Health-benefits terminology

Health-benefits terminology

Here are some definitions of common terms. Some policies may define terms differently, so check your plan's terminology:

Co-insurance: Portion of incurred medical expenses, usually a fixed percentage, that the patient must pay out of pocket.

Co-payment (co-pay): The flat rate that managed-care subscribers pay for a provider's medical service. May also refer to a percentage of a cost that the patient must pay under an indemnity plan.

Deductible: Amount of covered expenses that must be incurred and paid by an insured (enrollee/member) before benefits are payable by the insurer.

Enrollee: The person who is the primary insured. This term is usually used to reference people covered by an indemnity insurance plan.

Exclusions: Services that are not covered by a plan. Sometimes called limitations. These exclusions and limitations must be clearly spelled out in plan literature.

Fee-for-Service plans: Method of payment for provider services based on each visit or service rendered.

Flexible Spending Account (FSA): A spending arrangement set up by employers to allow employees to set aside pre-tax money to pay for qualified medical expenses during the year. Only employers may set up an account, and employers may or may not contribute to the account. Also, there may be a limit on the amount that employers and employees can contribute to a health flexible spending arrangement.

Formulary: Published list of medical substances and formulas, typically pharmaceuticals.

High-Deductible Health Plan (HDHP): Often called consumer-driven insurance, it is a health plan with lower premiums and a higher deductible for major care, like a hospitalization or surgery.

Health Maintenance Organization (HMO): An organization that provide enrollees with a wide range of comprehensive health-care services. These health-care plans emphasize maintenance or preventive care.

Health Savings Account (HSA): A type of medical savings account that allows consumers to save for medical expenses on a tax-free basis. They are linked with High-Deductible Health Plans, and together these insurance and savings options represent a new approach to health care.

Limits: The provision in a health insurance policy that states the limits of the insured's coverage. There are typically two limit categories: the time limit and the dollar limit.

Managed care: Typically, health-care insurance that utilizes a specific group (network) of physi
cians, hospitals and other health-care professionals.

Medical Savings Account (MSA): A health-insurance program that typically combines a high-deductible major-medical insurance policy with the insured's qualified savings account. Opportunities for tax advantages relevant to the savings portion of the plan exist in the law.

Medically necessary: Term used by insurers to describe medical treatment, equipment or devices that are appropriate and are rendered in accordance with generally accepted standards of medical practice.

Network: The providers -- clinics, hospitals, medical groups, physicians and others -- that can constitute a managed-care health plan.

Open enrollment: A set time of year when you can enroll in health insurance or change from one plan to another without benefit of a qualifying event (for instance, a marriage, divorce, birth of a child/adoption, or death of a spouse).

Out-of-pocket fee: The insured's portion of a covered claim or benefit paid on an annual basis that may include co-payments.

Point of Service (POS): A feature of a managed-care plan that allows insured members to seek care from medical providers outside a network or may add some coverage for preventive-care services.

Pre-authorization: Prior approval for a specialist referral or for non-emergency health-care services.

Pre-certification: A requirement of some health plans for the individual or provider to notify the insurer before a hospitalization or surgical procedure.

Preferred Provider Organization (PPO): A network of physicians and hospitals that agrees to provide health services for prearranged fees.

Premium: The amount charged by the insurance company to provide the insurance coverage detailed in the policy.

Usual, Customary and Reasonable Fees (UCRs): Charges by health-care providers that are consistent with charges from similar providers for identical or similar services in a given locale.

SOURCES: Virginia, Health Information; Agency for Healthcare; Research and Quality