insurancebrochure Health Insurance Glossary

Health Insurance Glossary

This health insurance glossary is not exhaustive and may not be accurate because usage of terms can vary. Some health insurance companies may use some words with a diffferent meaning from those given in this health insurance glossary, and practices may vary among health insurance companies.

Since a health insurance glossary can only be general in nature, you need to also check your policy/certificate/evidence of coverage for its definitions or call the health insurance company to obtain confirmation of what a term means in a particular case.

Accidental injuries: unintentional internal or external injuries, e.g., strains, animal bites, burns, contusions and abrasions which result in trauma to the body. Accidental injuries are different from illness related conditions.

Acupuncture services: the treatment of a disease or condition by inserting special needles along specific nerve pathways for therapeutic purposes. The placement of the needles varies with the disease or condition being treated.

Acute care: care that is provided in an office, urgent care setting, emergency room or hospital for a medical illness, accident or injury. Acute care may be emergency, urgent or non-urgent, but is not primarily preventive in nature.

Adverse selection: a tendency for higher than average bad risks to be issued coverage, e.g., an association plan where all members are eligible for enrollment without screening. The members with pre-existing health problems rush to join while the healthiest shop around. That increases average claims cost, causing the premiums to increase, causing the healthiest to shop around even more. Eventually, the plan is unaffordable for any good risk to consider buying and the whole wishful thinking scheme bites the dust. It is abandoned and the members must look elsewhere.

Aggregate maximum: in some policies, "aggregate maximum amount means the maximum amount payable... for any one covered injury or sickness for each insured person... ". Because one major illness or major injury could exceed this aggregate amount, typically $500,000, it effectively negates the benefit of the lifetime maximum which is a higher figure.

Alcoholism/substance treatment center: a detoxification and/or rehabilitation facility licensed by the state to treat alcoholism/drug abuse.

Alternative/complimentary care: therapeutic practices that are not currently considered an integral part of conventional medical practice. Therapies are termed Complimentary when used in addition to conventional treatments and as Alternative when used instead of conventional treatment. Alternative medicine includes, but is not limited to, Chinese or Ayurvedic medicine, herbal treatments, vitamin therapy, homeopathic medicine and other non-traditional remedies for treating diseases or conditions.

Ambulance: a specially designed and equipped vehicle used only for transporting the sick and injured. It must have customary safety and lifesaving equipment such as first aid supplies and oxygen equipment. The vehicle must be operated by trained personnel and licensed as an ambulance.

Ancillary services: services and supplies (in addition to room services) that hospitals, alcoholism treatment centers and other facilities bill for and regularly make available for the treatment of the member’s condition. Such services include, but are not limited to:

  • Use of operating room, recovery room, emergency room, treatment rooms and related equipment.
  • Drugs and medicines, biologics (medicines made from living organisms and their products), and pharmaceuticals.
  • Dressings and supplies, sterile trays, casts, and splints.
  • Diagnostic and therapeutic services.
  • Blood processing and transportation and blood handling costs and administration.

Anesthesia: the loss of normal sensation or feeling. There are two different types of anesthesia:

  • General anesthesia, also known as total body anesthesia, causes the patient to become unconscious or “put to sleep” for a period of time.
  • Local anesthesia causes loss of feeling or numbness in a specific area usually injected with a local anesthetic drug such as Lidocaine.

Anniversary date: (i) the annual date on which a group renews its coverage and optional coverages or other choices, e.g., employee waiting periods, can be changed. Usually this is the annual anniversary of when the policy was first in effect.
(ii) for some individual policies, the annual date on which certain changes may occur, e.g., policyholder can change the deductible or health insurance company changes the premium.

Anthem Blue Cross and Blue Shield: Rocky Mountain Hospital and Medical Service, Inc., a Colorado insurance company doing business as Anthem Blue Cross and Blue Shield. Also referred to as “Anthem.”

Appeal: a process for reconsideration of the insurer’s decision regarding a member’s claim.

Association: (i) Because of different laws and regulations in each state, to facilitate the filing of policies and amendments in multiple states, some health insurance companies wanting to issue individual/family coverage, contract with an independent association,. e.g., a consumer association or special-interest lobbying association, to which they issue a master policy. A policy certificate is issued under the master policy to the health insurance buyer who must be a member of the association. A small membership fee is charged in addition to the premium or may be included in the premium. The fee is then paid by the health insurance company to the association. Of itself, this is a legal and proper procedure. However, it still amounts to selling individual coverage.

(ii) This legitimate process should not be confused with the dubious claims of some marketing operations who say that the price of their health insurance is lower than it otherwise would be because it was bought with an association's bulk buying power. Such a claim is considered by some observers to be a deceptive trade practice especially when combined with a lack of explanation as to significant coverage limitations in the plan which the consumer may overlook. There may be an association master policy from which the association member gets a policy certificate, but that does not reduce claims or other significant costs and so does not produce lower priced health insurance for association members.

