We want to help you to understand health insurance so you can make the most of your health plan.
Please see the information below for definitions, abbreviations, and acronyms for some of the most commonly used insurance terms:
Accumulation Period: A specified period during which a covered employee must accumulate eligible expenses to meet the plan's deductible amount.
Actuarial: Refers to the statistical calculations used to determine the insured rates and premiums based on projections of utilization and costs for a defined population.
Actuarial Value: The percentage of benefit costs the health insurer expects to pay toward a health plan. It is based on an average for a population or area, and may not necessarily reflect actual cost sharing.
Advanced Premium Tax Credit (APTC): Tax credit for individuals who purchase a health plan through the Health Insurance Marketplace and have an income of between 100–400 percent of the Federal Poverty Level. Also known as a subsidy.
Affordable Care Act: See Patient Protection and Affordable Care Act.
Allowed Amount: The maximum amount on which payment is based for covered healthcare services. This may be called "eligible expense," "payment allowance," or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference. See Balance Billing.
Allowable Charge: The amount of money the insurance company will pay a non-participating provider based on that provider's geographic region.
Ambulatory Care: Healthcare services rendered to persons who are not kept overnight in a healthcare facility.
Ancillary Services: Hospital services such as room and board, dietary, nursing and supplies; some examples are radiography and laboratory services.
Appeal: A request for your health insurer or health plan to review a decision or a grievance again.
Assignment of Benefits: A procedure whereby a person authorizes payment of any allowable benefits directly to the healthcare provider.
Authorization: The process by which medical care or a specific service is approved by the health plan.
Balance Billing: The practice of charging full fees in excess of the insurer's reimbursable amounts, then billing the patient for that portion of the bill which the insurer does not cover.
Benefits Package: The list of covered services an insurance company offers to a group or individual.
Benefit Period: Period for application of deductibles, after which time a deductible must again be satisfied.
Board Certified: Physicians or other health professionals who have passed an examination given by a medical specialty board and have been certified by that board as a specialist in the subject in question.
Brokers: Licensed insurance professional who can help you find the right health insurance coverage to fit your specific needs.
Calendar Year Plan: A plan on a calendar year runs from January 1 - December 31. Items like deductible, maximum out-of-pocket expense, etc. will reset every January 1.
Centers of Excellence: A network of healthcare facilities selected for specific services based on criteria such as experience, outcomes, efficiency, and effectiveness. For example, an organ transplant managed care program, wherein member's access selected types of benefits through a specific network of medical centers.
Certificate of Insurance (COI): The legal document describing the coverage a member receives from the insurance company.
CHIP: The Children's Health Insurance Program (CHIP) provides funds to states for health insurance to low-income families with children. It is administered by the U.S. Department of Health and Human Services.
COBRA: Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA permits eligible employees and beneficiaries to continue their health coverage for a period after it would normally terminate. The continuation of coverage requires the individual to pay a premium. COBRA applies to groups of 20 or more people.
Coinsurance: Shared cost of covered services paid by the health plan and the member. Depending on the service, a coinsurance amount may apply before or after you meet your deductible.
Consumer-Directed Health Plans: Health plans (usually with a high deductible) accompanied by either a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) plan.
Contract Year Plan: A plan on a contract year (also called benefit year) runs for any 12-month period within the year. Items like deductible, maximum out-of-pocket expense, etc. will reset at the plan's renewal date. For example, ABC Company renews on July 1 every year. The deductible would start July 1 and end on June 30. The deductible would reset every July 1 for ABC Company members.
Coordination of Benefits (COB): A process by which if an individual has two group health plans, the amount payable is divided between the plans so that the combined coverage amounts to, but does not exceed, 100 percent of the charges.
Copayment: A fixed amount paid by a member at the time of services rendered when seeing a participating provider. For example, $35 per visit to see a PCP.
Cost Sharing: A health plan where the member is required to pay a portion of the cost of care. Examples include copayments, coinsurance, and deductibles.
Cost-Sharing Reduction: Health plans with reduced copayments, coinsurance, and ceductible amounts for individuals who purchase a silver-level plan through the Health Insurance Marketplace and have an income of between 100–250 percent of the Federal Poverty Level. Also known as a subsidy.
Custodial Care: Care provided primarily to assist a patient in meeting the activities of daily living, that does not require skilled nursing services.
Deductible: A set dollar amount that a person must pay out-of-pocket before insurance coverage for most medical expenses can begin.
Dependent: A person (other than you or your spouse) such as a child, parent, or other relative for whom you're entitled to claim a personal exemption on your federal tax return.
Disease Management: For persons with chronic conditions (e.g. diabetes, COPD) it is the coordination of care for the entire disease treatment process, including patient education, inpatient and outpatient care, preventive care, and acute care.
