California Health Insurance Glossary
This list of health insurance terms will help you navigate your way through some of the confusing terms about medical coverage.
Access - Your availability to medical care which is determined by where you live and the type of health care facilities available in your area.
Accident - For the purposes of health insurance, an accident is an unforeseen, unexpected and unintended event resulting in a bodily injury.
Accumulation Period - The period of time during which the policy holder (insured) of a health insurance policy accumulates eligible medical expenses which accrue towards satisfying the policy deductible.
Acupuncture - Most health insurance policies are consider acupuncture an alternative medical treatment and may or may not be covered under the plan.
Acute Care – Short-term but frequent medical treatment, usually in a hospital or by nursing professionals, for patients recovering from surgery or from an illness or serious injury.
Alternative Medicine – Usually refers to the practice of medicine without the use of drugs and may or may not be covered under a health insurance policy. Many alternative medicine procedures that were once considered outside the boundaries of covered expenses are now covered under many plans such as acupuncture, osteopathic treatments and midwives services. re
Arbitration - A legal process in which the parties agree to let an impartial third party hear the facts of the dispute and make a legally binding decision which can save a lot of time and money as opposed to going through the court systems.
Behavioral Healthcare - The assessment and treatment of mental and/or psychoactive chemical dependency (substance abuse) disorders.
Beneficiary - The recipient of the benefits of the health insurance policy.
Benefit – The amount payable by the health insurance company to a claimant, assignee, or beneficiary when the insured suffers a loss.
Brand-name drug – A prescription drug that has a specific brand name and is protected by a patent. Patents can lasts for several years and during the patent protected timeframe the drug can be produced and sold only by the company holding the patent. When the patent runs out generic versions of many popular drugs are produced and sold at lower cost by other companies.
Carrier - The carrier is the insurance company that offers the health insurance plan such as Anthem Blue Cross, Cigna, Aetna, Blue Shield or United Health for example.
Carve-out - A separation from the primary group health plan designed to provide a specialized type of care, such as a retiree health carve-out. Carve-outs are also used when an employer eliminates coverage for a specific category of services (e.g. vision care, mental health/psychological services) from the group medical insurance plan.
Chronic Condition - A chronic condition is a prolonged condition which requires ongoing treatment, or treatment for a period of at least three months. Examples are asthma and diabetes.
Claim - A request by the insured (or his or her medical provider) to an individual's health insurance company to pay for services obtained from the medical provider.
Closed Practice – In an HMO medical plan a closed practice refers to a primary care doctor that is no longer accepting new patients under the HMO plan.
COBRA - A federal law that allows an employee to continue coverage of health insurance benefits for up to 18 months at the employees expense after the employee loses the job or if the employer terminates the group coverage. Cobra premiums are too expensive for many people and a short-term or an individual health insurance policy is often times a better choice.
Co-insurance - The share (usually a percentage such as 80/20) of the covered charges in a health insurance policy that the insured (you – the policy holder)) and the insurance company each pay after the deductible has been met and until the out of pocket maximum is met. After the out of pocket maximum for the year has been met, co-insurance stops and the insurance company pays 100% of covered charges for the remainder of the year.
Coordination of Benefits – COB occurs when someone is covered under more than one health insurance plan and its purpose is to divide responsibility among plans and ensure that benefits from all plans do not exceed 100% of covered expenses.
Conventional indemnity plan - An indemnity medical plan that allows the participant of the plan the choice of any provider without effect on reimbursement. These plans reimburse the patient and/or provider as expenses are incurred.
Co-Pays - Co-payments are specified dollars amounts that an insured pays directly to the medical provider at the time the medical service is rendered. For example, a health insurance plan may specify that the insured pay a $40 co-pay for each office visit to their doctor’s office and may also have a separate co-pay for prescription drugs of $25 for each pharmacy prescription filled for example.
Deductible - A fixed dollar amount an individual must pay for health care expenses before the insurance plan will cover any of the costs. Different plans may have different exceptions for yearly deductibles. Some plans for example, will waive the deductible for yearly check-ups or routine doctor visits. The higher the plans deductible is, the lower the monthly insurance premium will be.
Dental Health Maintenance Organization (Dental HMO) – Provides dental services through a network of dental providers. Members pay a fixed monthly fee for services instead of a separate charge for each visit. Members pick a primary care dentist and the plan will not pay for dental specialist unless the primary care dentist refers the member.
