Health Insurance Glossary
Whether you are shopping for a new health insurance plan or you would simply like to learn more about health care, it’s important to familiarize yourself with common terms used in the insurance industry. The following is a comprehensive glossary of health insurance-related terms and definitions that will help you to better understand and shop for coverage. This health insurance glossary is brought to you by Norvax, the health insurance industry’s leading provider of sales automation and web marketing tools.
Accident Insurance - A form of insurance policy offering coverage against accidental injury or death.
Actuary – A professional who uses statistics to calculate and evaluate various risks, generally for the purpose of insurance policies and financial programs.
Admitting privilege – The right of a doctor, as a member of the medical staff, to admit patients to a specific hospital or medical center for certain tests or treatment.
Advance care planning consultations – An omitted provision of Health Care Reform legislation proposing end of life counseling for elderly or terminally ill patients.
Advance directive –Legal documents communicating actions to be taken in the event that a person is no longer able to decide on end of life care due to illness or incapacity.
Advocacy – A person chosen to advise and help make health care decisions on behalf of a patient.
Affordable Care Act (ACA) – Signed to law in 2010, the ACA aims to lower health care costs and make affordable health care accessible to more Americans by providing tax credits, lowering premiums and holding insurance companies accountable.
Agent – A professional representing one or more insurance companies that is licensed to sell insurance policies.
Assignment – An agreement transferring legal and beneficial rights in an insurance policy to another person.
Association – Organization which purchases insurance for a group of people.
Balance Billing – A practice illegal in most states and regarding Medicare, in which a health care provider bills a patient for all charges not covered by an insurance plan.
Beneficiary – A person such as a spouse or child, designated to receive the benefits of an insurance policy
Benefit – The amount an insurance company pays out to a policyholder after a loss occurs.
Brand-Name Drug – A drug patented and sold through one manufacturer, with a trademark name. Brand name drugs are typically more costly than generic. Example: brand name: “Advil,” generic name: “Ibuprofen.”
Broker – An independent insurance agent who works with several insurance companies to find the best policies and rates for his or her client.
Capitation – A health care reimbursement model, in which the health care provider is paid a fixed amount per person, no matter the number or type of services they require.
Carrier- An insurance company that offers health insurance plans.
Case Management – A practice of supplying medical services to patients to decrease costs and improve overall patient care.
Certificate of Insurance – The document an individual receives from an insurance company specifying the coverage that individual receives.
Claim – Made by a policyholder to the insurance company to pay for services rendered.
Claim Form – The form used when an individual files an insurance claim.
COBRA (Consolidated Omnibus Budget Reconciliation Act) – Legislation that allows employees to keep their health coverage for a length of time after leaving a company.
Coinsurance – Part of a health plan where the policyholder splits the cost of healthcare with the carrier.
Commercial Insurers – Insurance that covers a range of property, liability and workers’ compensation policies.
Complaint – A claim made by a party showing evidence of a violation in policies, contact provisions or certain rules/ statutes.
Cooperatives – Health payment arrangements that can lower the cost of health insurance.
Copayment – The monetary amount that the injured party must pay on a medical bill.
Credit for Prior Coverage – Discount offered to a client who has valuable assets already insured, made by an insurance company.
Deductible – The annual fee a policyholder must pay in order for insurance coverage to begin.
Denial of Claim – When a health insurance company refuses a claim made by the insured party.
Dental Insurance – Insurance that covers a portion of costs associated with dental care.
Dependent – A person who is directly financially relying on the insured (typically includes spouse or children).
Dependent Worker – A member of a family who generates income but relies financially on someone else within the family.
Discount Medical Program – A program that helps people save on health care costs by granting discounts for visiting certain providers.
Drug Card – Specific plans that offer discounts on medicine.
Effective Date – The date that an insurance policy begins.
Electronic Medical Records – Electronic system that stores medical information.
Employee Assistance Programs – Therapy services available to workers that have personal dilemmas affecting their daily work.
Employee Benefits Consultant – Professionals who provide steps for health care programs focused on reducing costs and increasing profits.
Employer Mandate – Programs meant to decrease the number of uninsured individuals by adding to the employer’s group health insurance system.
Employer Tax Credits – A program that helps employers purchase health insurance for employees in exchange for tax credits.
Employer-Sponsored Health Insurance – Health insurance paid for by an employer.
Employer-Sponsored Health Plans – Certain health plans and benefits which are provided through a company.
Exchange – Offers through other health insurance providers of other qualified plans.
Exclusions – Certain health care or medical services which are not covered by an insurance policy.
Explanation of Benefits – A written explanation concerning a claim from an insurance company, stating the amount paid by the company and the amount to be paid by the client.
External Appeal/External Review – Process of reviewing a case if coverage has been denied due to the determination that it’s not medically necessary. Fee for Service (FFS)-Payments to doctors or health care providers after services are performed.