The consumer may end up with coverage that is inadequate and over-priced compared with what else is on the market. That may happen because the consumer becomes overly enthusiastic about the "bulk buying power" story and neglects to make a careful comparison with what else is on the market.

Authorization: approval of benefits for a covered procedure or service.

Benefit period: the number of days or units of service, such as two office visits per member’s benefit year, for which the insurer will provide benefits during a specified length of time.

Benefit year: A specified 12 month period. It is usually either (i) the calendar year, or (ii) from anniversary to anniversary of when the coverage came into effect.

Billed charges: a provider’s regular charges for services and supplies, as offered to the public generally and without any adjustment for any applicable PPO, participating provider or other discounts.

Birth abnormality: a condition that is recognizable at birth, such as a fractured arm.

Birthday rule: the guideline that determines which of two parents' health insurance coverages is primary for the coverage of dependent child(ren). Generally, under the birthday rule, the parent whose birthday comes first during the year is considered to have the primary insurance coverage for the child(ren). Any balance may be submitted to the other parent's insurance carrier for additional consideration.

Capitation: A method used by an entity responsible for financing health care, e.g., certain health insurers and some large employers, to pay medical providers such as a group of physicians or hospitals. A pre-determined payment is made periodically to cover a number of patients for whatever medical care is needed, ie., payment is per person instead of per procedure.

The financial risk is shifted in large part to the medical providers. In addition, the insurer or self-funded plan saves money by not having to process claims. Primary care capitation covers only primary care. Partial capitation covers primary care and specialty care. Global or full capitation also includes hospitalization.

Care management: a plan of medically necessary and appropriate health care, which is aimed at promoting more effective interventions to meet member needs and optimize care. Care management is also referred to as case management.

Care manager: a professional (e.g., nurse, doctor or social worker) who works with members, providers and the insurer to coordinate services deemed medically necessary for the member. A care manager is also referred to as a case manager.

Certificate, or policy certificate: A document issued by the insurer which explains the benefits, limitations, exclusions, terms and conditions of the health coverage.

Chemotherapy: drug therapy administered as treatment for malignant conditions and diseases of certain body systems.

Chiropractic services: a system of therapy in which disease is considered the result of abnormal function of the nervous system. This method of treatment usually involves manipulation of the spinal column and other body structures.

Chronic Pain: ongoing pain that lasts more than six months that is due to non-life threatening causes, may continue for the remainder of the person's life, and has not responded to current available treatment methods.

COBRA: an acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985. This federal law allows individuals, in certain cases, to continue their group health insurance coverage for a specified period after termination of their employment for other qualifying events.

Coinsurance: (i) you, the insured member, pay part of the medical expenses and the health insurance company pays part, usually up to a certain annual dollar figure of expenses, after which the health insurance company pays 100% of covered expenses. Coinsurance is commonly paid after an annual deductible has been paid by the insured.

(ii) coinsurance may be greater than the deductible, so shop carefully. Compare deductible added to coinsurance, don't just compare deductibles.

(iii) a provision under which the insured and the insurer share costs incurred after the deductible is met, according to a specific formula. An insurer may calculate the amount of coinsurance that the member pays to a provider before the insurer subtracts any discount(s) the insurer may have negotiated with the provider.

Cold therapy: application of cold to decrease swelling, pain or muscle spasm.

Community Rating: The premium charged to a group or individual is not based on its claims alone, but is based on the claims of all the groups or individuals in a certain category, e.g, all the individuals in a county, or all the employers in a certain region or industry.

Complaint: an expression of dissatisfaction with the insurer’s services or the practices of an in-network provider, whether medical or non-medical in nature.

Congenital defect: a defect or anomaly existing before birth, such as cleft lip or club foot. Disorders of growth and development over time are not considered congenital.

Consultation/second opinion: a service provided by another physician who gives an opinion about the treatment of the member's condition. The consulting physician often has specialized skills that are helpful in diagnosing or treating the illness or injury.

Coordination of benefits: also known as COB, a stipulation in most health insurance policies that helps prevent duplicate payments for services covered by more than one policy or program of insurance. For example, a member may be covered by the member’s own policy, as well as a spouse's policy. Eligible medical expenses are covered first by a person's own policy. Any balance is submitted to the spouse's health insurance carrier for additional consideration.

Copayment or Copay: the portion of a claim or medical expense that a member must pay out of the member’s own pocket to a provider or a facility for each service. A copayment or copay is usually a fixed amount that is paid at the time the service is rendered (but sometimes is a percentage).

Usually, but not always, the health insurance company pays 100% of the balance, i.e., there is no coinsurance. Usually, but not always, the annual deductible does not have to be paid first when a copay applies. Sometimes there is a special deductible, e.g., for prescriptions, where an annual prescription deductible must be paid first, and then prescriptions can be paid for with a copay.

