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Glossary of Terms

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National Association of Healthcare Underwriters

Glossary of Terms

Certificate of Creditable Coverage

Documentation provided by your health plan that verifies you had coverage under that plan. Certificates of Creditable Coverage will usually be provided automatically when you leave a health plan. You can obtain certificates at other times as well.

COBRA

The Consolidated Omnibus Budget Reconciliation Act, a federal law in effect since 1986. COBRA permits you and your dependents to continue in your employer's group health plan after your job ends. If your employer has 20 or more employees, you may be eligible for COBRA continuation coverage when you retire, terminate employment, or work reduced hours. Continuation coverage also extends to surviving, divorced or separated spouses and dependent children. COBRA continuation coverage generally lasts 18 months, or 36 months for dependents in certain circumstances. An extension of 11 months may be available due to disability.

Co-Insurance

Co-insurance refers to money that an individual is required to pay for services after a deductible has been paid. In some health care plans, co-insurance is called "co-payment" . Co-insurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.

Continuous Coverage

This refers to health insurance coverage that is not interrupted by a break of 63 or more consecutive days. Employer waiting periods do not act as gaps in health insurance coverage for the purpose of determining if coverage is continuous.

Contractual Adjustment

A contractual adjustment is the amount that the carrier agrees to accept as a participating provider with your insurance carrier.

Co-pay

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 PPOs require a $ 20 "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.

Creditable Coverage

Most health coverage is creditable coverage, such as coverage under a group health plan (including COBRA continuation coverage), HMO, individual health insurance policy, Medicaid or Medicare.

Creditable coverage does not include coverage consisting solely of excepted benefits, such as coverage solely for limited-scope dental or vision benefits.

Days in a waiting period during which you have no other coverage are not creditable coverage under the plan, nor are these days taken into account when determining a significant break in coverage (generally a break of 63 days or more).  This 63-day break period may be extended under state law if your coverage is insured through an insurance company or offered through an HMO.  Check with your State Insurance Commissioner's Office to see whether a longer break period applies to you.

Deductible

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.

Enrollment Period

The period during which all employees and their eligible dependents can sign up for coverage under an employer group health plan.

Explanation of Benefits (EOB)

The insurance company's written explanation to a claim showing what they paid and what the client must pay - sometimes accompanied by a benefits check.

Family Medical Leave Act (FMLA)

A federal law that requires employers to provide an employee with up to 12 weeks of unpaid leave during a 12 month period of time for the birth or adoption of a child, or for a serious health condition of the employee or their immediate family member. The employer must allow the employee to return to the same or an equivalent position with the same benefits in which they were eligible for prior to the leave. There are exceptions to the FMLA - the most notable is that only employers with 50 or more employees are covered.

Formulary / Non-Formulary

A Formulary is a list of preferred medications that a committee of pharmacists and doctors deem to be the safest, most effective and most economical. This committee meets regularly to discuss new drugs and trends in drug therapy, and the formulary list changes annually to reflect its findings. Formulary drugs, including preferred brand-name and generic medications, provide a safe, effective and affordable alternative to non-formulary drugs, which have the highest co -payment.

A Non- Formulary drug is a medication that has a preferred alternative listed in the drug formulary. Some benefits provide coverage for non-formulary drugs at a higher non-formulary co -payment. If you do not have coverage for non-formulary drugs at a higher co -payment, your physician may request authorization for a non-formulary drug.

Fully Insured Group Health Plan

Health insurance contract purchased by an employer from an insurance company. Fully insured health plans are regulated by state law.

Group Health Plan

Coverage through an employer or other entity that covers all individuals in the group.

Guaranteed Issue

A requirement that group health plans must allow you to enroll regardless of your health status, age, gender, or other factors that might predict your use of health services. Most health plans sold to small employers are guaranteed issue. If you are HIPAA eligible, insurance companies must offer you a choice of basic and standard individual health plans that are guaranteed issue.

Guaranteed Renewability

A provision in a health plan that means your coverage cannot be canceled because you get sick. HIPAA requires all health plans to be guaranteed renewable. Your coverage can be canceled for other reasons unrelated to your health status.

Health Insurance (or health plan)

Insurance against loss by illness or bodily injury. Health insurance provides coverage for medicine, visits to the doctor or emergency room, hospital stays and other medical expenses. Policies differ in what they cover, the size of the deductible and/or co-payment, limits of coverage and the options for treatment available to the policyholder.

Health Plan Year

That calendar period during which your health plan coverage is in effect. Some group health plan years begin on January 1, while others begin in a different month. Typical group health plans are written for a 12 month timeframe.