Dual Choice / Dual Option: The opportunity for an individual within an employed group to choose from two or more types of healthcare coverage such as an HMO and a traditional insurance plan.
Durable Medical Equipment (DME): Equipment and supplies ordered by a healthcare provider for everyday or extended use. Coverage for DME may include oxygen equipment, wheelchairs, crutches, or blood testing strips for diabetics.
Electronic Health Record/Electronic Medical Record: Computerized patient health records, including medical, demographic, and administrative information that can be shared across multiple healthcare facilities and physicians for overall continuity in care.
Eligibility Date: The date an individual and/or dependents become eligible for benefits under an employee benefit plan.
Embedded Deductible: When there is more than one individual on a health plan policy, each individual on the plan must meet the individual deductible for their benefits to begin. When the total family deductible is met, benefits for all covered family members begin. No one individual can contribute more than their individual deductible amount to the overall family deductible. See non-embedded deductible.
Emergency Medical Condition: An illness, injury, symptom, or condition so serious that a reasonable person would seek care right away to avoid severe harm.
Emergency Medical Transportation: Ambulance services for an emergency medical condition.
Emergency Services: Services provided in connection with an unforeseen acute illness or injury requiring immediate medical attention.
Employer Mandate: Employers with 51 or more employees must offer affordable coverage to its full-time employees or pay a penalty.
Enrollee: An individual who is enrolled in a benefit plan. Enrollees are also referred to as members and beneficiaries.
Essential Health Benefits: A set of 10 benefits including ambulatory patient services, emergency services, maternity and newborn care, hospitalization, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services, laboratory services, pediatric services, and preventive care that must be included in a qualified health plan (QHP) for individuals and small groups.
Evidence of Coverage (EOC): The legal document describing a subscriber's coverage under a health plan such as a Health Maintenance Organization (HMO).
Exchange (Health Insurance Exchange): General term for the online marketplace all states are required to have for individuals and small businesses. They serve as an Expedia or Orbitz for the health insurance market, where private insurers can offer health plans. See also Health Insurance Marketplace and Small Business Health Options Program.
Excluded Services: Healthcare services that your health insurance or plan does not pay for or cover.
Explanation of Benefits (EOB): A description, sent to patients by the health plan, of benefits received and services for which a healthcare provider has requested payment. This is not a bill.
Family Deductible: A deductible which is met by the combined expenses of all covered family members. For example, a program with a $200 individual deductible may limit a maximum of three deductibles ($600) for the family, regardless of the number of family members.
Federal Poverty Level (FPL): A measure of the minimum income a household needs to cover essentials like food, clothing, and housing. The FPL is established by the federal government and is used to determine eligibility for Exchange.
Fee: A charge or price for professional services.
Fee-for-Service: A method of payment that is based on charges for each individual service or treatment rendered.
Flexible Spending Account (FSA): A tax-advantaged financial account that can be set up through a cafeteria plan of an employer that allows an employee to set aside a portion of earnings to pay for qualified medical expenses as established in the cafeteria plan. Money deducted from an employee's pay into an FSA is not subject to payroll taxes.
Formulary: A list of prescription drugs that are covered by a health plan. Also called a drug list.
Fully Insured: An insurer collects premiums from an employer group or individual and assumes financial risk for medical expenses incurred. The employer or individual bears no risk.
Grandfathered Plan: A health plan that was in place on March 23, 2010, when Health Care Reform began. Grandfathered plans are exempt from complying with some parts of the law, if the plan does not make certain changes.
Grievance: A complaint that an individual communicates to his or her health insurer or plan.
Group Health Plan: Health insurance offered by a group, typically an employer or an association.
Guaranteed Availability/Issue: A law that states that a health plan cannot deny you coverage because of pre-existing conditions or past medical history.
Habilitative Services: Healthcare services that help a person keep, learn, or improve skills and function for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology, and other services for people with disabilities in a variety of inpatient and/or outpatient settings.
Health Insurance: A contract that requires your health insurer to pay some or all of your healthcare costs in exchange for a premium.
Health Insurance Marketplace: The section of the federal Exchange where individuals can purchase health plans for themselves and/or their families. See Virginia Insurance Marketplace.
Health Insurance Portability and Accountability Act of 1996 (HIPAA): The law that sets standards regarding the security and privacy of person health information.
Health Reimbursement Arrangement (HRA): An optional benefit, funded by the employer, that reimburses plan participants for qualified medical expenses up to a fixed amount. The reimbursements are tax-free, and any unused funds can be rolled over for use in future years.
Health Care Reform: See Patient Protection and Affordable Care Act
Health Savings Account (HSA): A tax-advantaged medical savings account available to taxpayers enrolled in a high-deductible health plan (HDHP). The funds contributed to an HSA are not subject to federal income tax at the time of deposit.