Dental Preferred Provider Organization (Dental PPO) – Members receive dental care through a network of dentists that offer discounted dental service fees to its members.
Dependents – The primary insured’s spouse and/or unmarried children and can include the insured’s adopted and/or step children.
Disease Management – A system for patients that have specific chronic medical risks where preventative, diagnostic, and therapeutic techniques are implemented to provide quality and cost-effective healthcare.
Dual Eligible – Patients that due to certain qualifications, qualify for both Medicare and Medicaid benefits.
Effective Date - The date your insurance coverage becomes effective. This date is usually requested on your health insurance application. Insurance companies will usually allow you to request coverage to begin as soon as the application is approved or up to 75 days in the future.
Enrollment Period – The period when an individual may apply for enrollment or change a health insurance plan. For example, Medicare open enrollment period is November 15th through December 31st each year.
Exclusions – Items that are not covered under a health plan are excluded from coverage. Most plans have common exclusions such as cosmetic surgery. Other plans will exclude certain pre-existing conditions that applicants either for the life of the policy or for a pre-defined period of time after which those exclusions would then be covered.
Exclusive Provider Organization (EPO) plan – EPO plans are similar to HMO plans in that members, in order to be covered, must visit in-network doctors only. EPO members, however, do not select a primary care doctor like an HMO plan and do not need a referral to see a specialist as long as the specialist is in the EPO network. Exceptions for out of network visits are made in the event of an emergency.
Explanation of Benefits - The insurance company's written decision and explanation regarding you claim. The explanation of benefit will list what the insurance has paid (or will pay) and what the patient is responsible for paying.
Evidence of Insurability (EOI) – EOI is proof that you are in good health. It is usually in the form of a medical exam although not all health insurance plans require a medical exam.
Fee for Service – A type of health insurance that allows you to choose any doctor you want but requires you to pay for the services yourself and then file claim for reimbursement with the health plan.
Flexible spending accounts or arrangements (FSA) – Usually associated with an employer, an FSA allows an employee to put aside money, tax-free from their paycheck to be used to pay medical expenses. The employer also can contribute to the employees FSA. Most FSA plans have a “Use it or Lose it” provision which means that any funds not spent by year’s end are forfeited.
Free Look Period – The period of time that the insurance company allows you to cancel the policy and receive a full refund. Most health insurance plans give you 10 days from the date you receive the policy and some plans (like Medicare) may give up to 30 days in the free look period.
Gatekeeper – The term used to describe the primary care doctor in an HMO plan.
Generic Drug: After the patent on a brand name drug expires, other drug companies are allowed to sell a duplicate of the original drug under a different “Generic” name. Once the drug is generic they cost less than the original and health plans usually require or reward the member for using the less expensive generic drug.
Grace Period – The period of time allowed to make a premium payment after the due date of the premium without having the insurance terminate for non-payment of premium.
Guaranteed Issue – A guaranteed issue plan can be approved irrespective of any medical underwriting or pre-existing condition.
Group Health Insurance - When health insurance coverage is obtained through your employer or other entity that covers a group of people.
HMOs - Health Maintenance Organizations are a type of health insurance plan. When selecting an HMO plan, members choose a primary care doctor. Once the member of the HMO selects his or her primary care doctor the member is required to visit the primary care doctor first for all non-emergency health issues.
HIPAA: "The Health Insurance Portability and Accountability Act of 1996.” The federal law is designed to provide privacy standards to protect patients' medical records and other health information provided to health plans, doctors, hospitals and other health care providers. Developed by the Department of Health and Human Services, these new standards provide patients with access to their medical records and more control over how their personal health information is used and disclosed.
Hospital Indemnity Policy – This type of policy pays a pre-determined fixed cost for each day that you are in the hospital, irrespective of the actual costs.
Hospital Pre-certification – Most plans require approval or pre-certification before the insured enters the hospital. Exceptions are made for emergency situations.
Indemnity plan - A type of health insurance plan also called a “fee-for-service” that will reimburse the patient and/or the medical care provider as expenses are incurred.
In-network – Insurance companies have negotiated rates with healthcare providers. These providers that have agreed to certain rates are providers that are in the plans network or “In-Network” and are almost always less expensive than seeing an out-of-network provider.
Independent Practice Associations - IPAs are comprised of a group of independent doctors and are similar to HMOs, except that enrolled members receive care in the doctor’s own office, rather than in an HMO facility.
Individual Health Insurance - When you maintain and pay for your own or your family’s health insurance policy and are not part of a group policy.
