Key Health Insurance Terms for Consumers

Accelerated benefits/living benefits riders: These riders allow policyholders, who may be terminally or critically ill, to draw upon a percentage of the face value of their life insurance policies. Conditions under which this option can be exercised and the amount available to the policyholder can vary with each insurance company.
Adverse Selection: Occurs when the sickest purchasers all gravitate toward a specific insurance plan. For example: If a plan offers a prescription drug benefit, those who need it most will buy the insurance package and drive up the cost.
Agent: The primary link between consumer and company. Advisors work with consumers to assess their needs and plan for long-term financial stability. Advisors may also be referred to as life underwriters or field underwriters.
AHP: Accountable Health Partnerships (AHPs) - Under managed competition Health Insurance Purchasing Cooperative (HIPCs) offer approved health plans to individuals and employers. These are health insurance plans offering a uniform health insurance benefit. It is expected that the AHPs will favor the use of managed care plans in offering insurance coverage to their participants.
AWP: Any Willing Provider Laws - Mandate that certain types of health care providers such as physicians, hospitals and pharmacies must have the opportunity to enter health networks (HMOs and PPOS), even if the networks already have enough such providers or have no real need of this type of provider.
Balance Billing: Charging a patient the difference between what an insurer will pay and what the physician wants to charge for a service.
Capitation: A method of paying for an individual's medical care through a per capita payment that is independent of the number of services received or the costs incurred by a provider in furnishing those services.
Co-Insurance: A provision of a medical expense insurance policy that requires the insured to pay a percentage of all eligible medical expenses, in excess of the deductible, that result from sickness or injury.
Community Rating: An insurance rating system that spreads risk over a broad population base. Everyone pays the same premium amount for a health insurance plan offering the same benefits without regard to risk factors such as age, sex or medical status.
Coordination of Benefit: Coordination of benefits prevents duplication or overlapping for the same expense when you own two or more group policies. This allows one insurance carrier to be aware of any other insurance coverage the policyholder may have. The two companies determine which company has the primary responsibility to pay and which company has the secondary responsibility after the benefits from the primary insurer are exhausted.
Cost Shifting: Providers shift the costs of services provided to those who do not pay the full cost of their care -- such as the uninsured and those covered by public programs -- to other payers, usually those who are privately insured. This in turn causes insurers to raise premiums.
Deductible: The amount you must pay before your insurance covers any expenses. The insurance program pays benefits only for losses over the amount stated in the deductible provision.
DRG-Diagnosis-Related Groups: A Medicare payment system to pay for hospital services. Services are grouped by severity of service and recuperation time and hospitals are paid a flat fee for the services provided.
Elimination period or Waiting period: The waiting or elimination period is the time you must be insured under the policy before you are eligible for benefits.
ERISA: Employment Retirement Income Security Act of 1974. A law that holds employers responsible for the prudent management of employee benefit plan assets, establishing the fiduciary responsibilities of the employers. Multiple employer purchasing arrangements for employee benefit, such as a HIPC, could fall under the ERISA requirements. Self-insured plans are exempt under ERISA from State insurance regulation including mandated benefits and insurance premium taxes.
Experience Rating: An insurance rating system where insurance premiums are based on the average expected costs of the group being insured.
FFS-Fee-For-Service: A payment system for health care where the provider is paid for each service rendered.
Fee Schedule: An established payment list for specific health care services or procedures.
Global Budgets: An established budget or ceiling on health care expenditures for all services, for a specified range of health services, or for a range of providers such as hospitals and nursing homes.
Guaranteed Issuance: A requirement that a health insurer is required to provide health insurance to all applicants for insurance without regard to preexisting conditions or other risk factors such as age, sex, or medical history.
Guaranteed Renewable: A policy which is renewable at the policy holder's choice and cannot be terminated by the insurance company.
Health Alliance: Organizations that would contract with health insurers on behalf of individuals and employers of a certain size and below to purchase affordable health insurance. Health Alliances would be required to perform certain other activities that must be defined. Health Alliances were formerly called Health Insurance Purchasing Cooperatives (HIPC).
HIPC: Health Insurance Purchasing Cooperative: Organizations that would contract with health insurers on behalf of individuals and employers of a certain size and below to purchase affordable health insurance.
Multiple HIEPC or Health Affiance: More than one HIPC in a geographic area; an active HIPC or Health Alliance. A Health Insurance Purchasing Cooperative given regulatory functions such as risk assessment and adjustment, health care quality activities, and cost containment functions while performing health purchasing functions. It might also be given authority to exclude otherwise eligible plans.
