A method of paying medical providers through a pre-paid, flat monthly fee for each covered person. The payment is independent of the number of services received or the costs incurred by a provider in furnishing those services.
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 durations of continuance are available under certain circumstances. If you opt to continue coverage, you must pay the entire premium, plus a two
percent administration charge.
The amount you are 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.
Coordination of Benefits (COB)
A process for determining the respective responsibilities of two or more health plans that have some
financial responsibility for a medical claim.
A cost sharing arrangement in which a person pays a specific charge for a specific medical service – say
$10 for an office visit or $5 for a prescription.
The amount of money you must pay upfront each year to cover your medical care expenses before your
insurance policy starts paying.
Specific conditions or circumstances for which the policy will not provide benefits.
A payment system for health care where the provider is paid for each service rendered.
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.
Health Savings Account (HSA)
A Health Savings Account is a special account owned by an individual where contributions to the
account are to pay for current and future medical expenses. HSA’s are used in conjunction with a
“High Deductible Health Plan” (HDHP)
High Deductible Health Plan (HDHP)
Insurance that does not cover first dollar medical expenses (with the possible exception of prevenative
care) and can be an HMO, PPO or indemnity plan, as long as it meets the requirements.
A cap on the benefits paid under a policy. Many policies have a lifetime limit of $1 million, which
means that the insurer agrees to cover up to $1 million in covered services over the life of the policy.
An organized way to manage costs, use, and qualify 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).
A joint federal-state health insurance program that is run by the states and covers certain low-income
people (especially children and pregnant women), and disabled people.
The federally sponsored health insurance program of hospital and medical insurance primarily for
people age 65 and over.
Out of Pocket Maximum
The most money you will be 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) Plan
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 copayment (say $10 for a doctor’s visit), or to an out-of-network
provider and pay a deductible and/or a coinsurance charge.
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.
A cost containment feature of many group medical policies whereby the insured must contact the insurer
prior to a hospitalization or surgery and receive authorization for the service.
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.
The amount you or your employer pays in exchange for insurance coverage.
Primary Care Physician
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 monitors your health, treats most health problems, and refers you to specialists if necessary.
Any person (doctor or nurse) or institution (hospital, clinic or laboratory) that provides medical care.
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.
A cost control mechanism by which the appropriateness, necessity, and quality of health care services
are monitored by both insurers and employers.