| Glossary: Health
& Medical Insurance Terminology |
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Cap |
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The maximum amount an insured person will pay for covered medical bills in any one year. A cap is reached when out-of-pocket expenses,
including the annual deductible and coinsurance payments, total a specific amount stated in the insurance policy. |
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Coinsurance |
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The amount the insured is required to pay for medical care in a plan after the annual deductible has been met. Coinsurance rate is usually
expressed as a percentage. For example, the insurance company may pay 80% of the covered claim, and the insured pays the
remaining 20%. This would be called 80/20. |
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Coordination of Benefits |
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A system to eliminate duplication of benefits when a person is covered under more than one group health insurance plan. Benefits under the
two plans usually are limited to no more than 100% of the claim. |
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Co-payment |
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A flat fee paid when medical service is received.
Co-payments are generally paid by people insured in managed care insurance plans. For
example, $10 for every visit to the doctor, or $5 for every filled prescription. |
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COBRA |
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COBRA stands for Consolidated Omnibus Budget Reconciliation Act. This federal law passed in 1985, made it possible for workers and their
covered spouses and children to remain on a former employer’s healthcare plan for a set period of time. |
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Covered Expenses |
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Costs covered by a health plan for covered services, which are medical procedures the insurer agrees to pay for as listed in the insurance
policy. Most insurance plans do not pay for all services. For example, some may not pay for mental health services or certain medications. |
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Deductible |
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The amount of money paid each year by the insured for medical care expenses before an insurance policy starts paying. |
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Exclusions |
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Specific conditions or circumstances for which the policy will not provide benefits. |
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Fee-for-Service |
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A payment system for healthcare in which the caregiver is paid for each service provided rather than a pre-negotiated amount for each
insured patient. |
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Formulary |
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The list of preferred pharmaceutical products that is to be used by physicians in a managed-care plan when they prescribe medication. |
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Generic Drug |
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A drug which is the same as a brand name drug and which is allowed to be produced after the brand name drug’s patent has expired. |
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Health Maintenance Organization (HMO) |
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Health Maintenance Organizations are prepaid health plans. The insured pays a monthly premium and the HMO covers services such as doctors'
visits, hospital stays, emergency care, surgery, checkups, lab tests and x-rays, and therapy. Doctors and hospitals are designated by the HMO. |
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Indemnity Plan |
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Traditional health insurance that usually covers a percentage of the cost of care after the insured pays an annual deductible. |
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Insured |
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The person for whom a healthcare insurance policy is issued. |
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Managed Care |
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A healthcare system structured to manage costs, use and quality of healthcare delivery. All HMOs and PPOs are managed-care systems. |
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Maximum Out-of-Pocket |
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The most money an individual is required to pay per year for deductibles and coinsurance. It is a stated dollar amount set by the insurance
company. Regular premiums are not included in this amount. |
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Point-of-Service (POS) |
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A type of managed-care plan that combines features of health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
Most POS plans enable the insured to decide whether to go to a doctor contracted with the plan and pay a flat dollar copayment, or go to a doctor not contracted with the plan and pay an annual
deductible and coinsurance. |
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Preferred Provider Organization (PPO) |
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A combination of traditional fee-for-service and an HMO. When doctors and hospitals used are part of the PPO, the insurer covers a larger
part of medical bills. Using other doctors is allowed, but results in higher costs for the insured. |
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Pre-existing Condition |
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A health problem that existed or for which the insured received treatment before the date healthcare insurance became effective. Most
healthcare insurance policies have clauses that describe under what circumstances medical expenses related to pre-existing condition will be covered by the plan. |
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Premium |
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The payment, or regular periodic payments, that a policyholder makes to own an insurance policy. Healthcare plan premiums are often
expressed as a monthly premium payment. |
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Primary Care Physician or Doctor |
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Usually, the first contact for healthcare. Often, this is a family physician or internist, but some women use their gynecologist. A primary
care doctor monitors health and diagnoses and treats minor health problems, then may refer individuals to specialists if another level of care is needed. |
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Provider |
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Any person (doctor, nurse, dentist) or institution (hospital or clinic) that provides medical care. |
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Short Term Health Insurance Plan |
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Short-term healthcare plans are sometimes called
Short Term Health Insurance. These plans offer major medical coverage and are
specifically designed to cover you for the short time periods (typically
30 days to 6 or 12 months) during which you have no other health insurance. |
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Usual and Customary |
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(Also Usual and Regular) Agreed upon dollar amounts an insurance company will pay for specific types of healthcare treatments. |
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