Cosmetic services: beautification procedures, services or surgery of a physical characteristic to improve an individual’s appearance.

Cost sharing: the general term for out-of-pocket expenses, e.g., copayments and deductibles, paid by a member.

Covered services: supplies or treatments which are:

  • Medically necessary or otherwise specifically included as a benefit under the coverage.
  • Within the scope of the license of the provider performing the service.
  • Rendered while coverage is in force.
  • Not experimental/investigational or otherwise excluded or limited by the coverage, or by any amendment or rider thereto.
  • Authorized in advance by the insurer if such preauthorization is required by the insurer.

Creditable coverage: a qualified prior health coverage that an employee and/or dependent had within 90 days prior to the effective date of the new coverage. Prior creditable health coverage includes Medicare or Medicaid coverage, a group health insurance coverage, an individual health benefit coverage, state high risk pool coverage, any federal or state health benefit coverage or any other health benefit coverage that provides basic medical and hospital care, including, but not limited to, hospital services, physicians’ services, outpatient medical services, and laboratory and X-ray services.

Cryocuff: water-circulating pad with pump. A machine that circulates fluid through a specially designed pad to provide continuous cold or heat therapy to a specific area.

Custodial care: care provided primarily to meet the personal needs of the member. This includes help in walking, bathing or dressing. It also includes, but is not limited to, preparing food or special diets, feeding, administration of medicine that is usually self-administered or any other care which does not require continuing services of specialized medical personnel.

Deductible: an amount that is required to be paid by a subscriber before the insurer will begin to reimburse for services. However, if a copay applies to a particular procedure, the deductible usually does not apply, e.g., physician office visit copay - the insured pays the copay for the exam and the health insurance company pays the rest of the charge for the exam. Lab tests and x-rays are separate procedures from an exam and so may be subject to deductible and coinsurance even though the exam is covered by a copay.

Dental services: services performed for treatment of conditions related to the teeth or structures supporting the teeth.

Discharge planning: the evaluation of a member’s medical needs and arrangement of appropriate care after discharge from a facility.

Durable medical equipment: any equipment that can withstand repeated use, is made to serve a medical condition, is useless to a person who is not ill or injured, and is appropriate for use in the home.

Effective date: the date coverage begins.

Elective surgery: a procedure that does not have to be performed on an emergency basis and can be reasonably delayed. Such surgery may still be considered medically necessary.

Emergency: the sudden, and at the time, unexpected onset of a health condition that requires immediate medical attention where failure to provide medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person’s health in serious jeopardy.

Exclusion Rider: identifies a specific medical condition or other risk factor. No health care plan payment is made for expenses of the identified factor or its consequences or complications.

Experimental/investigational —

  1. Any drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply used in or directly related to the diagnosis, evaluation or treatment of a disease, injury, illness or other health condition which the insurer determines in its sole discretion to be experimental or investigational.

    The insurer will deem any drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply to be experimental or investigational if it determines that one or more of the following criteria apply when the service is rendered with respect to the use for which benefits are sought.

    The drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply:
    • Cannot be legally marketed in the United States without the final approval of the Food and Drug Administration (FDA) or any other state or federal regulatory agency, and such final approval has not been granted.
    • Has been determined by the FDA to be contraindicated for the specific use.
    • Is provided as part of a clinical research protocol or clinical trial, or is provided in any other manner that is intended to evaluate the safety, toxicity or efficacy of the drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply; or is subject to review and approval of an Institutional Review Board (IRB) or other body serving a similar function.
    • Is provided pursuant to informed consent documents that describe the drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply as experimental/investigational, or otherwise indicate that the safety, toxicity or efficacy of the drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply is under evaluation.
  2. Any service not deemed experimental or investigational based on the criteria in subsection (a) may still be deemed to be experimental or investigational by the insurer. In determining whether a service is experimental or investigational, The insurer will consider the information described in subsection (c) and assess all of the following:
    1. Whether the scientific evidence is conclusory concerning the effect of the service on health outcomes.
    2. Whether the evidence demonstrates that the service improves the net health outcomes of the total population for whom the service might be proposed as any established alternatives.
    3. Whether the evidence demonstrates the service has been shown to improve the net health outcomes of the total population for whom the service might be proposed under the usual conditions of medical practice outside clinical investigatory settings.
  3. The information the insurer considers or evaluates to determine whether a drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply is experimental or investigational under subsections (a) and (b) may include one or more items from the following list, which is not all-inclusive:
    • Randomized, controlled, clinical trials published in authoritative, peer-reviewed United States medical or scientific journal.
    • Evaluations of national medical associations, consensus panels and other technology evaluation bodies
    • Documents issued by and/or filed with the FDA or other federal, state or local agency with the authority to approve, regulate or investigate the use of the drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply.
    • Documents of an IRB or other similar body performing substantially the same function
    • Consent documentation(s) used by the treating physicians, other medical professionals or facilities or by other treating physicians, other medical professionals or facilities studying substantially the same drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply
    • The written protocol(s) used by the treating physicians, other medical professionals or facilities or by other treating physicians, other medical professionals or facilities studying substantially the same drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply
    • Medical records
    • The opinions of consulting providers and other experts in the field
  4. The insurer has the sole authority and discretion to identify and weigh all information and determine all questions pertaining to whether a drug, biologic, device, diagnostic, product, equipment, procedure, treatment, service or supply is experimental or investigational.

