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Health Insurance Lingo

Understanding Health Insurance terms is crucial for understanding your rights in this area. Knowing all those laws, wordings, restrictions, regulations and definitions may be the job of insurers, but if you speak with them using the same language, you gain more benefits: you come to know the particulars of your health insurance coverage and have a better chance of meeting your insurance needs adequately. Knowing what is covered and what is excluded is essential if your aim is to be a smart insurance consumer.

Traditional Health Insurance is a form of health insurance where policyholders are free to visit any physician or hospital they want, and receive any treatment covered on their policy. Premiums for Traditional Health Insurance are normally higher than for other types of health plans.

Short-Term Medical Insurance is an inexpensive type of insurance that covers periods of up to six months. This form of medical insurance often comes with many limitations, for example, pre-existing medical conditions, medical expenses in countries other than the United States, maternity expenses, etc are unlikely to be covered under Short-Term Medical Insurance.

Deductible is the initial fee a patient pays annually for his/her health care before insurance coverage becomes effective. Deductibles can be established on a per-treatment, per-individual or per-family basis. Usually the higher is the deductible; the lower is the premium rate.

Benefits are medically necessary supplies and services that you can receive payment for under an insurance agreement. For instance, an eye care benefit of $100 would pay $100 for required eye care.

Premium is a fixed rate that you pay monthly, bimonthly, or quarterly to have insurance. Most insurance companies tend to increase their insurance quotes once a year or more often.

Emergency is an injury or disease which happens unexpectedly and requires urgent treatment (within 24 hours).

Dependent is a covered individual who acquires health coverage through a spouse or parent and relies on another person for support. This term normally refers to a spouse or child.

Eligible Dependent is a dependent of a covered person who qualifies for coverage since he/she meets all requirements stated in the contract.

Effective Date is the date upon which contracted insurance benefits are available.

Claim is a demand of an insured individual (or his/her health care provider) to the individual's insurance company to obtain the benefits as specified under the policy.

Network is the term which refers to groups of doctors, hospitals and other health care providers that are involved in the health plan and offer care at established rates.

Master Policy is an insurance policy which provides coverage for a group of policyholders who receive certificates of insurance as the evidence of coverage.

Certificate of Insurance (Certificate Booklet, Policy Booklet, Benefits Booklet) is the plan agreement, that is a printed description of the benefits and coverage provisions, explaining the terms of contract between the carrier and the insured group or individual and stating what is covered and what is excluded.

Open Enrollment is a period which takes place each year and gives employees an opportunity to switch their employer-provided health care plans choosing from a variety of health insurance providers or add/drop dependents from their health insurance policy. In health insurance market, such a period takes place in December, for changes effective January 1.

Complaint is a formal written document that starts the legal action against an insurer or HMO. Complaint is filed in court and includes the defendant, allegations, and desired relief information.

Co-payment is a fixed payment (fee) for certain medical services, such as doctor visits, hospital admissions, therapy sessions, etc, required by an insurer as a cost sharing arrangement. For instance, you can pay $20 for an office visit and $10 for a prescription.

Co-Insurance is your portion of a health care cost that is shared between the insurer and the patient, usually 20-30 percent. For example, the patient often pays 20 percent of the first $5,000 of health care costs for the year.

Referral is an authorization from your primary care physician or health insurer to apply to a specialist or undergo a special procedure. Referrals are a common practice in HMOs.

Generic Drug is a cheaper duplicate of a brand name drug with the same active ingredients, producing the same effect, available when the brand name drug is no longer patent protected.

Prescription Drug is the approved by the FDA medication, taken under written order from a physician and not available over-the-counter.

Underwriting is the process Insurance Companies use to review and evaluate applications for insurance for risk assessment and appropriate premium rates. According to the potential risk associated with an applicant, the Insurance Company either determines the appropriate rating or rejects an applicant.

Indemnity Health Plan (Fee-for-Service) is a health insurance coverage type that reimburses a part of your medical expenses and allows you to choose your own physician, specialist or hospital regardless of whether they are a part of a network or plan. The fees for services are determined by the health care providers and usually vary from doctor to doctor and hospital to hospital. For each covered service provided to you, your insurance company will reimburse your provider.

Managed Care refers to all programs (health plans) that manage health costs by limiting unnecessary treatment. This is an attempt to create the most cost-efficient comprehensive health care system. Health Maintenance Organization (HMO), Point-of-Service (POS) and Preferred Provider Organization (PPO) are the three most common Managed Care health insurance plan options.

Health Maintenance Organization Plan (HMO) is a coverage type that provides health services to members for a monthly premium and co-payment. Members make a choice of a primary care physician who coordinates the member's health care. HMO plan requires members to get a referral from their PCP before seeing a specialist.

Primary Care Physician (Personal Care Provider) (PCP) is a medical professional (family practice physicians, general internal medicine physicians, pediatricians, and sometimes obstetrician/gynecologists) who provides a range of health care services to insured individuals, manages the health care of HMO patients and makes referrals to other specialists when required. A person enrolled in HMO chooses a PCP from a network of participating providers.

Point-of-Service (POS) is a type of Managed Care plan that allow its members to receive services either from participating HMO providers or outside the network. In-network care for members of POS plan is less expensive, while for out-of-network care, members pay a deductible and coinsurance.

Preferred Provider Organization (PPO) is a type of Managed Care health coverage that is based on a network of doctors and hospitals who offer care to covered persons at a discounted rate. This plan has fewer restrictions as to accessing providers. If you choose an in-network provider, you pay a lower co-payment and co-insurance. If you choose an out-of-network doctor or hospital, you will have higher co-payments and co-insurance subsequently.

Health Insurance Portability and Accountability Act (HIPAA) is a federal act that protects people who have pre-existing medical conditions, are self-employed, or have to change their jobs. HIPAA strives to make health insurance more mobile in case people change employers, and tries to reduce waste and fraud in health care system.

Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal act according to which employees and their dependents are able to continue their group health coverage for a fixed period of time due to a qualifying event (death or divorce of a covered employee, termination of employment, etc.)

Pre-existing condition, illness or ailment is an illness, the symptoms of which existed prior to a member's joining a new health plan. When applying for Individual Health Insurance, a person having a pre-existing condition may have his/her application denied, offered an insurance coverage at a higher price, or offered coverage that excludes some health conditions.

Risk Pool is referred to special state health insurance plans established to serve as a safety net for those who cannot obtain group health insurance, have pre-existing health conditions and fail to find affordable health insurance coverage on their own. Risk pools are for people who are self-employed, work for businesses that don't offer health insurance to their employees, unemployed, retirees, people with chronic diseases, the disabled, etc.