To get the most from your health insurance benefits, it’s important to understand the terms and phrases used by insurance companies, HMOs or your employer. The following is an updated glossary of common terms which may be helpful in making sense out of today’s rapidly changing health care insurance environment.
Ambulatory Care Facility
A facility that provides health care services (such as surgery) on an outpatient basis, meaning an individual does not have to stay overnight. Most inpatient facilities (such as hospitals), also offer ambulatory services. Ambulatory is sometimes called outpatient.
Laboratory tests, x-rays and all other hospital services other than room, board and nursing service.
Capitation represents a set dollar limit that you or your employer pay to a health maintenance organization (HMO), regardless of how much you use (or don’t use) the services offered by the health maintenance organization’s providers.
(Providers is a term used for health professionals who provide care. Usually providers refer to doctors or hospitals. Sometimes, the term also refers to nurse practitioners, chiropractors and other health professionals who offer specialized services.)
Case management is a system embraced by employers and insurance companies to ensure that individuals receive appropriate, reasonable health care services.
Co-payment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some HMOs require a $10 “co-payment” for each office visit, regardless of the type or level of services provided during the visit. Co-payments are not usually specified by percentages.
The amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.
Employee Assistance Programs (EAPs)
Mental health counseling services that are sometimes offered by insurance companies or employers. Typically, individuals or employers do not have to directly pay for services provided through an employee assistance program.
Health Maintenance Organizations (HMO’s)
Health Maintenance Organizations represent “pre-paid” or “capitated” insurance plans in which individuals or their employers pay a fixed monthly fee for services, instead of a separate charge for each visit or service.
The monthly fees remain the same, regardless of the types or levels of services provided. Services are provided by physicians who are employed by, or under contract with, the HMO. HMOs vary in design. Depending on the type of HMO, services may be provided in a central facility, or in a physician’s own office (as with IPAs).
Indemnity Health Plan
Indemnity health insurance plans are also called “fee-for-service.” These are the types of plans that primarily existed before the rise of HMOs, IPAs, and PPOs.
With indemnity plans, the individual pays a pre-determined percentage of the cost of health care services, and the insurance company (or self-insured employer) pays the other percentage.
For example, an individual might pay 20 percent for services and the insurance company pays 80 percent. The fees for services are defined by the providers and vary from physician to physicians. Indemnity health plans offer individuals the freedom to choose their health care professionals.
Independent Practice Associations
IPAs are similar to HMOs, except that individuals receive care in a physician’s own office, rather than in an HMO facility.
A federal-state program that helps pay for health care for the poor and disabled. Individual states determine who is eligible for Medicaid and which health services will be covered. Most people do not qualify for Medicaid until the majority of their money has been spent.
The federal health care insurance program provides some medical coverage for people over 65 for a limited period of time. Medicare will help meet some bills for long-term care, but will not fund unlimited long-term care. To meet uncovered costs, you may need supplemental or “medigap” insurance policies.
Maximum Dollar Limit
The maximum amount of money that an insurance company (or self-insured company) will pay for claims within a specific time period. Maximum dollar limits vary greatly. They may be based on or specified in terms of types of illnesses or types of services. Sometimes they are specified in terms of lifetime, sometimes for a year.
Medigap Insurance Policies
Medigap insurance is offered by private insurance companies, not the government. It is not the same as Medicare or Medicaid. These policies are designed to pay for some of the costs that Medicare does not cover.
A medical condition that is excluded from coverage by an insurance company, because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company.
Preferred Provider Organizations (PPOs)
You or your employer receive discounted rates if you use doctors from a pre-selected group. If you use a physician outside the PPO plan, you must pay more for the medical care
Primary Care Provider (PCP)
A health care professional (usually a physician) who is responsible for monitoring an individual’s overall health care needs. Typically, a PCP serves as a “quarterback” for an individual’s medical care, referring the individual to more specialized physicians for specialist care.
Provider is a termed used for health professionals who provide health care services. Sometimes, the term refers only to physicians. Often, however, the term also refers to other health care professionals such as hospitals, nurse practitioners, chiropractors, physical therapists, and others offering specialized health care services.)
Reasonable and Customary Fees
The average fee charged by a particular type of health care practitioner within a geographic area. The term is often used by medical plans as the amount of money they will approve for a specific test or procedure.
If the fees are higher than the approved amount, the individual receiving the service is responsible for paying the difference. Sometimes, however, if an individual questions his or her physician about the fee, the provider will reduce the charge to the amount that the insurance company has defined as reasonable and customary.
The chance of loss, the degree of probability of loss or the amount of possible loss to the insuring company. For an individual, risk represents such probabilities as the likelihood of surgical complications, medications’ side effects, exposure to infection, or the chance of suffering a medical problem because of a lifestyle or other choice. For example, an individual increases his or her risk of getting cancer if he or she chooses to smoke cigarettes.
Workers’ Compensation encompasses many different state and federal laws that provide financial benefits to workers and their families as compensation for work-related injuries, illnesses, diseases and deaths.
Time limits on filing claims differ by state. Employees who are injured on the job should notify their employer as soon as possible after an injury, and request and obtain appropriate treatment. Claims must be filed with the state agency that manages the workers’ compensation plan.