Pharmacy Benefit Manager (PBM) – The administrator of prescription drug programs for commercial health plans, self-insured employer groups plans, Medicare part D plans, labor groups and state employee health plans.

Prescription Drug Out-Of-Pocket Maximum

The maximum amount of money you will pay out of pocket for covered prescription drugs in a calendar year.

Premium

The amount of money your pay for your health insurance each month.

Point of Service (POS) Plan

An HMO healthcare plan that offers lower costs to use in-network providers and requires a referral from a primary provider to see a specialist. A member can choose to see a doctor out of the network at any time if they are willing to pay higher copayments, deductibles and possibly higher monthly premiums. This combines the elements of an HMO and PPO in the opposite way that an EPO does.

Pre-Authorization

Authorization required by a carrier that a service, treatment, drug or equipment is medically necessary or covered. Also called pre-certification.

Pre-existing Condition

A health condition (except pregnancy) that existed before current coverage began.

Preferred Provider Organization (PPO)

A group of providers that gives preferred rates (lower deductibles, co-pays, etc.) for members for using their organization.

Premium

The costs to obtain insurance and insurance coverage contract.

Primary Care Physician (PCP)

Physician who provides first point of contact for a health concern and monitors ongoing care or refers to another provider.

Qualified Health Plan (QHP)

A Health care plan that meets all mandatory requirements of the Affordable Care Act.

Qualifying Event

An event that allows an addition, cancellation or change of coverage, within a limited time frame, outside of open enrollment. Ex: divorce, marriage, adoption, loss of other coverage, etc.

Reinsurance

Insurance for insurance companies, to limit the risk of financial loss. Also referred to as stop-loss insurance. The coverage may apply to an individual claim (specific stop loss) or to all the claims during a specific period for an individual enrollee (aggregate stop loss).

Risk

The possibility that costs associated with insurance for an individual group may be higher than expected, resulting in losses for an insurance carrier or self- insurer.

Risk Pool

Risk management system in which insurance companies form a pool of insureds to provide increased protection against catastrophic loss.

Rollover

Deductibles paid under a previous plan that are then applied to the deductible of the current plan in place.

Self-Funded

Insurance plan where the employer assumes the risk and pays the claims for employees, instead of paying premiums to a full-insured carrier.

Service Area

Geographic area which an insurance company uses to determine membership and provider networks.

Specific Stop Loss

Protects against high claims from any one individual and protects against the severity of a single catastrophic claim.

Summary Plan Description (SPD)

An important document that tells plan participants what the plan provides and how it operates.

Third-Party Administrator (TPA)

Separate organization that handles certain insurance processes; processing claims, underwriting, manage provider networks, etc.

Usual, Customary and Reasonable Charges

The amount charged for a service in a geographical area based on the usual cost for the same or similar service, in the same geographical area.