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Insurance
Glosssary of Terms
By the Virginia Bureau of Insurance
Coinsurance: The percentage of health care allowable charges you must pay after you have met your deductible.
Coordination of Benefits (COB): Method of integrating benefits payable under more than one health insurance plan so that the insured's benefits from all sources do not exceed 100 percent of allowable medical expenses.
Copayment: A specific charge you pay for a specific medical service. For example, you may pay $10 for an office visit or $5 for a prescription and the health plan covers the rest of the medical charges.
Cost Sharing: Policy provisions that require individuals to pay, through copayments, deductibles and coinsurance, a portion of their health care expenses.
Deductible: The amount of money you must pay, generally annually, to cover your medical care expenses before your insurance policy or HMO plan starts paying.
Eligible Expenses: Expenses defined in the health plan as being eligible for coverage. This could involve specified health services, fees or "usual, customary and reasonable charges."
Elimination Period: A specified number of days at the beginning of each period of disability (in disability income policies) or hospital confinement (in hospital confinement indemnity policies), during which no benefits are paid.
Enrollee: An individual who is enrolled in an MCHIP.
Evidence of Coverage (EOC): Document that summarizes the provisions and benefits of a managed care health insurance plan.
Evidence of Insurability: A statement or proof of physical condition and/or other information affecting a person's eligibility for insurance.
Exclusions: Specific conditions or circumstances for which the policy or plan will not provide benefits.
Explanation of Benefits (EOB): The statement sent to a participant in a health policy or managed care plan listing services, amounts paid by the plan, and total amount billed to the patient.
Fee-For-Service: A payment system for health care where the provider is paid for each service rendered rather than a pre-negotiated amount for each patient.
Formulary: List of prescription medications covered by an insurance company.
Fully Insured Plan: Employer-purchased insurance coverage from a licensed insurance company, wherein the insurance company assumes the risk.
Gatekeeper: Role of the primary care physician or PCP in HMOs and other forms of MCHIPs. The Gatekeeper coordinates care and makes referrals to specialists.
Grace Period: Specified time (usually 31 days) following the premium due date during which insurance remains in force and a policyholder may pay the premium without penalty.
Grievance Procedure: A procedure which allows a member of a health plan or a provider of benefits to express complaints, protest a decision, and seek remedies.
Group Certificate:
The document provided to each member of a group plan. It describes the benefits provided under the group plan.
Guaranteed Renewable Contract: Contract under which an insured has the right, commonly up to a certain age, to continue the policy by the timely payment of premiums. Under guaranteed renewable contracts, the insurer reserves the right to change premium rates by policy class.
Health Maintenance Organization (HMO): Prepaid managed care health insurance plans in which you pay a premium and the HMO covers your cost of care to see doctors, hospitals and other providers within the HMO's network, at prenegotiated rates, subject also to your payment of a specified amount as services are delivered. You generally must choose a PCP who coordinates all of your care and makes referrals to any specialists you might need.
Indemnity Plan: Traditional health insurance that usually covers a percentage of the cost of care (often 80%) after the consumer pays an annual deductible. Patients with an indemnity plan can choose any doctor or hospital for their care.
Individual Insurance: A policy that provides protection to a policyholder and may extend coverage to his or her family; sometimes called personal insurance, as distinct from group insurance.
Lifetime Maximum: The total amount of benefits that a health care plan will pay over a policyholder's lifetime.
Maximum Out-of-Pocket Costs: The most a member will pay considering copayments, coinsurance, deductibles, etc., usually on a calendar year or policy year basis.
Medicaid: A joint state and federal public assistance program that pays for health care services for low income or disabled persons.
Medicare: A federally administered health insurance program that covers the cost of hospitalization, medical care, and some related services for most people over age 65, people receiving Social Security Disability Insurance payments, and people with End Stage Renal Disease (ESRD).
Medicare Supplement Insurance: Insurance coverage sold on an individual or group basis which helps to fill the gaps in the protection provided by the Medicare program. This insurance is also called "Medigap program."
Multiple Employer Welfare Arrangement (MEWA): An arrangement by which two or more employers form a coalition to offer a health plan to their employees.
Noncancelable: A health insurance policy that the insured has a right to continue in force by payment of premiums, as set forth in the contract, for a period of time as set forth in the contract. During that period of time, the insurer may not make any change in any provision of the contract,
including the premium.
Out-of-Network Care: Medical services obtained by managed care health insurance plan members from non-participating or non-preferred providers. In many plans, such care will not be reimbursed unless previous authorization for such care was obtained.
Out-of-Pocket Costs:
Health care costs the covered person must pay out of his or her own pocket, including such things as coinsurance, copayments, deductibles, etc.
Pre-Admission or Pre-Certification Authorization: A requirement that the health care plan must approve, in advance, certain hospital admissions or certain procedures.
Pre-existing Condition Exclusion: Generally, a limitation or exclusion of health benefits based on the fact that a physical or mental condition was present before the first day of coverage. HIPAA and some state laws limit the extent to which a health plan or issuer can apply a preexisting condition exclusion in certain instances.
Preferred Provider Organization (PPO): A network of health care providers that have agreed to provide medical services to a health plan's members at discounted costs. The cost to use physicians within the PPO network is generally less than using a non-network provider.
Premium: The amount you pay in exchange for health insurance coverage.
Primary Care Physician (PCP): Under many MCHIPs, the physician (often a physician, internist, or pediatrician) who manages your healthcare. With some exceptions, you must first consult with your PCP for healthcare needs. A PCP makes referrals to specialists if necessary.
Provider: Any person or institution that provides medical care.
Referral: The process under which an HMO member receives authorization (generally from his or her PCP) to receive or obtain care from a specialist or hospital.
Rescind: To nullify or make void a policy or coverage. In many cases, when and if a company rescinds a policy, premiums are refunded.
Underwriting: Process by which an insurer determines whether or not, and on what basis, it will accept and classify the risks associated with an application for coverage.
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