Explanation of benefits: also known as an EOB, a printed form sent by an insurance company to a member after a claim has been filed and adjudicated. The EOB includes such information as the date of service, name of provider, amount covered and patient balance. An explanation of Medicare benefits, or EOMB, is similar, except it is sent following submission of a Medicare claim.

Family membership: a membership that covers two or more persons (the subscriber and one or more dependents).

Formulary: a list of drugs that a health insurance company considers to include the most cost-effective alternatives because there may be two or more drugs used for the same therapeutic effect, at different prices. If a non-formulary drug is prescribed, there is usually a higher copay and/or coinsurance to be paid. Formulary usually applies only to brand name drugs. Formularies vary between health insurance companies.

Grievance: a written complaint about the quality of care, denial of a benefit or service received from a provider.

Group Health Insurance: health insurance purchased by a group not formed for the purpose of buying health insurance. Typically, the purchaser is an employer or an employee union. Small group is usually considered to be 50 employees or less employed (not 50 enrolling) and large group is usually more than 50 employees employed.

An association may also sponsor a group plan. For the plan to be fully insured, a regulated insurance company must be prepared to underwrite the group. If enrollment is dependent on the results of a health history questionnaire, that is not a true group plan, but in substance amounts to nothing more than individual coverage under the guise of an "association" in order to fool the buyer into thinking that this is a unique opportunity at a special low premium price. For comparable benefits, the premium may in fact be higher than honestly presented alternative individual coverage.

Health Insurance: a promise to pay for unexpected medical expenses in return for periodic payment of a premium. The promise is made by an insurance company licensed to do business in the state. Supplementary coverage, e.g., up to the plan deductible, may be provided by self-funding by an employer or union or other such organization. Other types of coverage, e.g., provided by a group of physicians in a pre-paid plan would also be licensed by the state. A pre-paid plan is based on a promise to provide care rather than a promise to pay for expenses incurred.

Health Plan Description Form: a state mandated document which all health insurers must provide to help consumers better understand and compare coverage from different insurers.

Health benefit ID card: the card the insurer gives members with information such as the subscriber’s name, number and date issued.

Health Maintenance Organization (HMO): a method of financing health care by prepayment to a clinic, network, or other group of medical providers. In return for a periodic payment, the medical providers as a group promise to provide necessary medical care. This arrangement may be offered directly by the providers to consumers or arranged by an entity such as an insurance company or an employer. Because the remuneration to the provider is fixed, there may be an incentive to use preventive medicine as much as possible to avoid more expensive treatment of a preventible health condition. The emphasis on preventive care at a time when pure indemnity insurance was more popular and paid little or nothing for prevention, may have given rise to the name. The term was coined by Dr. Paul Ellwood for the Nixon Administration in 1970 "as a way of describing an organization that would compete on the bases of price and quality and that would combine insurance and health care in a single organization." (Managed Care Magazine November 1997).

There may also be an incentive for the provider to avoid unnecessary care and thereby reduce plan premiums by reducing waste of medical resources. Another attempt at cost saving which may or may not be part of an HMO's procedure is for referrals from a primary care provider to be necessary before seeing a specialist so that inappropriate specialist visits are not made. The idea is to provide the best set of medical services, not to reduce access.

Staff model: physicians are salaried employees of the HMO. Known as a closed-panel HMO, because physicians may treat only HMO members.

Group model: the HMO pays a group of physicians as a group. The group pays the individual physician. Also a closed-panel HMO.

Open panel: individual physicians contract with an independent practice association (IPA), which has a contract with an HMO. Known as "open panel" because individual physicians maintain their own offices and also see non-HMO patients.

Network model: the HMO contracts with groups, IPAs, and individual physicians. Most health insurance companies with HMO plans use the network model.

Health Savings Account: a bank account or account at a financial institution that qualifies under federal law for special tax treatment. Contributions to the health savings account are tax deductible without any itemizing being necessary on schedule A of the form 1040 individual tax return. Health insurance coverage meeting Internal Revenue Code guidelines must be held to be eligible to open the health savings account and take the tax deduction. You may find such health insurance referred to as an "HSA-qualified high deductible health plan" or "Health Savings Account plan".