Health Employer Data and Information Set (HEDIS®): A set of performance measures designed to help healthcare purchasers understand the value of healthcare purchases and measure health plan performance.
Health Maintenance Organization (HMO): A legal corporation that offers health insurance and medical care. HMOs typically offer a range of healthcare services at a fixed price (see capitation).
Health Plan: A generic term to refer to a specific benefit package offered by an insurer.
High-Deductible Health Plan: Health plans with a higher-set dollar amount that a person must pay before insurance coverage for medical expenses can begin. They also usually have lower premiums than traditional plans.
Home Health Care: Healthcare services a person receives at home.
Hospice Services: Services to provide comfort and support for persons in the last stages of a terminal illness and their families.
Hospitalization: Care in a hospital that requires admission as an inpatient and usually requires an overnight stay. An overnight stay for observation could also be considered outpatient care.
Individual Mandate: Law that states most individuals are required to have health insurance.
In-Network Provider (Participating Provider): Any physician, hospital, pharmacy, laboratory, or other diagnostic center under contract with the health plan to provide services to members at a specified cost.
Insurance Company: Organization assuming risk for paying a group's medical claims, regardless of the amount. Insurance companies set the premium and determine the benefit plan coverage.
Managed Care: A healthcare system that reduces the cost of providing health benefits and improves the quality of care.
Medicaid: Program administered by the state's Department of Medical Assistance Services (DMAS) under The Centers for Medicare and Medicaid Services (CMS). Payments are made for approved healthcare services provided by hospitals, health agencies, and private practitioners for persons receiving public assistance or whose income does not exceed maximum limits. Funds are derived on a state-federal shared basis.
Medically Necessary: Supplies and services provided to diagnose and treat a medical condition in accordance with the standards of good medical practice and the medical community.
Medicare: The federally financed hospital insurance system (Part A) and supplementary medical insurance (Part B) for the aged created by the 1965 amendment to the Social Security Act.
Member: Each individual enrolled for services in the health plan; includes subscribers and their eligible dependents.
Network: The facilities, providers, and suppliers your health insurer or plan has contracted with to provide healthcare services.
Non-embedded deductible: When there is more than one individual on a health plan policy, all family members' out-of-pocket expenses count toward the family deductible until it is met, and then benefits for all covered family members begin. The family deductible may be met entirely by one family member or a combination of family members. See Embedded Deductible.
Non-Par (Non-Participating) Provider: Any physician, hospital, pharmacy, laboratory, or other diagnostic center not under contract with a plan to provide services to members at a specified cost. In some benefit plans, members may have reduced coverage (or NO coverage if care is received from non-plan providers).
Open Enrollment: The period (usually once a year) during which subscribers in a health plan may have an opportunity to select an alternative plan being offered to them; or a period when uninsured employees and their dependents may obtain coverage.
Out-of-Network-Provider(Non-Participating Provider): Any physician, hospital, pharmacy, laboratory, or other diagnostic center not under contract with a plan to provide services to members at a specified cost. In some benefit plans, members may have reduced coverage (or NO coverage if care is received from non-participating providers).
Out-of-Pocket Costs: Healthcare costs that are not covered by insurance, such as copayments, coinsurance, and deductibles.
Out-of-Pocket Maximum (OOP max or MOOP): The maximum amount that an insured person will have to pay for covered expenses under the plan, usually within the plan effective dates.
Outpatient Care: Care in a hospital that does not usually require an overnight stay.
Participating Provider: Any physician, hospital, pharmacy, laboratory, or other diagnostic center under contract with the health plan to provide services to members at a specified cost.
Patient Centered Medical Home (PCMH): A team-based healthcare delivery model led by a physician that provides comprehensive and continuous medical care to patients. Goals of a PCMH include better access to healthcare, increased satisfaction with care, and overall improved health.
Patient Protection and Affordable Care Act (PPACA): A law with a series of statutes went into effect March 23, 2010 aimed at increasing access to affordable healthcare for most Americans. Health insurers, healthcare facilities, physicians, individuals, small and large businesses, Medicare, and Medicaid are all impacted by the law.
Per Diem Cost: Cost per day; hospital or other institutional cost for a day of care.
Physician Services: Professional services provided by a licensed medical professional, such as a physician, to promote, maintain, or restore health.
Point of Service (POS) Plan: An HMO plan which allows the member to pay lower copayment or coinsurance if they stay within the established HMO delivery system. This plan also permits the member to choose and receive services from an outside doctor, any time, if they are willing to pay higher copayments, deductibles, and possibly monthly premiums.
Pre-Admission Review: Review of an elective hospitalization prior to a patient's admission to ensure that the services are necessary and should be provided in an inpatient hospital setting.