Insured - The beneficiary of the insurance policy who may be an individual or an organization. The insurance plan provides coverage to this individual or entity.
Lifetime Maximum - The upper limit amount in dollar terms that the insurance provider agrees to pay in benefits over a lifetime under a health plan to the insured person while the person remains covered under that plan.
Long-Term Care Policy - Health insurance plans that provide coverage to people with pre-existing chronic illness or disability conditions. These policies typically offer coverage for specific services for a specific time-period. Home health care and custodial care services are usually covered under long-term care plans.
Long-term Disability Insurance - Policies that cover a fixed percentage of the monthly income of an insured who may suffer from a disability that renders such person unable to earn the same level of income as prior to the disability.
LOS - Length of Stay or LOS is a common term used in health insurance policies that denotes the amount of time of the insured remains hospitalized.
Medicare - Popular health insurance plan run by the federal government for people in the age group 65 years and above. Certain people suffering from disability are also covered under this program. Patients can visit any participating physician or health facility under this fee-for-service program. Medicare reimburses the healthcare service providers directly for eligible medical services. Medicare is divided into two primary classes: Part A, which includes hospital services, and Part B, which includes physician services. Other classes are Part C, which includes Medicare Advantage Plans, and Part D, which includes coverage for prescription medications.
Medicaid - Entitlement health plan designed to provide long-term care and general health coverage to specific categories of low-income Americans who cannot afford private medical insurance. Each state has its own Medicaid plans designed in conformance with federal guidelines.
Managed Care - A healthcare delivery mechanism that enables efficient management of quality and cost of medical services that are provided to people under various private health plans. Popular managed care plans include PPOs, HMOs, POSs, and EPOs. Some of the managed care plans are marked by a special emphasis on preventative care.
Mandated Benefits - Benefits that are a mandatory part of a health insurance program as required by a federal or state law.
Maximum out-of-pocket expense - The upper limit amount in terms of dollars that the insured must pay out of pocket during a given year. Once this limit has been reached, any additional covered expenses on healthcare are paid for by the insurance provider up to the lifetime maximum under the plan.
Maximum plan dollar limit - The upper limit amount in terms of dollars that the insurance provider agrees to pay for covered medical expenses incurred by the insured and covered dependants while covered under the plan.
Medical savings accounts (MSA) - A savings account set up for the insured to make tax-exempt savings that may be used to cover out-of-pocket healthcare costs. Insured persons who opt for health plans with high deductibles are usually encouraged to use MSAs.
Medigap Insurance Policies - Supplemental health policies that are designed to cover any gaps that may not have been covered under the original medical plan. Titled A to L, there are 12 different Medigap plans, each offering a separate set of benefits and costs. These are private insurance plans, and not offered by the government.
Network - A participatory group of general doctors, specialists, healthcare facilities, hospitals, and other healthcare providers who offer medical services to members under a particular health plan. PPO and HMO networks are two of the most popular private healthcare networks. Insured persons receive pre-determined lower prices and other privileges when they use services from within the network.
Non-emergency weekend admission restriction - A limitation imposed on the insured person under a particular health policy that limits reimbursement if the person is admitted to a hospital on a weekend in absence of a medical emergency.
Open enrollment - Designated period of time during which any new subscribers are allowed to enroll into a health plan, irrespective of their pre-existing health conditions.
Out-of-Plan (Out-of-Network) - Non-participating doctors, specialists, healthcare facilities, and other healthcare providers, who are not a part of the network. The health insurance plan may include partial reimbursement to the members for using out-of-network services, or may not offer any reimbursement at all.
Outpatient - A patient who receives medical care on an outpatient basis, which means the patient does not stay overnight at the hospital or other healthcare facility. Insurance providers usually have a pre-identified list of tests, treatments and procedures, including some surgeries that are covered only on an outpatient basis.
Outpatient services - Health care services that do not involve overnight stay for patients at the healthcare facility. These services are commonly offered at hospitals, clinics, doctors’ offices, hospices, ambulatory surgical centers, and home health services.
Physical examination - Medical exam and medical history records that may be necessary in order to qualify for a health insurance plan. Requirements of physical examination may vary depending on the insured medical history, and other factors such as individual or group plans, type of plans, and for different insurance providers.
Plan Administration - Managing and supervising the routine activity and details involved in the running of a health plan. It may include activities ranging from answering queries of members to enrolling new members, and billing and collecting insurance premiums.