Hemodialysis: the treatment of an acute or chronic kidney ailment during which impurities are removed from the blood with dialysis equipment.

Holistic medicine: various preventive and healing techniques, that are theoretically based on the influence of the external environment and the various ways different body tissues affect each other along with the body’s natural healing powers.

Home health agency: An agency certified by the Colorado Department of Public Health and Environment as meeting the provisions of Title XVIII of the Federal “Social Security Act,” as amended, for home health agencies. A home health agency is primarily engaged in arranging and providing nursing services, home health aide services, and other therapeutic and related services.

Home health care: the special term for skilled nursing, occupational therapy and other health-related services provided at home by a certified home health agency.

Home health services: the following services provided by a certified home health agency under a plan of care to eligible members in their place of residence: professional nursing services; certified nurse aide services; medical supplies, equipment, and appliances suitable for use in the home; and physical therapy, occupational therapy, speech pathology and audiology services.

Hospice agency: an agency licensed by the Colorado Department of Public Health and Environment to provide hospice care in this state. A hospice is a centrally administered program of palliative, supportive and interdisciplinary team services providing physical, psychological, spiritual and sociological care for terminally ill individuals and their families within a continuum of inpatient care, home health care and follow up bereavement services available 24 hours a day, seven days a week.

Hospice care: an alternative way of caring for terminally ill individuals that stresses palliative care rather than curative or restorative care. Hospice care focuses on the patient/family as the unit of care. Supportive services are offered to the family before and after the death of the member. Hospice care addresses physical, social, psychological and spiritual needs of the member and the member’s family.

Hospital: a health institution offering facilities, beds and continuous services 24 hours a day and meets all licensing and certification requirements of local and state regulatory agencies.

Individual health insurance: a category of licensed and regulated health insurance that includes coverage for dependent family members (spouse, minor children, dependent adult full time students up to a specified age) if included in the same application. The other major category is group coverage issued to employers for employees. There may be other categories such as association coverage recognized in a particular state.

Individual membership: a membership covering one person (the subscriber).

In-network: a term for providers or facilities that enter into a network agreement with the insurer.

Inpatient medical rehabilitation: care that includes a minimum of three hours of therapy, e.g., speech therapy, respiratory therapy, occupational therapy and/or physical therapy, and often some weekend therapy. Inpatient medical rehabilitation is generally provided in a rehabilitation section of a hospital or a freestanding facility. Some skilled nursing facilities have “rehabilitation” beds.

Intractable pain: a pain state in which the cause of the pain cannot be removed and which in the generally accepted course of medical practice no relief or cure of the cause of the pain is possible or none has been found after reasonable efforts, including, but not limited to, evaluation by the attending physician and one or more physicians specializing in the treatment of the area, system or organ of the body perceived as the source of the pain.

Laboratory and pathology services: testing procedures required for the diagnosis or treatment of a condition. Generally, these services involve the analysis of a specimen of tissue or other material that has been removed from the body.

Long-term acute care facility: an institution that provides an array of long-term critical care services to members with serious illnesses or injuries. Long-term acute care is provided for patients with complex medical needs. These include high-risk pulmonary patients with ventilator or tracheotomy needs, medically unstable members, extensive wound care or post operative surgery wound members, and low level closed head injury members. LTAC facilities do not provide care for low intensity patient needs.

Managed care: a system of health care delivery the goal of which is to give members access to quality, cost effective health care while optimizing utilization and cost of services, and measuring provider and coverage performance.

Maximum benefit allowance: the maximum dollar amount determined and approved by the insurer which the insurer allows for covered services and procedures. The insurer’s determination of a maximum benefit allowance is the maximum amount the insurer approves for any particular service. Cost sharing amounts are based on this allowance and on the allowance and are the amounts the member pays to a provider.

Maximum medical improvement: a determination at the insurer’s sole discretion that no further medical care can reasonably be expected to measurably improve a member’s condition. Maximum medical improvement shall be determined without regard to whether continued care is necessary to prevent deterioration of the condition or is otherwise life sustaining.

Medically necessary: an intervention that is or will be provided for the diagnosis, evaluation and treatment of a condition, illness, disease or injury and that the insurer solely determines to be:

  • Medically appropriate for and consistent with the symptoms and proper diagnosis or treatment of the condition, illness, disease or injury.
  • Obtained from a physician and/or licensed, certified or registered provider.
  • Provided in accordance with applicable medical and/or professional standards.
  • Known to be effective, as proven by scientific evidence, in materially improving health outcomes.
  • The most appropriate supply, setting or level of service that can safely be provided to the member and which cannot be omitted consistent with recognized professional standards of care (which, in the case of hospitalization, also means that safe and adequate care could not be obtained as an outpatient).
  • Cost-effective compared to alternative interventions, including no intervention (“cost effective” does not mean lowest cost).
  • Not experimental/investigational.
  • Not primarily for the convenience of the member, the member’s family or the provider.
  • Not otherwise subject to an exclusion under the coverage.