First-level Internal Appeal Process – The first step in the process of reaching a decision on a utilization review appeal.
Flexible Spending Account – A savings account that uses pre-tax income can to cover any health care expenses.
Formulary – A comprehensive list of covered prescription drugs.
Generic Drug – A drug that was once under patent by one company but is now sold generically by any drug company.
Grievance – The right of a consumer to receive reviews on decisions by their health plan.
Group Health Insurance – Individuals within a group that are covered by an employer or other authority.
Guaranteed Issue– A law (varying by state) which requires all insurance applicants to be accepted regardless of health condition, history, age or other factors.
Guaranteed Renewal – An insurance policy that is automatically renewed when the policy holder pays the premium.
Health Care Decision Counseling – A service that guides people to make better decisions about health and medical care needs.
Health Choices Administration – Federal agency established to overlook health plan benefit standards, operations of health insurance exchanges and supervision of individual affordability credits/subsidies.
Health Choices Commissioner – A person appointed by the President, responsible for overseeing health reform provisions.
Health Insurance Exchange – Providing a variety of competing carriers that offer different qualifying plans.
Health Insurance Portability and Accountability Act of 1996 (HIPAA) – Upon new employment, a person is able to receive comparable health insurance coverage.
Health Maintenance Organization (HMO) Plan – Instead of paying for a service on an individual basis, people can choose to pay a monthly fee for services rendered.
Health Reimbursement Agreement – An employer’s designated amount of money to spend on health care expenses for employees.
Health Savings Account (HSA) – A savings account that uses tax-free income to pay for health care expenses.
High Risk Pool – Health insurance coverage for people who have pre-existing medical conditions.
High-Deductible Health Plan (HDHP) – A plan with a specific deductible to an individual or family: $1,100 and $2,200 respectively.
Indemnity Health Plan – Same plan as Fee for Service plan.
Independent Practice Associations (IPA) – Similar to an HMO policy, but IPA policyholders can receive care in the own office of a physician.
Individual Affordability Credits – Provision that helps individuals and families purchase health coverage.
Individual Health Insurance – Health insurance coverage solely for an individual.
Individual Mandate – Provision stating that people are required to receive coverage up to certain standards, which were set in accordance with health insurance exchanges.
Individual Subsidy – Provisions that helps individuals and families purchase health insurance coverage.
In-Network – Agreement between a medical professional and a health plan to provide medical services at a discount in exchange for patient referrals.
Inpatient – Any medical procedure requiring patients to stay overnight in a hospital or medical facility.
Insurability – The process used to determine whether an applicant is eligible for a health plan.
Insurance Exchange – A provision providing several competing providers along with a variety of qualified plans, all meeting the standards of the Health Choices Administration.
Length of Stay (LOS) –The length of time a person stays in a hospital or medical facility.
Lifetime Maximum Benefit- The maximum amount of time a health plan pays in benefits to the policy holder.
Limitations – The certain amount of benefits paid for a covered expense.
Long-Term Care Policy – A type of insurance designed to cover the costs of long-term care services which may be left uncovered through traditional health insurance.
Long-Term Disability Insurance- A type of insurance that pays out a certain percentage of a person’s monthly earnings should they become disabled.
Major Medical Insurance – A type of insurance that covers any major or disastrous medical care.
Managed Care Plan – Plans that partner with certain providers and medical facilities in order to provide care at reduced costs.
Maximum Dollar Limit – The highest dollar amount an insurance company will pay for claims in a given time period.
Maximum Lifetime Benefit – The highest dollar amount an insurance company will pay for claims and benefits during the insured’s life span.
Medicaid- A government sponsored health insurance program providing low-income Americans with coverage.
Medical Underwriting – A process sometimes used by insurance companies when deciding whether or not to accept an applicant for health insurance.
Medicare – A government sponsored program providing health insurance for seniors age 65 and over, or those with end-stage renal disease.
Medicare Medicare Advantage Plans- Medicare benefits that include prescription drug coverage, as well as Part A, and Part B coverage.
Medigap Medicare Supplement – Insurance coverage purchased through private insurance companies meant to fill the costs uncovered by Medicare.
Multiple Employer Trust- When several employers in the same industry purchase group health insurance together at a lower cost to provide to their employees.
Mutual Insurance Company – Insurance companies owned solely by policyholders.
Network –A group of health care providers including doctors, physicians, hospitals, etc, who offer insurance policy holders services at a lower rate.
Non-Profit Cooperative – Alternative cooperatives that offer networks of health care providers for medical services.
Non-profit Indemnity Insurers – Insurers that reimburse policyholders as well as physicians and hospitals, using a managed care strategy.
Open-Ended HMO – Under a regular indemnity plan, these individuals can use out-of-plan providers and continue to get coverage for the services rendered.
Out-of-Network- Health care providers that are not included in a HMO or PPO, leaving some medical expenses uncovered.
