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A
Accident - An unforeseen and unintentional act identifiable in time and place.
Actuary - A person trained in mathematics whose job is to apply the theory of probability to the business of insurance to develop insurance rates. This is done largely from past experience, though future probable trends are also taken into account.
Agent - An individual appointed by an insurance company to solicit, negotiate, effect or countersign insurance contracts, and to provide policyholder services on its behalf. Unlike brokers, agents are "captive" with the insurance company they represent, meaning that they sign a contract with the company promising not to represent any competing insurance companies in that line of insurance.
Allowable Charge - The maximum charge for which a third party will reimburse a provider for a given service. An allowable charge is not necessarily the same as either a reasonable, customary, maximum, actual, or prevailing charge.
Ancillary Services - Services, other than those provided by a physician or hospital, which are related to a patientıs care, such as laboratory work, x-rays and anesthesia.
B
Basic Hospital Expense Insurance - Hospital coverage providing benefits for room and board and miscellaneous hospital expenses for a specified number of days during hospital confinement, typically on an indemnity basis with no network pricing benefits.
Benefit Period - In health insurance, the length of time money will be payable by the insurer to the insured under the provisions of an insurance policy.
Broker - A person who acts as the representative of the applicant for insurance. A broker, like Insurance Shoppers, generally offers options from multiple insurance carriers. Although brokers are compensated with a commission from the insurance company, they do not represent the insurer. Their sole duty is to get the best possible coverage for their clients at the lowest possible cost. Insurance companies cannot charge more for policies purchased through a broker.
C
Calendar Year - The period beginning January 1 of any year through December 31 of the same year which insurance companies base deductible, coinsurance and out-of-pocket expenses on.
Case Management - A process whereby a covered person with specific health care needs is identified and a plan which efficiently utilizes health care resources is designed and implemented to achieve the optimum patient outcome in the most cost-effective manner.
Certificate Of Coverage - A document given to an insured that describes the benefits, limitations and exclusions of coverage provided by an insurance company.
Claim - Information a medical provider or insured submits to an insurance company to request payment for medical services provided to the insured.
Coinsurance - Coinsurance is the percentage of a medical bill that an insured person must pay, after deductibles and/or co-pays are met. While coinsurance is commonly 20 percent, it can be as little as zero or as much as 50 percent.
Common Law - Law based upon custom, usage and case law of the courts during the past several hundred years, as distinguished from statute law which is passed by state legislatures or congress.
Concealment - Withholding material facts concerning a risk or a loss. Concealment usually voids coverage.
Consolidated Omnibus Budget Reconciliation Act (COBRA) - A federal law that, among other things, requires employers to offer continued health insurance coverage to certain employees and their beneficiaries whose group health insurance has been terminated if they undergo a triggering event.
Contract Year - The period of time from the effective date of the contract, to the expiration date of the contract.
Coordination Of Benefits (COB) - A provision in the contract that applies when a person is covered under more than one medical plan. It requires that payment of benefits be coordinated by all plans to eliminate over insurance or duplication of benefits.
Copayment - A cost-sharing arrangement in which an insured pays a specified charge for a specified service, such as $25 for an office visit or $15 for a generic medication. The insured is usually responsible for payment at the time the service is rendered. If a plan has copayments on doctor's visits, prescriptions, etc, this charge typically does not count toward coinsurance and deductible payments because the service is covered before the deductible and coinsurance.
Covered Person - An individual who meets eligibility requirements and for whom premium payments are paid for specified benefits of the contractual agreement.
D
Deductible - The amount of eligible expenses a covered person or family must pay each year from his/her own pocket before the plan will make payment for eligible expenses. On family policies, deductibles are typically per person and usually have a maximum of 2 or 3 family members. However, deductibles on HSA qualified health plans have just one deductible for the whole family to accumulate towards and will usually be higher.
Deductible Carry Over Credit - Charges applied to the deductible for services during the last 3 months of a calendar year which may be used to satisfy the following yearıs deductible.
Dependent - A covered person who relies on another person for support or obtains health coverage through a spouse, parent or grandparent who is the covered person under a plan.
E
Effective Date - The date insurance coverage begins.
Eligible Dependent - A dependent of a covered person (spouse, child, or other dependent) who meets all requirements specified in the contract to qualify for coverage and for who premium payment is made.
Eligible Expenses - The lower of the reasonable and customary charges or the agreed upon health services fee for health services and supplies covered under a health plan.
Exclusion - Something not covered by the policy and specifically stated in the policy contract. Pre-existing conditions can have exclusions for a set period of time.
Explanation Of Benefits (EOB) - The statement sent to an insured by their health insurance company listing services provided, amount billed, eligible expenses and payment made by the health insurance company.
F
Family Health Insurance - See Individual/Family health plans.
Formulary - An approved list of prescription drugs that managed care plans may provide to their enrollees. Some plans restrict prescriptions to those contained on the formulary and others also provide non-formulary prescriptions. Drugs contained on the formulary are generally those that are determined to be cost effective and medically effective.
Fraud - A false representation of a matter of fact (whether by words or conduct, by false or misleading allegations, or by concealment of that which should have been disclosed) which deceives and is intended to deceive another to his/her legal injury.
Free Look - A period of time during which a policy owner may examine a newly issued policy and, if not satisfied, surrender it in exchange for a full refund of premium.
G
Global Bill - A total charge for a specific set of services, such as obstetrical services that encompass prenatal, delivery, and post-natal care.