The fact that a physician and/or provider may prescribe, order, recommend or approve care, treatment, services or supplies does not, of itself, make such care, treatment, services or supplies medically necessary.

Medical supplies: items (except prescription drugs) required for the treatment of an illness or injury.

Medicare: a federally funded health insurance program that provides benefits for people age 65 and older. Some individuals under age 65 who are disabled or who have end stage kidney disease also are eligible for Medicare benefits.

Member: the subscriber or any dependent who is enrolled for coverage under the policy.

Benefit year: The member’s benefit year begins on the subscriber’s effective date, and expires either on the following December 31 for a calendar year basis, or on the day prior to the anniversary of the effective date for a policy year basis; the new benefit year commences on each subsequent January 1 or effective date anniversary respectively.

Mental health condition: non-biologically based mental conditions with a psychiatric diagnosis or that require specific psychotherapeutic treatment, regardless of the underlying condition (e.g., depression secondary to diabetes or primary depression).

Myotherapy: the physical diagnosis, treatment and pain management of conditions which cause pain in muscles and bones.

Nephritis: infection or inflammation of the kidney.

Nephrosis: condition in which there are degenerative changes in the kidneys without the occurrence of inflammation.

Non-formulary: Most health insurers have a list of what they consider to be the most cost-effective drugs in cases where there are alternative drugs available for the same course of treatment. Those on the list are "preferred" of "formulary" drugs. Those not on the list are "non-preferred" or "non-formulary". Under a health insurance plan, the amount you have to pay towards the non-formulary drug cost is usually a higher copay or higher coinsurance than for formulary.

Non-participating provider: a provider defined as one of the following:

  • A facility provider, such as a hospital, that has not entered into an agreement with the insurer
  • A professional provider, such as a physician, who has not entered in to an agreement with the insurer. Providers who have not contracted or affiliated with the insurer’s designated subcontractor(s) for the services they perform under the coverage

Occupational therapy: the use of educational and rehabilitative techniques to improve a member’s functional ability to live independently. Occupational therapy requires that a properly accredited occupational therapist (OT) or certified occupational therapy assistant (COTA) perform such therapy.

OMT: an acronym for Osteopathic Manipulative Therapy, a hands-on modality of evaluation, diagnosis, and treatment using palpation of the body's tissues and musculoskeletal system with a variety of therapuetic techniques involving fascia, muscles, and joints to help resolve both acute and chronic musculoskeletal injuries.

Organ transplants: a surgical process that involves the removal of an organ from one person and placement of the organ into another person. Transplant can also mean removal of body substances, such as stem cells or bone marrow, for the purpose of treatment and reimplanting the removed organ or tissue into the same person.

Orthopedic appliance: a rigid or semi-rigid support used to eliminate, restrict or support motion in a part of the body that is diseased, injured, weak or malformed.

Orthotic: a support or brace for weak or ineffective joints or muscles.

Out-of-network: a term for providers or facilities that do not enter into a network agreement with the in, usually at a higher out-of-pocket expense to members than services rendered by an in-network provider.

Out-of-pocket annual maximum: the maximum that you may be liable for during a specified period. Add the deductible plus coinsurance plus possible copays/facility charges to get a realistic total reachable out-of pocket amount per benefit year.

Plans also formally specify a dollar figure as an annual out-of-pocket limit, but that figure can be misunderstood or misleading. That formally stated limit may or may not include any copays that you incur depending on how the plan defines what the limit consists of. Some companies even define out-of-pocket to mean coinsurance only.

Since plans use the same term in different ways, you can't compare plans based on each plan's stated "out-of-pocket" figure. You have to compute the possible out-of-pocket annual maximum yourself, then compare.

A benefit year is usually a calendar year, but a plan could specify a different period, e.g., the anniversary of the effective date.

For each benefit year, after the plan's stated out-of-pocket limit is reached, payment for covered medical services is made at 100 percent of the allowable charge for the remainder of the benefit year, within the limit of how the plan defines the term.

Outpatient medical care: non-surgical services provided in a provider’s office, the outpatient department of a hospital or other facility, or the member’s home.

Paraprofessional: a trained colleague who assists a professional person, such as a radiology technician.

Participating provider: a facility provider (such as a hospital) or a professional provider (such as a physician) that has entered into an agreement with the insurer to bill the insurer directly for covered services, and to accept the insurer’s maximum benefit allowance as the maximum amount of payment for covered services the participating provider must bill the member for or use to calculate cost sharing amounts for covered services.