Pre-Authorization: The authorization required by an insurance carrier before the member is eligible to receive maximum benefits for hospitalization and other specific services. With some benefit plans, the member is responsible for obtaining pre-authorization prior to receiving services.
Pre-Existing Condition: A health condition (except pregnancy) that was diagnosed and/or treated within six months prior to enrolling in a health plan. See Guaranteed Issue.
Preferred Provider Organization (PPO): A system in which a payer negotiates lower prices with certain doctors and hospitals. Patients who go to a preferred (or in-network) provider get a higher benefit-for example, 90 percent or 100 percent coverage of their costs-than patients who go outside the network.
Premium: The fee paid to a health insurance carrier by an enrolled company or individual, normally monthly, for the delivery and financing of healthcare services to the employees or the individual, and their dependents enrolled in the plan.
Preventive Care: Care received to help prevent or detect illness before it occurs, such as routine physicals, well baby care, annual gynecological exams, etc.
Primary Care Physician (PCP): A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine) or Physician Assistant who directly provides or coordinates a range of healthcare services for a patient.
Provider: A supplier of healthcare services like a hospital, nursing home, lab, or physician.
Qualified Health Plan (QHP): An insurance plan that is certified by an Exchange, provides essential health benefits, follows established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts), and meets other requirements. A QHP will have a certification by each Exchange in which it is sold.
Qualifying Event: An event that enables an individual to make a change to their health plan outside of the open enrollment period. Examples include divorce, termination of employment, or birth of a child.
Reconstructive Surgery: Surgery and follow-up treatment needed to correct or improve a part of the body because of birth defects, accidents, injuries, or medical conditions.
Rehabilitation Services: Healthcare services that help a person keep, get back, or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt, or disabled. These services may include physical and occupational therapy, speech-language pathology, and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.
Reinsurance: Insurance obtained by a carrier from another company to protect itself against part or all the losses incurred in the process of honoring the claims of members or policyholders. Also referred to as "stop loss insurance." The coverage may apply to an individual claim or to all claims during a specified period for an individual enrollee.
Rescission of Coverage: A health plan is voided by the insurer, and the subscriber (member) could be responsible for any medical claims made against the health plan. Recession of coverage is prohibited except in cases of fraud.
Risk: The possibility that costs associated with insuring a particular group will exceed expected levels, thereby resulting in losses for an insurance carrier or self-insurer.
Rollover: Deductibles paid under a previous plan that are applied to the Deductibles of the current plan.
Self-Funded: A completely non-insured or self-funded plan is one in which no insurance company or insurance plan collect premiums and assumes financial risk. Employer groups use self-funded plans where they collect premiums from employees and pay the claims, but contract with an insurer to provide the administrative services.
Service Area: The geographic area served by an insurer or healthcare provider.
Skilled Nursing Care: Services from licensed nurses in your home or in a nursing home. Skilled care services are from technicians and therapists in your home or in a nursing home.
Specialist: A physician specialist focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent, or treat certain types of symptoms and conditions. A non-physician specialist is a provider who has more training in a specific area of healthcare.
Stop-loss: See Reinsurance.
Subsidy: See Advanced Premium Tax Credit or Cost-Sharing Reduction.
Subscriber: An individual who meets the health plan's eligibility requirement; who enrolls in the health plan; and accepts the financial responsibility for any premiums, copayments, coinsurance, or deductibles.
Summary of Benefits (SOB): A document that outlines the benefits, out-of-pocket costs, and what the insurance company pays based on the type of plan. This is not a bill.
Tertiary Care: Medical care requiring a setting outside of the routine, community standard; care to be provided within a regional medical center having comprehensive training, specialists, and research training.
Third-Party Administrator (TPA): An organization that administers healthcare benefits, mostly for self-insured employers. Services may include claims review and claims processing.
Urgent Care: Care for an illness, injury, or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.
Uniform Summary of Benefits and Coverage (SBC): a standardized document provided by health insurance companies to potential and current policyholders, detailing the key features of their health plan in plain language, allowing for easy comparison between different coverage options, including covered services, cost-sharing rules, limitations, and exceptions, all presented in a consistent format mandated by the Affordable Care Act (ACA).
Usual, Customary, and Reasonable (UCR) Charges: The maximum amount an insurer will consider eligible for reimbursement under group health insurance plans. Charges are generally based on customary fees paid to providers with similar training and experience in a given geographic area.
Virginia Insurance Marketplace (VIM): The state Exchange where individuals can purchase health plans for themselves and/or their families. The VIM opened in 2023 for Virginia-based residents. See Health Insurance Marketplace.
Wellness Plan/Program: An employer-sponsored program that can be part of the overall health plan or a separate program. Wellness programs aim to improve health and prevent disease while reducing overall healthcare costs, maintaining/improving employee health, and reducing illness-related absenteeism.
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