Point-of-service (POS) plan - A POS plan is a unique combination of PPO and HMO plans. It is also called an Open-ended HMO when it is offered by an HMO. In-network services under POS plans are similar to those of an HMO, and it also includes the flexibility of a PPO plan by allowing partial reimbursement for out-of-network services.
Portability - A worker with a pre-existing medical condition is allowed to receive credit for the remaining time in a previous health plan, if the worker joins a new employer who has a new plan in place.
Pre-Admission Certification - This certification involves a pre-admission review by a representative of the insurance provider before a member is admitted to a hospital or another health facility as an in-patient. Either the insured or the physician may contact the insurance provider prior to patient’s admission. The goal of this certification is to ensure that healthcare services that are medically unnecessary may be avoided.
Pre-existing Condition - A medical condition that exists prior to an insured person’s purchasing a health plan. Such medical conditions may typically be excluded from medical coverage by a provider. However, there are some health plans that offer coverage for pre-existing medical conditions, while some other plans may include the condition under coverage after a specific time period.
Pre-admission Testing - Basic medical tests that a patient may be required to undergo prior to being admitted to a hospital or another in-patient health facility. Insurance providers may require pre-admission testing in order to encourage patients to obtain the necessary medical tests completed on an outpatient basis for a non-emergency hospitalization. This helps to reduce the patient’s duration of the hospital stay.
Preferred Provider Organizations (PPOs) - Healthcare facilities, hospitals, doctors, specialists, and other medical supporters and suppliers who are a part of health provider network under a PPO health plan. Organizations and individuals participating in this network agree to charge discounted medical costs to the members of the PPO health plan.
Preferred Provider Organization (PPO) plan - A popular health plan that offers health coverage to its members through a participatory network of doctors and hospitals. Participants in the network offer healthcare services to members at a pre-determined lower rate.
Premium - A pre-determined fee that an insured person agrees to pay in exchange for specified health coverage benefits. Premiums are usually paid annually, and may be paid by the beneficiary or an employer on behalf of the beneficiary. Sometimes the premiums may also be shared between the employee and the employer.
Primary Care Provider (PCP) - A healthcare professional, who is usually a general physician appointed under a health plan to offer primary healthcare services to the insured individual. HMO health plans typically require PCPs to be appointed for each insured member. If the member needs an appointment with a specialist within the network, the PCP’s recommendation may be required. In such managed care health plans such as HMO, the PCP is responsible for providing basic medical care to a member.
Primary plan - A health insurance plan that first makes the reimbursements for medical costs when the individual is covered under multiple health plans. Secondary plans may come into force when coverage under the primary plan has been exhausted.
Prior qualifying coverage - Health insurance coverage that was in force prior to the effective date of the new health insurance plan.
Private health insurance - Health insurance sold by the private health insurance providers is called private health insurance. At present, private insurers cover more than two-thirds of the U.S. non-elderly health insurance market. This insurance also includes group policies sponsored by the employers on behalf of the employees. More than 60 percent of all Americans receive health insurance as a benefit of their employment. Elderly people usually avail benefits under Medicare plans that are sponsored by the government.
Provider - Any physician, specialist, healthcare facility, hospital, medical laboratory, pharmacy, and other individuals and entities that are a part of the healthcare support system.
Reasonable and customary fees - When an insured person makes a health insurance claim or when a healthcare provider submits a medical bill for reimbursement to the health insurance company, the insurer will evaluate whether the claim or the bill submitted includes reasonable and customary fees for a particular medical procedure. Reasonable and customary can vary depending on the quality of healthcare facility, the skills and experience of the operating doctor or other healthcare professionals, the geographical location, and other such factors. Insurance companies usually deploy advanced software programs with comprehensive data to determine what may be defined as reasonable and/or customary fees in a given situation.
Reinstatement - A health policy that has lapsed may be revived or reinstated by paying previous dues and providing the required evidence of insurability.
Reinsurance - When the health insurance risk is underwritten by another insurer or insurers, in part or full. Such underwriters or assuming companies are called Reinsurers.
Renewability - The general term of a health insurance plan, whether individual or a group plan, is one year. Insurance providers will usually review the track record of premium payments and claims of the insured person or group, and accordingly make a renewal offer for the next year. Such renewal is usually made at a different premium, depending on the current year’s claim performance. The insured person or group has a right to accept or reject the renewal offer. In case of someone’s individual health insurance, renewability terms are usually clearly spelled out in the insurance policy.