Group Health Insurance - Insurance issued on a group basis. Usually with an employer/employee relationship and under a master contract. A group can be underwritten as a whole to adjust price by a small percentage, but the insurance must be guarantee issue to everyone in the group. In states like Colorado, Texas, Ohio, and California, employers who decide to sponsor a health insurance plan may only sponsor a guarantee issue group plan in order to discourage hiring based on health status and spread the risk over the entire group. Thus, in these states, employers may not show any sponsorship of an employee insured under an individual health plan.
Guarantee Issue Health Insurance - Coverage issued on a group basis regardless of known medical conditions or plans that are HIPAA qualified.
H
Health Insurance Portability And Accountability Act (HIPAA) - A federal health benefits law passed in 1996, effective July 1, 1997, which among other things, restricts pre-existing condition exclusion periods to ensure portability of health-care coverage between plans, group and individuals requires guaranteed issue and renewal of insurance coverage; prohibits plans from charging individuals higher premiums, co-payments, and/or deductibles based on health status. Because the issuance of HIPAA plans are guaranteed they usually cost more than plans that are underwritten. Examples of HIPAA plans that are guarantee issue are (Major Risk Medical Insurance Pool (MRMIP) in California and Cover Colorado in Colorado.
Health Maintenance Organization (HMO) - An HMO is a prepaid medical service plan which provides services to plan members. Medical providers contract with the HMO to provide medical services to plan members. Members must use contracted providers and access care through a Primary Care Physician (PCP). The emphasis is on preventive care, and the out of pocket cost to the insured tends to be less than that of a PPO.
Health Savings Account (HSA) - Health Savings Accounts are an option for people wanting a high deductible health insurance plan that has two parts. The first part is a health insurance policy that covers large hospital bills. Note that if you have a family, the deductible on HSA qualified plans is for the entire family. The second part of the Health Savings Account is an investment account or retirement account from which you can withdraw money tax-free for medical care. Otherwise, the money accumulates with tax-free interest until retirement, when you can withdraw for any purpose and pay normal income taxes.
I
Incentives - Profit sharing arrangements offered by HMOs and managed care plans that permit subcontractors and physicians to share in amounts earned from plan savings through reduced hospital and specialty referral usage. (NOTE: Federal fraud and abuse rules may affect the types of incentive plans that health centers and physicians may enter into).
Indemnity - Term used to describe a benefit that pays a specific dollar amount (typically by reimbursement) rather than actual charges or a percentage of the charges. This type of health insurance coverage can leave the insured with more out-of-pocket exposure because there aren't any network negotiated rates and the insured is responsible for any charges above the specific dollar amount that the insurance company reimburses.
Individual (or Family) Health Insurance - Insurance purchased and underwritten on an individual, not group, basis which covers only one person or in some cases members of his or her family as well.
Insured - A person who has obtained health insurance coverage under a health insurance plan.
M
Managed Care - A health care system under which physicians, hospitals, and other health care professionals are organized into a group or "network" in order to manage the cost, quality and access to health care. Managed care organizations include Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HM0s)
Medical Loss Ratio - The ratio between the cost to deliver medical care and the amount of money that was taken in by a plan. Insurance companies often have a medical loss ratio of 96 percent or more: tightly managed HMOs may have medical loss ratios of 75 percent to 85 percent, although the administrative cost ratio is also higher.
N
Network - A list of physicians, hospitals and other providers who provide health care services to the beneficiaries of a specific managed care organization. (See also Participating Provider)
O
Out-of-Network Provider - A health care provider with whom a managed care organization does not have a contract to provide health care services. Because the beneficiary must pay either all of the costs of care from an out-of-network provider or their cost-sharing requirements are greatly increased, depending on the particular plan a beneficiary is in.
Out-of-Pocket Maximum - The total payments that must be paid by a covered person (i.e., deductibles and coinsurance) as defined by the contract. Once this limit is reached, covered health services are paid at 100% for health services received during the rest of that calendar year.
P
Participating Provider - A medical provider who has been contracted to render medical services or supplies to insureds' at a pre-negotiated fee. Providers include hospitals, physicians, and other medical facilities.
Point-of-Service Plan (POS) - A health insurance plan that offers members options for different delivery systems such as HMO, PPO, etc.
Pre-existing Condition - A physical or mental condition that existed before issuance of a policy.
Preferred Provider Organization (PPO) - A health care delivery arrangement which offers insureds access to participating providers at reduced costs. PPOs provide insureds incentives, such as lower deductibles and copayments, to use providers in the network. Network providers agree to negotiated fees in exchange for their preferred provider status.
Premium - The amount paid for insurance.
Primary Care Physician (PCP) - A physician that is responsible for providing, prescribing, authorizing and coordinating all medical care and treatment.
Provider - A physician, hospital, health professional and other entity or institutional health care provider that provides a health care service.
R
Reasonable And Customary (R & C) - A term used to refer to the commonly charged or prevailing fees for health services within a geographic area. A fee is generally considered to be reasonable if it falls within the parameters of the average or commonly charged fee for the particular service within that specific community.
Risk Pool - Health insurance risk pools are special programs created by state legislatures to provide a safety net for the "medically uninsurable" population. These are people who have been denied health insurance coverage because of a pre-existing health condition, or who can only access private coverage that is restricted or has extremely high rates.
U
Underwriting - The act of reviewing and evaluating prospective insureds for risk assessment and appropriate premium. | 
