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Helpful Medical Insurance Terminology
Co-insurance
The amount you are personally required to pay for medical care in a 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.
COBRA
The Consolidated Omnibus Budget Reconciliation Act of 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 duration of continuance is available under certain circumstances. If you opt to continue coverage, you must pay the entire premium, plus an administration charge. Additional information is available from the State of Colorado here.
Co-payment
A cost sharing arrangement in which a person pays a specific charge for a specific medical service -- say $20 for an office visit or $10 for a prescription.
Deductible
The amount of money you must personally pay each year to cover your medical care expenses before your insurance policy starts paying.
Discount Health Plans and Medical Cards
How does a discount health plan or medical card differ from creditable health insurance coverage? The Colorado Division of Insurance (DOI), a part of DORA, the Department of Regulatory Agencies, has recently published this patient education material to help consumers better understand the insurance they purchase. Please see their information at this link.
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits.
Health Maintenance Organization (HMO)
Prepaid health plans in which you pay a monthly premium and the HMO covers your doctors' 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 and have a referral.
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 (PPOs).
Medicaid
A joint federal-state health insurance program run by the states and covers certain low-income people (especially children and pregnant women) and disabled people. An income eligibility chart for Colorado is available at the Child Health Plan Plus website
Medicare (Original Medicare)
This fee-for-service plan covers many health care services. You can go to any doctor or supplier that is enrolled and accepts Medicare and is accepting new Medicare patients, or to any hospital or other facility. Additional information is available at the Medicare website
Medicare Health Plans (like HMOs and PPOs – Medicare Advantage)
These plans are approved by Medicare and run by private companies and are sometimes known as Medicare Advantage plans. When you join one of these plans, you are still in Medicare. Some of these plans require referrals to see specialists. They provide all of your Part A (hospital) and Part B (medical) coverage. They generally offer extra benefits, and many include prescription drug coverage. These plans often have networks, which mean you may have to see doctors who belong to the plan or go to certain hospitals to get covered services. In many cases, your costs for services can be lower than in Original Medicare, but it is important to check with the plan because the costs for services will vary. The Medicare website has the capability for you to determine which Medicare Advantage plan best fits your situation. The comparison website can be accessed here.
Medicare Prescription Drug Plans (Medicare donut hole)
These plans add prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service Plans, and Medicare Medical Savings Account Plans. In 2009, Medicare pays 75% of seniors' prescription drug bills up to $2,700 (after a $295 deductible). Then, they must spend as much as $3,500 of their own monies for 100% of their purchases until total spending reaches around $6,200 when Medicare then pays 95%.
Medigap (Medicare Supplement Insurance) Policies
These policies help pay some of the health care costs that Original Medicare doesn’t cover. If you are in Original Medicare, you could get a Medigap policy to help cover the extra health care costs.
Out of-Pocket Maximum
The most money you will be personally 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)
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 co-payment (say $10 for a doctor's visit), or to an out-of-network provider and pay a deductible and/or a 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. The insured must contact the insurance company prior to a hospitalization or surgery and receive authorization for the service.
Pre-Authorization Denial and Grievance Procedures
What are my rights regarding insurance pre-authorization and grievance procedures when my insurance carrier says NO?
The Colorado Division of Insurance (DOI), a part of DORA, the Department of Regulatory Agencies, has recently published this patient education material to help consumers better understand the insurance they purchase. Please see their information at this link.
Pre-Existing Condition
A health problem that existed before the date your insurance became effective. Many insurance plans will not cover pre-existing 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 or 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 (PCP)
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 (PCP) monitors your health, treats most health problems and refers you to specialists if necessary.
Provider
Any person (doctor, physician assistant or audiologist) or institution (hospital, clinic or laboratory) that provides medical care.
Referral
A requirement by some types of insurance plans to have their members’ access to healthcare be controlled by a gate keeper – typically the patients’ primary care provider (PCP). When your PCP cannot provide you certain specialized medical care, they then coordinate for specialty services for the patient by entering a referral into the medical insurance system and providing a copy to the specialist. It is the patient’s responsibility to insure a referral is provided to the specialist from their PCP if your insurance requires you to have a referral.
State Continuation
State continuation rules provide for extended health benefits if you had a minimum of 6 months of continued coverage under your employer’s group sponsored plan. To access Continuation benefits contact your employer. Alternatively you may also be eligible for Conversion benefits if you have had coverage for a minimum of 3 consecutive months under your group sponsored plan. To access Conversion benefits please call your member services on the back of your health insurance ID card within 30 days of your loss of coverage. You would be responsible for these premiums and an administration charge. Additional information is available from the State of Colorado here.
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.
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