Rider - A legal amendment or modification added to an existing insurance policy pertaining to the provisions and clauses of the policy. Riders typically include or exclude a particular coverage.
Secondary plan - It is applicable to people who purchase more than one health insurance plan. The secondary plan usually becomes effective when the reimbursements under the primary plan have been exhausted.
Second opinion - A professional medical opinion sought from an unrelated second doctor or medical expert once the medical opinion of the original doctor is already available. In case of a serious health diagnosis, second opinions are usually recommended for the insured person. From the insurance provider’s perspective, a second opinion is a verification of the recommendations of the operating doctor.
Second surgical opinion - If the original physician has recommended surgery, the insurance provider may ask the insured person to seek a second surgical opinion to be increasingly sure that surgery is the best option under the circumstances. This second opinion should be derived by a doctor who is board certified, many times the insurance company will require this and that this doctor is neutral in that they do not have any financial incentive in any way pertaining to their diagnosis. This system aims to ensure that the patient is not undergoing an elective or avoidable surgical procedure. If the patient refuses to obtain this second opinion, the health care plan reimbursement could be curtailed or permanently suspended.
Self-insured plan - A plan usually adopted by some employers who directly undertake to bear a substantial portion of the healthcare costs of an employee. Some plans may undertake the entire risk, but most such plans include stop-loss coverage in case of considerably large health claims. Self-insured employers may associate with an insurance provider or a third party administrator to process medical claims and provide other administrative services. Most types of health plans may be financed by the employers on a self-insured basis.
Short-Term Disability - An illness or injury that prevents an insured person from resuming normal duties at the workplace for a brief period of time. The defined length of such short-term disabilities may vary from one insurance provider to another. The purpose of short-term disability insurance is to protect a worker against the risk of loss of wages during a short period of illness or injury.
Short-Term Health Insurance - An insurance policy that offers health coverage for a short period of time, typically ranging between one and six months.
Single-payer system - A health insurance system wherein a single entity assumes the entire cost of healthcare services. This entity pays for all costs and collects the healthcare fees, but is not engaged in the delivery of healthcare services.
Small Employer Group - In health insurance terms, a small employer group typically refers to a group having between one and 99 employees. However, the definition of such groups may vary depending upon state laws.
Specific disease policy - A health plan that offers coverage for only a specific disease or a specific group of diseases identified in the policy document. It is also known as a Dreaded Disease Policy.
State mandated benefits - Benefits that are included in a health plan based on the compulsion imposed by state laws to include such benefits.
Stop-loss - The point when the insured person’s deductibles as well as out-of-pocket maximums are exhausted under a health plan and the plan begins to pay 100 percent of the patient’s healthcare costs.
Stop-loss clause - The clause in the insurance contract between the provider and the insured person that limits the amount of maximum payment that either party will make as a contribution towards a particular coverage. If multiple insurers are involved in a contract, the clause may refer to an arrangement of risk management between various parties.
Student health insurance - A health insurance policy specifically designed for students. Many higher educational institutions make it mandatory for students to have a health policy. Options for coverage may include coverage through family health insurance policy or coverage through college-sponsored student health plans. A majority of four-year public colleges now offer sponsored health plans for students. Coverage may also be acquired individually through a licensed medical insurance provider. If a student is working, coverage may be sought through the employer’s health insurance plan. In some states, students may be eligible for health coverage through a state sponsored health risk pool. This plan is meant for students who may be refused health insurance by private insurers possibly due to a student’s pre-existing medical condition.
Third Party Administrator (TPA) - A company or an individual usually appointed by employers to handle the processing of claims, making payments to insurance providers, and managing other administrative requirements of the employer’s group health insurance policy.
Underwriter - An entity that assumes full or partial responsibility for the financial risk of an insurance provider. In absence of a third party underwriter, the insurer becomes the underwriter for the entire risk.
Underwriting - The process that enables the insurance provider to establish and assume financial risks.
Utilization review - The process of periodic evaluation and review of the standards and quality of health care provided to the insurer persons. Such a review may be undertaken before, during, or after the health services have been delivered. Reviews may be undertaken randomly or on a case by case basis.
Waiting period - A temporary gap of time during which the insured person is not covered for a specific disease, and may have to wait for a specified amount of time before this type of coverage becomes available.
Waiver - A policy amendment that waives or excludes coverage for one or more specific medical conditions.
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