Glossary of Health Insurance Terms. List 1

Brand-name drug | A drug that has a trade name and a patent. While the patent is in effect, the company that developed the drug has the exclusive right to sell it. After the patent expires, other manufacturers can apply to make generic versions of the brand-name drug. Generic drugs are typically a fraction of the cost because the makers do not have to spend money on developing and marketing the drugs. Capitation A health care reimbursement model in which a health insurance plan agrees to pay a doctor, hospital, lab or other health care provider a flat amount per enrolled patient, no matter how many services patients require. The payment amount is set in a contract between the health plan and providers or groups of providers. Health maintenance organizations use this kind of contracting method to keep costs down. To get full coverage, patients must seek treatment from the doctors and other providers who have contracted with the HMO. Certificate of coverage | A legal document between the health insurer and a group to provide benefits to eligible members. The certificate spells out the benefits, limitations and exclusions in the health plan. Children's Health Insurance Program | A state and federal program that provides health coverage for uninsured children and pregnant women in families with incomes that are too high for most state Medicaid programs but too low to afford private coverage. COBRA The Consolidated Omnibus Budget Reconciliation Act gives former employees, their spouses, retirees and dependent children the right to temporarily continue employment-based health insurance coverage at group rates. The continuation is available only when coverage is lost because of a specific qualifying event outlined in the law, such as an employee losing a job. Co-insurance The amount of medical costs the patient pays after paying the health insurance plan deductible. Co-insurance is usually a percentage of the cost and is defined in the health plan. It sometimes varies according to the type of service provided. Co-payment The amount the patient must pay toward medical services that are covered in the health plan. The co-payment is a usually a flat dollar amount paid at the time of service. Contract year | The year in which a health plan operates. Under plans that operate on a contract basis, the deductibles are reset on the renewal date, no matter when that falls during the calendar year. Under plans that operate on a calendar-year basis, deductibles are reset Jan. 1. Deductible A flat amount that a patient must pay each year for covered medical services before health insurance pays for services. Denial of claim | A refusal by the health insurance company to pay for a medical service. An insurer may decline payment if it determines the service is not covered in the health plan. Dependent A spouse or child enrolled on an employee's group health plan. Under health care reform, adult children can remain on a parent's health plan up to age 26. Drug formulary | A list of prescription drugs covered by a health plan. The plan may provide different levels of coverage for different drugs, based on the medications' cost and effectiveness. Effective date | The date when health insurance goes into effect. The date is usually listed on the health insurance identification card. EPO Exclusive provider organization. A health plan that covers only services provided by practitioners in its provider network (except in emergency situations). Exclusion Medical services that are not covered under the health insurance plan. Exclusions are listed in the certificate of coverage. Explanation of benefits | A form that explains how a health insurance claim was paid. The form, provided to the patient, details how much the insurer paid and includes information about how to appeal a health benefits decision. Fee for service | A model in which the health insurer pays doctors, hospitals, labs and other providers a fee for each service provided. Fee schedule | A schedule of fees a health insurer pays doctors and other providers for services under a fee-for-service plan. Flexible spending account | An account provided with a benefits plan that employees can use to pay out-of-pocket costs for health care, such as deductibles, co-payments and medical services not covered by the health plan. The account is funded by pre-tax contributions from the employee. The money can't be carried over from one year to the next; any unused money in the account at the end of the year is forfeited. Generic drug | A copy of a brand-name drug that goes by its common name. Manufacturers are allowed to make a generic version after the patent expires on a brand-name drug. Although chemically equivalent to their brand-name counterparts, generic drugs are generally much less expensive. Group health insurance | Health plans offered to groups by employers and professional and alumni associations. Generally it's easier to get coverage for pre-existing conditions under a group health plan than an individual health insurance plan. Health insurance exchange | A one-stop shop for comparing and purchasing insurance. Federal health care reform calls for exchanges to be set up in every state by 2014. The exchanges will be open to individuals and small businesses first, but may open to large groups in 2017. Health insurance plans sold through exchanges must meet certain federal quality standards. Health savings account (HSA) | An account that people can use to pay for health care costs with pre-tax savings. The account is portable - it can move with the employee from one job to another - and the balance carries over from one year to the next, allowing savings to build. An individual must have a high-deductible health insurance plan to be eligible for a health savings account. HIPPA Health Insurance Portability and Accountability Act. A federal law enacted to improve efficiency and access to health insurance and ensure patient privacy. The law gives workers and their families the ability to transfer and continue health insurance coverage when they change or lose jobs, requires confidential handling of patient health information, mandates standards for electronic billing and other processes and aims to minimize health care fraud and abuse. HMO Health maintenance organization. A health plan that provides coordinated and managed health care services. Members in most HMOs must choose a primary care physician who makes referrals to specialists and hospital care when necessary. In some cases, members must receive nonemergency care from providers in a network. Other HMO plans might offer reduced benefits for out-of-network providers. Most HMOs feature small co-payments and no deductibles.