Health Insurance 

Health Insurance Glossary

Capitation - A system where an HMO pays a doctor or hospital a flat monthly fee for the care of each health plan member whether or not any services are delivered.

Carrier - A company or HMO that provides health care coverage.

Certificates of coverage - Printed material showing members of a group health benefit plan the benefits provided by the group master policy.

Closed practice - A primary care physician who is not accepting new patients. Note: Even if your physician is on the HMO or PPO list, call to see if the practice is still open for accepting new HMO or PPO participants.

Coinsurance - The percentage of each health care bill a person must pay out of their own pocket. Non-covered charges and deductibles are in addition to this amount.

Coinsurance maximum - The most you will have to pay in coinsurance during a policy period (usually a year) before your health plan begins paying 100 percent of the cost of your covered health services. The coinsurance maximum generally does not apply to copayments or other expenses you might be required to pay.

Conditional receipt - A premium receipt given to an applicant that makes a life and health insurance policy effective only if or when a specified condition is met.

Consumer Choice plans - Health care plans offered by carriers that do not include all of the state-mandated benefits. Consumer choice plans must provide members with a disclosure statement and a list describing the mandated benefits that are not covered.

Copayment - The amount you must pay out of your own pocket when you receive medical care or a prescription drug. Copayments usually refer to set fees that HMOs charge to access health care services, but they also may apply to a PPO insurance contract.

Coordination of benefits - A group plan provision that stipulates the primary carrier when you have more than one health plan. This ensures that payments made by the carriers do no exceed the cost of the services provided.

Deductible - The amount the insured must pay in a loss before any payment is due from the company.

Disability benefits - Insurance company coverage that pays for lost wages when you are unable to work because of an illness or injury.

Dread disease policies - Policies that pay only if you contract the illness specified in the policy. (Also called specified disease policies.)

Earned premium - The portion of a policy premium that has been used to actually buy coverage, or that the insurance company has "earned." For instance, if a policyholder has a six-month policy that was paid for in advance, two months into the policy, there would be two months of earned premium. The remaining four months of premium is "unearned premium."

Effective date - The date on which an insurance policy becomes effective.

Eligible employee - An employee who meets the eligibility requirements for coverage in a group plan. To be eligible to join a group plan, you usually must work full-time for at least 30 hours a week. Some group plans may require employees to be a certain pay grade or job classification to be eligible for coverage.

Emergency care - Health care services provided in a hospital emergency facility or comparable facility to evaluate and stabilize sudden and severe medical conditions.

ERISA plan - Health plans created under the Employee Retirement and Income Security Act (ERISA) of 1974. These plans are self-funded, which means that claims are paid strictly from employer contributions and employee premiums. ERISA plans are administered by the U.S. Department of Labor. (Also known as a self-funded plan.)

Evidence of insurability - To qualify for a particular policy at a particular price, companies have the right to ask for information about health and lifestyle. An insurance company will use this information - the evidence of insurability - in deciding if your application for insurance is acceptable and at what premium rate.

Exclusions or limitations - Provisions that exclude or limit coverage of certain named diseases, medical conditions, or services, as well as some sicknesses or accidents that occur under specified circumstances.

Health benefit plan - In most cases, health care services provided to employees by an employer. It can be an indemnity plan or an HMO plan.

Health care reimbursement accounts - Although not an insurance benefit, these accounts allow you to set aside pre-tax dollars to pay for medical care or medical costs not covered by your regular health benefit plan.

Health maintenance organization (HMO) - Managed care plans that provide health care services to their members through networks of doctors, hospitals, and other health care providers. HMOs are popular alternatives to traditional health care plans offered by insurance companies because they cover a wide variety of services, usually at a lower cost.

Hospital confinement policies - Policies that pay a fixed amount each day you are in the hospital.

Hospital-surgical policies - Insurance policies that cover hospital and surgical services.

Indemnity plan - A health plan that allows you to go to any physician or provider you choose, but requires that you pay for the services yourself and file claims for reimbursement. (Also known as fee-for-service.)

Independent Review Organization (IRO) - If your health insurer or HMO declines to pay for health care you believe is medically necessary or appropriate, you may request that it contact TDI and request that an independent group (IRO) review the decision. An IRO review is not required for self-funded ERISA plans. Unless your condition is life-threatening, you must complete the standard appeal process before requesting an IRO review. IROs are not affiliated with your health plan. The health plan must pay for treatment the IRO determines is necessary.

Inpatient medical care - Medical and surgical care usually received in a hospital or skilled nursing home environment.

Justified complaint - A complaint that exposes an apparent violation of a policy provision, contract provision, rule, or statute; or which indicates a practice or service that a prudent layperson would regard as below customary business or medical standards.

Lifetime maximum -The total dollar amount a health care plan will pay over a policyholder´s lifetime.

Long-term care benefits - Coverage that provides help for people when they are unable to care for themselves because of prolonged illness or disability. Benefits are triggered by specific findings of "cognitive impairment" or inability to perform certain actions known as "Activities of Daily Living." Benefits can range from help with daily activities while recuperating at home to skilled nursing care provided in a nursing home.

Major medical policies - Health care policies that usually cover both hospital stays and physicians´ services in and out of the hospital.

Managed health care - A system that organizes physicians, hospitals, and other health care providers into networks with the goal of lowering costs while still providing appropriate medical services. Many managed care systems focus on preventive care and case management to avoid treating more costly illnesses.

Mandated benefits - Health care benefits that state or federal law says must be included in health care plans.