Permanent Coverage or Permanent Insurance: health insurance that is not limited to a specific period of time, e.g., six or twelve months as in the case of short term insurance. Permanent insurance is not guaranteed to stay in existence, e.g., the insurance company could go out of business completely, or quit health insurance completely, or just terminate some of their current plans. An individual cannot be singled out for cancellation, but "permanent" coverage could be lost if the insurer terminates all coverage for all insureds under a particular plan.

Physical therapy: the use of physical agents to treat disability resulting from disease or injury. Physical agents used include heat, cold, electrical currents, ultrasound, ultraviolet radiation, massage and therapeutic exercise. Physical therapy must be performed by a physician or registered physical therapist.

Physician: A doctor of medicine or osteopathy who is licensed to practice medicine under the laws of the state or jurisdiction where the services are provided.

PPO provider: a participating facility provider or a participating professional provider that has entered into an additional agreement with the insurer, to limit charges for services performed under the coverage.

Preauthorization: a process in which requests for services are reviewed prior to service for approval of benefits, length of stay and appropriate location.

Pharmacy: an establishment licensed to dispense prescription drugs and other medications through a licensed pharmacist upon a authorized health care professional’s order. A pharmacy may be an in-network provider or an out-of-network provider. An in-network pharmacy is contracted as an in-network pharmacy with the insurer to provide covered drugs to members under the terms and conditions of the coverage. An out-of-network pharmacy is not contracted with the insurer.

Preauthorization: the process applied to certain drugs and/or therapeutic categories to define the conditions under which these drugs will be covered. The drugs and criteria for coverage are defined by the pharmacy and therapeutics committee.

Preferred Provider Organization (PPO): a name invented for claims networks which have pre-agreed prices for procedures and a code for each procedure. The members are physicians, other medical professionals, hospitals, and other medical facilities. Members send patient claims to the network operator's claims office for processing instead of patients having to file claims. This improves the efficiency of claims payment. The processed claim is then sent to the party responsible for actual payment of the claim. Medical providers credentials are checked when they apply for membership. Because of its advantages, the insurance plan usually pays better benefits in-network than out-of-network. So the network members are "preferred providers". For want of a better name, the arrangement is called an "organization".

Premium: a periodic, usually monthly, charge that the insured individual and/or group must pay to establish and maintain coverage.

Pre-paid Plan: a promise to provide medical care in return for the periodic payment of a premium. The promise is made by a group of physicians and may include hospitals and other facilities. By contrast, insurance is a promise to indemnify or pay certain expenses incurred, not a promise to provide care.

Prescription drugs: prescription drugs include:

  • Brand name prescription drug: the initial version of a medication developed by a pharmaceutical manufacturer or a version marketed under a pharmaceutical manufacturer's own registered trade name or trademark. The original manufacturer is granted an exclusive patent to manufacture and market a new drug for a certain number of years. After the patent expires and FDA requirements are met, any manufacturer can produce the drug and sell the drug under its own brand name or under the drug's chemical (generic) name. The insurer will designate brand name prescription drugs as follows:
    • As a formulary brand name prescription drug identified on the formulary by the insurer as a prescription drug with a tier-2 copayment as listed on the Health Plan Description Form.
    • As a non-formulary brand name prescription drug not identified on the formulary by the insurer as a prescription drug with a Tier-3 copayment as listed on the Health Plan Description Form.
  • Legend drug: a medicinal substance, dispensed for outpatient use, which under the Federal Food, Drug & Cosmetic Act is required to bear on its original packing label, “Caution: Federal law prohibits dispensing without a prescription.” Compounded medications that contain at least one such medicinal substance are considered to be prescription legend drugs. Insulin is considered to be a prescription legend drug.
  • Formulary: a list of pharmaceutical products developed in consultation with physicians and pharmacists and approved for their quality and cost effectiveness, i.e., most cost effective compared to other drugs that may be used for the some course of treatment.
  • Generic prescription drug: drugs determined by the FDA to be bio-equivalent to brand name drugs and that are not manufactured or marketed under a registered trade name or trademark. A generic drug’s active ingredients duplicate those of a brand name drug. Generic drugs must meet the same FDA specifications as brand name drugs for safety, purity and potency and must be dispensed in the same dosage form (tablet, capsule, and cream) as the counterpart brand name drug. On average, generic drugs cost about half as much as the counterpart brand name drug. Generic prescription drugs are often identified on the formulary by the insurer as prescription drugs with a tier-1 copayment as listed on the Health Plan Description Form.

Preventive care: comprehensive care that emphasizes prevention, early detection and early treatment of conditions through routine physical exams, immunizations and health education.

Private duty nursing services: services that require the training, judgment and technical skills of an actively practicing registered nurse (R.N.) or licensed practical nurse (L.P.N.). Such services must be prescribed by the attending physician for the continuous medical treatment of the condition.