Out-of-Pocket Maximum- The highest cost for health care a policy holder pays annually on their own.
Outpatient – A medical procedure not requiring a patient to stay overnight in a hospital or medical facility.
Participating Provider – Health care providers under health plans to provide services and care to policy holders.
Patient Protection and Affordable Care Act (PPACA)- Health care reform legislation signed in March 2010, aiming to provide coverage to uninsured Americans, lower health care costs and cut out pre-existing conditions as a prerequisite for denied coverage.
Physician-Hospital Organization (PHO) – A company representing certain physicians and hospitals as agents.
Plan Administration- Administration overseeing the daily activities of running and installing health plans.
Point of Service (POS) Plan- Plan that includes aspects of both HMO and PPO plans, including choosing a Primary Care Physician and coverage either in or out-of-network providers.
Pre-Admission Certification- Approval by a health care professional allowing an individual to enter a medical facility.
Pre-Admission Review - Review by a health care professional allowing an individual to enter a medical facility.
Preadmission Testing- Certain medical tests performed before admission to a hospital or health care facility.
Precertification – Approval needed prior to an individual’s admission for a surgery or hospital.
Pre-Existing Condition – A medical condition that occurred before health care coverage beings.
Preferred Provider Organization (PPO) – A plan including coverage for in and out-of-network doctors as well as hospitals and other providers.
Premiums – The monthly fee paid to the insurance company to continue coverage.
Prescription Drug Plan – Prescription drug coverage which can be added to original Medicare coverage.
Preventive Care – Routine doctor’s visits that help prevent serious illness.
Primary Care Physician (PCP) – Physicians categorized as primary doctors for an individual or family.
Primary Care Provider (PCP) – Physicians offering primary care to patients either by choice or assignment.
Private Health Insurance –Health insurance plans sponsored by the private health insurance industry.
Prompt Pay Complaint- A complaint made against an insurance company, agency or producer.
Provider – Health care professionals, including doctors, hospitals, specialists and more.
Public Option- A public health benefit plan that competes with other plans qualifying as part of health insurance exchanges.
Public plan – See Public Option.
Quote – Options for an insurance plan which can be run by the insurance company, agent or automated system.
Rate-Up –The amount of annual increase in premiums.
Rationing – The argument that the government must restrict care if health care were to become a public option.
Reasonable and Customary Fees – Standard fees charged by health care practitioners in a geographic area.
Referral – When care of a patient is transferred to another clinic.
Rescission – The option for an insurer to cancel a policy holder’s coverage if his or her application contains an error.
Rider – The option to add or exclude coverage on an insurance policy.
Risk – The probability of loss an insurance company takes on with the insured.
Schedule of Allowances – The amount a dental patient pays between the cost of service and allowance.
Screening Programs –Programs used to identify a disease in its early stages.
Second Opinion – Obtaining an opinion from a second health professional.
Second Surgical Opinion – Obtaining an opinion on a possible surgical procedure from a second health professional.
Self-Insured Health Plan – A group health plan where the organization provides group health care directly to the employees, not through a provider.
Short-Term Disability – When an employee is out of work for a short period of time due to injury or illness.
Short-Term Health Insurance – Insurance coverage lasting anywhere from a month to a year.
Single-Payer System – A system where one person pays all fees and costs associated with their health care plan.
Small Business Health Care Tax Credits – See Employer Tax Credits.
Small Employer Group – A group ranging from 1-99 employees.
Specialist- A health care professional trained or focused in one branch of medicine.
State Children’s Health Insurance Program (SCHIP) – Families with children who receive health insurance from the state and also receive these matched funds benefits from the U.S. Department of Health and Human Services.
State Mandated Benefits – Certain state laws passed that must include specific benefits in health insurance plans.
Stop-Loss- Insurance pay that starts and pays at full only once the insured has paid all out-of-pocket expenses.
Student Health Insurance – Health insurance coverage ranging from family policies, school-sponsored health plans, employer’s plan, or individual health insurance.
Subsidies – See individual subsidies.
Travel Insurance- Health plans providing coverage for people while traveling to another country.
Underwriter- An insurance professional that determines premiums for each applicant.
Universal Health Insurance – Health insurance covering an entire population.
Usual and Customary Reimbursement (UCR) – Any necessary medical service or supply needed for treatment that are charged a common amount.
Utilization Review (UR) –A review of current patients on efficiency, quality and cost-effectiveness.
Vision Care Insurance- Insurance covering vision plans to help with co-pays or routine visits to an optometrist or ophthalmologist.
Waiting Periods- The time period in which a policy holder will not be insured for specific health care costs.
Waiver of Premium- A policy which waives the premium for a period of time if regular payments cannot be made due to an unforeseen disability.
Women’s Health and Cancer Rights Act (WHCRA) – The right of women to have coverage and protection for those who have breast cancer and those who elect to have breast reconstruction along with a mastectomy.