Mandated offerings - Health care benefits that must be offered to the employer or organization sponsoring a group policy. The sponsor is not required to include the benefits in its group plan.

Maximum out-of-pocket expense - The maximum amount someone covered under a health care plan must pay during a certain period for expenses covered by the plan. Until the maximum is reached, the person covered is required to pay a copayment or a percentage on each claim.

Medical payments and personal injury protection (PIP) - Both auto insurance coverages pay limited medical and funeral expenses if the policyholder, a family member, or a passenger in the car is injured or killed in a motor vehicle accident. PIP also pays lost-income benefits.

Medically necessary care - Health care that results from illness or injury or is otherwise authorized by the health care plan. This term can be defined differently from one health care plan to another.

Multiple employer plans - Benefit plans that serve employees of more than one employer and are set up under terms of a collective bargaining agreement.

Multiple Employer Welfare Arrangements (MEWAs) - In general, employee association plans (not set up under a collective bargaining agreement) that provide benefits to employees of more than one employer. If the MEWA assumes all or part of the plan´s insurance risk, it must be licensed by TDI.

Network - All physicians, specialists, hospitals, and other providers who have agreed to provide medical care to HMO members under terms of the contract with the HMO. Insurance contracts with preferred provider benefits also use networks.

Non-network providers - Health care providers and treatment facilities not under contract with the HMO or those that do not have an insurance PPO contract.

Out-of-area - The area outside the counties or ZIP codes in which an HMO provides regular and preventive coverage.

Out-of-network services -Health care services from providers not in an HMO´s or a PPO´s network. Except in certain situations, HMOs will only pay for care received from within its network. If you´re in a PPO plan, you will have to pay more to receive services outside the PPO´s network.

Out-of-pocket maximum - The most you will have to pay during a policy period (usually a year) before you no longer have to pay your share of coinsurance for covered health services. Once you've reached your out-of-pocket maximum, your health plan generally pays 100 percent of your health care costs, up to your policy's coverage limit. You are still responsible for paying your premium. Depending on your plan, you also may have to continue paying copayments and some other expenses.

Outpatient services - Services usually provided in clinics, physician or provider offices, hospital-based outpatient departments, home health services, ambulatory surgical centers, hospices, and kidney dialysis centers.

Point-of-service (POS) plans - POS plans allow an HMO to contract with an insurance company to give enrollees the option of receiving services outside the HMO´s network. In Texas, HMOs must contract with an insurance company to offer POS plans.

Policy - The contract issued by the insurance company to the insured.

Precertification - A requirement that the health care plan must approve, in advance, certain medical procedures. Precertification means the procedure is approved as medically necessary, not approved for payment.

Pre-existing condition - A medical problem or illness you had before applying for health care coverage.

Preferred provider organization (PPO) - A type of plan in which physicians, hospitals, and other providers agree to discount rates for an insurance company. These providers are part of the PPO´s network. Insurance contracts with PPO provisions reimburse at a higher percentage if you use providers in the network. If you go to providers outside the PPO´s network, you will have to pay more for your care.

Premium - The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.

Preventive care - Health care services such as routine physical examinations and immunizations that are intended to prevent illnesses before they occur.

Primary care physician - The physician selected by HMO members to serve as their personal doctor and provide all basic medical treatments and any referrals to medical specialists. Primary care physicians are prohibited in PPOs and other indemnity health plans. (Also known as a gatekeeper.)

Provider - A hospital, pharmacist, registered nurse, organization, institution, or person licensed to provide health care services in Texas. A physician also may be referred to as a provider. The term provider is often used collectively to refer to individual or facilities who provide health services.

Provider network - All the doctors, specialists, hospitals, and other providers who agree to provide medical care to HMO or PPO members under terms of a contract with the HMO or insurance company.

Residual market - Insurers, such as assigned risk plans and the Texas FAIR Plan, that exist to provide coverage for those who cannot get it in the standard market.

Self-funded plans - Plans funded strictly from employer contributions and employee premiums. These plans are authorized by the federal Employee Retirement and Income Security Act (ERISA) of 1974 and are regulated by the U.S. Department of Labor. State regulation of these plans is limited. Although an insurance company may be hired to administer the plan, the insurance company assumes no risk. (Also known as ERISA plans.)

Service area - The counties, or portions of counties, where an HMO or PPO provides coverage.

Skilled nursing care - Care needed after a serious illness. It is available 24 hours a day from skilled medical personnel such as registered nurses or professional therapists. A doctor orders skilled nursing care as part of a treatment plan.

Specified disease policies - Policies that pay only if you contract the illness specified in the policy. (Also called dread disease policies.)

Specified medical limitations - A dollar limit placed on treatment of certain medical conditions or types of treatment.

Texas Health Insurance Pool - The Health Pool provides health insurance to Texans unable to obtain coverage because of their medical history or for certain other reasons.

Third-party administrator (TPA) - An organization that performs managerial and clerical functions related to an employee benefit insurance plan by an individual or committee that is not an original party to the benefit plan.

Usual and customary - The charge for medical services that refers to the amount approved by the carrier for payment. These charges may be based on rates usually charged by physicians and providers in your area; rate averages compiled by independent rating services; or rate averages compiled by the insurance company.

Utilization review - The review process aimed at helping HMOs and insurance companies reduce health care costs by avoiding unnecessary care. The review includes evaluating requests for medical treatment and determining, on a case-by-case basis, whether that treatment is necessary.