Passive HIPC or Health Alliance: A Health Insurance Purchasing Cooperative without regulatory functions. The HIPC would simply contract for health insurance, collect and disburse premiums and provide information about benefits and quality of services.
Size of HIPC or Health Alliance: Details about size of business allowed in and whether participation is mandatory.
HMO: Health Maintenance Organization: A health plan from which care is received through a hospital and physician network. Providers are paid a salary so reimbursement does not depend upon how many services are rendered. Health care decision making is more structured with a care manager deciding with the patient when health services are needed.
Hospital Confinement Indemnity Policy: This type of policy usually pays only a specified amount each day or each week such as $50 when you are hospitalized. It may contain specific benefits for medical or surgical expenses or emergency outpatient care.
Long-Term Care Insurance: Insurance designed to cover a range of services for people who are chronically ill or infirm, though not necessarily confined to a long term care facility like a nursing home.
Managed Care: System that ties the financing and delivery of health care services. Third party payers review and intervene in decisions about health services to ensure that only appropriate and necessary services are provided. Managed care organizations will limit patients' choices of providers and negotiate with providers to obtain the lowest price for services.
Mandated Health Insurance Benefit (MHIB) laws: Laws that mandate insurance companies to provide coverage for certain nontraditional illnesses and disabilities.
Medicaid: State programs with federal matching funds provided by Social Security under stipulated conditions of public assistance to persons regardless of age whose income and resources are insufficient to pay for health care.
Medicare: A federally sponsored program that provides hospital benefits, supplementary medical care, and catastrophic coverages to elderly persons.
Medigap Policy: An insurance plan designed to supplement Medicare, by covering some hospital, medical and surgical services which individuals otherwise must pay for themselves.
MediSave Option: Allows for the creation of medical savings accounts. MediSave options are usually included as a portion of broader health insurance reform proposals.
MET - Multiple Employer Trust: A legal trust established by a plan sponsor that brings together a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or a self
funded basis.
MEWA-Multiple Employer Welfare Arrangement: A plan which is established by an employer or employee organization for the purpose of providing for its participants, by insurance or to otherwise, medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds or prepaid legal services.
MSA-Medical Savings Accounts: Provide incentives for employers to replace high cost, low deductible policies with affordable, high deductible catastrophic coverage for each employee. The difference in premium is then used to fund a tax preferred medical savings account that employees use to pay for qualified medical care and expenses, including annual deductibles and co-payments.
Outcomes Research: A health care research program to find the most medically effective and cost effective medical practices in treating patients.
PPO-Preferred Provider Organization: A network of health care providers with which a health insurer has established contracts for its insured population to receive a health service. Health care decision making generally remains with the patient as he or she selects the provider and determines his or her own need for services. Patients have financial incentives to select providers within the PPO network.
PSO-Point of Service Organization: A type of managed care combining features of HMO's and PPO'S, in which individuals decide whether to go to a network provider and pay a flat dollar co-payment ($5-$10), or to an out of network provider and pay a deductible or percentage coinsurance charge.
Portability: The ability for an individual to transfer from one health insurer to another health insurer without regard to pre-existing conditions or other risk factors.
Practice Guidelines: Using outcomes research, medical practice guidelines would be established specifying the medical procedures recommended for use in treating patients. It is believed that uniform treatment of patient illnesses will result in cost savings, eliminating the current wide range of testing and treatments used to treat the same illness.
Pre-Existing Condition: An individual's medical condition that existed prior to his or her purchase of a particular insurance plan. Costs related to that condition would not be paid by the new insurer.
Premium Setting: Establishing prices for premiums that health insurance companies would charge for health insurance plans.
RBRVS: Resource Based Relative Value Scale: A Medicare payment system to pay physicians and other health care professionals for services provided a Medicare patient. Payment is based upon a range of factors such as cost of practice (salaries for office staff), malpractice expenses, time it took to provide the service, the patient and the complexity of the service provided.
Rate Setting: Establishing fixed prices for all health services, or certain segments of health care services.
Rider: A special policy provision that may be added to a policy, expanding or limiting the benefits that are otherwise payable.
Single Payer: A health care system, like the Canadian system, where all revenue sources go into one pool and one entity is the payer and attempts to deliver equal benefits to all.
Supplemental Coverage: Insurance policies that would provide health care coverage for services in addition to those under a uniform benefit plan. Potentially, coverage could be restricted to offer benefits not offered under the uniform benefit plan.