Capitation
A method of paying medical providers through a pre-paid, flat monthly
fee for each covered person. The payment is independent of the number
of services received or the costs incurred by a provider in furnishing
those services.
COBRA
The Consolidated Omnibus Budget Reconciliation Act 1985, commonly known
as COBRA, requires group health plans with 20 or more employees to offer
continued health coverage for you and your dependents for 18 months after
you leave your job. Longer durations of continuance are available under
certain circumstances. If you opt to continue coverage, you must pay the
entire premium, plus a two percent administration charge.
Coinsurance
The amount you are required to pay for medical care in fee-for-service
plan or preferred provider organization (PPO) after you have met your
deductible. The coinsurance rate is usually expressed as a percentage
of billed charges. For example, if the insurance company pays 80 percent
of the claim, you pay 20 percent.
Co-payment
A cost sharing arrangement in which a person pays a specific charge for
a specific medical service -- say $10 for an office visit or $5 for a
prescription.
Deductible
The amount of money you must pay upfront each year to cover your medical
care expenses before your insurance policy starts paying.
Exclusions
Specific conditions or circumstances for which the policy will not provide
benefits.
Fee-for-Service
A payment system for health care where the provider is paid for each
service rendered.
Health Maintenance Organization (HMO)
Prepaid health plans in which you pay a monthly premium and the HMO covers
your doctor's visits, hospital stays, emergency care, surgery, preventive
care, checkups, lab tests, X-rays, and therapy. You must choose a primary
care physician who coordinates all of your care and makes referrals to
any specialists you might need. In an HMO, you must use the doctors, hospitals
and clinics that participate in your plan's network.
Health Savings Accounts (HSA)
An HSA works like an IRA, except that money is used to pay health care costs.
Participants enroll in a relatively inexpensive high deductible insurance plan.
Then, a tax-deductible savings account may be opened to cover current and future
medical expenses. The money deposited, as well as the earnings, is tax-deferred.
The money can then be withdrawn to cover qualified medical expenses tax-free. Unused
balances roll over from year to year.
Lifetime Limit
A cap on the benefits paid under a policy. Many policies have a lifetime
limit of $1 million, which means that the insurer agrees to cover up to
$1 million in covered services over the life of the policy.
Managed Care
An organized way to manage costs, use, and quality of the health care
system. The major types of managed care plans are health maintenance organizations
(HMOs), point-of-service (POS) plans and preferred provider organizations
(PPO).
Medicaid
A joint federal-state health insurance program that is run by the states
and covers certain low-income people (especially children and pregnant
women), and disabled people.
Medicare
The federally sponsored health insurance program of hospital and medical
insurance primarily for people age 65 and over.
Out-of-Pocket Maximum
The most money you will be required to pay in a year for deductibles
and coinsurance. It is a stated dollar amount set by the insurance company,
in addition to regular premiums.
Point-of-Service (POS) Plan
A type of managed care plan combining features of health maintenance
organizations (HMOs) and preferred provider organizations (PPOs), in which
individuals decide whether to go to a network provider and pay a flat
dollar copayment (say $10 for a doctor's visit), or to an out-of-network
provider and pay a deductible and/or coinsurance charge.
Portability
The ability for an individual to transfer from one health insurer to
another health insurer with regard to pre-existing conditions or other
risk factors.
Pre-authorization
A cost containment feature of many group medical policies whereby the
insured must contact the insurer prior to a hospitalization or surgery
and receive authorization for the service.
Pre-existing Condition
A health problem that existed before the date your insurance became effective.
Many insurance plans will not cover preexisting conditions. Some will
cover them only after a waiting period.
Preferred Provider Organization (PPO)
A network of health care providers with which a health insurer has negotiated
contracts for its insured population to receive health services at discounted
costs. Health care decisions generally remain with the patient as he she
selects providers and determines his or her own need for services. Patients
have financial incentives to select providers within the PPO network.
Premium
The amount you or your employer pays in exchange for insurance coverage.
Primary Care Physician
Under a health maintenance organization (HMO) or point-of-service (POS)
plan, usually your first contact for health care. This is often a family
physician, internist, or pediatrician. A primary care physician monitors
your health, treats most health problems, and refers you to specialists
if necessary.
Provider
Any person (doctor or nurse) or institution (hospital, clinic, or laboratory)
that provides medical care.
Third-Party Payer
Any payer of health care services other than you. This can be an insurance
company, an HMO, a PPO, or the federal government.
Usual and Customary Charge
The amount a health plan will recognize for payment for a particular
medical procedure. It is typically based on what is considered "reasonable"
for that procedure in your service area.
Utilization Review
A cost control mechanism by which the appropriateness, necessity, and
quality of health care services are monitored by both insurers and employers.