HIPAA

Federal law passed in 1996 that allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also creates the authority to mandate the use of standards for the electronic exchange of health care data; to specify what medical and administrative code sets should be used within those standards; to require the use of national identification systems for health care patients, providers, payers (or plans), and employers (or sponsors); and to specify the types of measures required to protect the security and privacy of personally identifiable health care. Full name is "The Health Insurance Portability and Accountability Act of 1996."

HIPAA eligible

  • You must have had 18 months of continuous creditable coverage, at least the last day of which was under a group health plan (including those offered by public employers and churches).

  • You also must have used up any COBRA or state continuation coverage for which you were eligible.

  • You must not be eligible for Medicare, Medicaid or a group health plan.

  • You must not have health insurance. (Note, however, if you know your group coverage is about to end, you can apply for coverage for which you will be federally eligible.)

  • You must apply for health insurance for which you are federally eligible within 63 days of losing your prior coverage.

High Risk Pool (HRP)

Subsidized health insurance pools that are organized by individual states. HRP pools offer health insurance to those who have been denied health insurance because of a medical condition or to individuals whose premiums are rated significantly higher than average due to health standing or claims experience. High risk pools can be a form of qualified health coverage if they are deemed state-qualified. To be considered qualified, the high risk pool must provide coverage to all individuals guaranteed coverage through HIPAA, not impose any preexisting condition exclusions, meet certain requirements for premium rates and covered benefits, and be officially qualified by the state.

HMO, or Health Maintenance Organization

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 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 the HMO, services may be provided in a central facility or in a physician's own office (as with IPAs.)

Individual Health Insurance

Health insurance coverage on an individual, not group, basis. The premium is based on the individualís health application and determined by the carrier.

Late Enrollment

Enrollment in a health plan at a time other than the regular or open enrollment period . If you are a late enrollee, you may be subject to a longer pre-existing condition exclusion period.

Look Back

A length of time immediately prior to enrolling in a health plan that can be examined for evidence of pre-existing conditions.

Managed Care Plans

A medical delivery system that attempts to manage the quality and cost of medical services that individuals receive. Most managed care systems offer HMOs and PPOs that individuals are encouraged to use for their health care services. Some managed care plans attempt to improve health quality, by emphasizing prevention of disease.

Medicaid

A program providing inclusive health insurance coverage and other support to certain low-income residents. States are mandated to have Medicaid programs, though eligibility levels and covered benefits will vary.

Out of Pocket Maximum

A predetermined limited amount of money that an individual must pay out of their own savings, before an insurance company or (self-insured employer) will pay 100 percent for an individual's health care expenses.

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.

Pre-existing Condition (Group)

Any condition for which medical advice, diagnosis, care, or treatment was recommended or received within a defined period (usually six to twelve months) directly preceding enrollment in a health plan. Pregnancy cannot be counted as a pre-existing condition. Genetic data about your probability of developing a disease or condition, without an analysis of that disease or condition, cannot be considered a pre-existing condition. Newborns, newly adopted children, and children placed for adoption covered within 30 days cannot be subject to pre-existing condition exclusions.

Pre-existing Condition (Individual Health Plans)

Any condition for which you received a diagnosis, medical advice, or treatment prior to obtaining individual insurance. In some states, individual health insurers have discretion to define what constitutes a pre-existing condition. Pregnancy can be subject to a pre-existing condition exclusion in most states. However, complications of pregnancy arising after coverage begins cannot be considered a pre-existing condition. Genetic information cannot trigger a pre-existing condition exclusion period in individual health insurance in most states.

Pre-existing Condition elimination Period

The time during which a health insurance plan will not pay for covered care relating to a pre-existing condition.

Premium

The amount a person pays in exchange for health coverage. Group insurance requires the employer to pay a percentage of the premium.

Qualifying Event

Self-Insured Group Health Plans

Plans set up by employers who set aside funds to pay their employees health claims and employ a re-insurer for large claims. Employers often hire insurance companies or third party administrators (TPA) to run these plans they may look to you just like fully insured plans. Employers must disclose in your benefits information whether an insurer is responsible for funding, or for only administering the plan. If the insurance carrier is only administering the plan, it is self-insured. Self-insured plans are regulated by the U.S. Department of Labor.

Small Group Health Plans

Typically they are insurance plans with at least 2 but not more than 50 eligible employees.

Stop Loss

The dollar amount of claims filed for eligible expenses at which point you've paid 100 percent of your out-of-pocket and the insurance begins to pay at 100%. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.

Waiting Period

The time you are required to work before you are eligible for health benefits from the employer. Waiting periods do not count as gaps in health insurance for purposes of determining whether coverage is continuous. If your employer requires a waiting period, your pre-existing condition exclusion period begins on the first day of the waiting period.


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