Producer: A person licensed by the state to sell insurance for insurance companies. In the vernacular, and in some states, producers are also called "agents" or "brokers", but since there is no practical reason for a distinction, many states now have only one licence, that of insurance "Producer".

Most producers are paid a fee as independent contractors. Generally, the fee is paid only if a successful application for insurance is produced by the producer. In most cases, the contingency fee is set by the insurance company and is not negotiable. The contingency payment may be a fixed sum per covered person or per policy issued, or computed as a percentage of premium (a 'commission'), or according to some other formula.

Prostate screening: testing to identify an increased risk of prostate cancer in the absence of any abnormal symptoms.

Prosthesis: a device that replaces all or part of a missing body part.

Provider: a person or facility recognized by the insurer as a health care provider and that fits one or more of the following descriptions:

  • Professional provider: a physician or other professional provider who is licensed or otherwise authorized by the state or jurisdiction where services are provided to perform designated health care services. For benefits to be payable, services of a provider must be within the scope of the authority granted by the license and covered by the insurer. Such services are subject to review by a medical authority appointed by the insurer. Other professional providers include, among others, certified nurse midwives, dentists, optometrists and certified registered nurse anesthetists. Services of such a provider must be among those covered by the provider and are subject to review by a medical authority appointed by the insurer.
  • Facility provider: there are two types of facility providers, inpatient and outpatient.

    • Inpatient facility provider: a hospital, alcoholism treatment center, residential treatment center, hospice facility, skilled nursing facility or other facility which the insurer recognizes as a health care provider. These facility providers may be referred to collectively as a facility provider or separately as an alcoholism treatment center provider.
    • Outpatient facility provider: a dialysis center, Veteran’s Administration or Department of Defense hospital, home health agency or other facility provider (except a hospital, alcoholism treatment center or hospice facility, skilled nursing facility or residential treatment center) recognized by the insurer and licensed or certified to perform designated health care services by the state or jurisdiction where services are provided. Services of such a provider must be among those covered by the insurer and are subject to review by a medical authority appointed by the insurer. Example: ambulatory surgery center.

Qualified, Qualifying: (i) meeting the requirements of the Internal Revenue Code so as to be tax deductible or otherwise tax advantaged.

(ii) For a Health Savings Account, qualifying medical expenses are those that may be paid out of the account without any tax penalty.

(iii) Health insurance qualifying the insured for a Health Savings Account has certain insurance plan features required by the Internal Revenue Code.

Radiation therapy: X-ray, radon, cobalt, betatron, telocobalt, radioactive isotope treatment and similar treatments for malignant diseases and other medical conditions.

Rateup: an increase in periodic premium which may be charged for various reasons, e.g., certain pre-existing conditions, tobacco use, certain occupations, certain avocations (dangerous hobbies)

Rebate Bribery: a form of bribery legal in California and Florida where an insurance producer is permitted to pay an inducement to an insurance purchaser in return for buying from the insurance company with that producer instead of another producer. The bribery payment is not made to help the purchaser make a better choice of insurance but only to influence who gets paid by the insurer. Rebate bribery is prohibited in all other states.

The producer is not reselling merchandise owned by the producer to the consumer as a retailer does. A retailer or an insurance company has a profit margin. A profit is what we say a company with its own products may have. As an individual not possessing a product, the producer has personal income, not a profit margin. So in rebating, the producer is not adjusting a profit margin but merely using personal income to bribe consumers in order to get an insurer payment instead of someone else getting it.

Unlike broker/dealers in stocks or real estate brokers adjusting their fees to whatever they see fit, rebating by producers is not the reduction of fees, but the use of personal income for bribery. Rivalry in rebate bribery between producers is not based on the merit or suitability of an insurance product but only on the size of the bribe.

If rebate bribery became widespread, insurers would have to increase sales contingency payments to compensate producers for the payment of the bribes. Otherwise, there would be a lack of individuals willing to be producers to bring in new business as they find themselves cheated out of income by being locked into a system of bribery. In the long run, consumers in general do not benefit from rebate bribery.

Insurance companies have competing insurance products and are paid for them by consumers. Producers do not possess any products for which consumers pay them. They may contend against each other to get the insurer payment, but as producers they have nothing of their own to offer for sale. Producers are not principals in free enterprise economic competition. Because rebates by producers are mere bribery that distorts the process of obtaining suitable insurance, it is unlikely to be permitted any more than it is now.

The second definition of bribe in the Merriam-Webster Online Dictionary is "2: something that serves to induce or influence".

Reconstructive breast surgery: a surgical procedure performed following a mastectomy on one or both breasts to re-establish symmetry between the two breasts. The term includes, but is not limited to, augmentation mammoplasty, reduction mammoplasty and mastoplasty.

Reconstructive surgery: surgery that restores or improves bodily function to the level experienced before the event which necessitated the surgery or, in the case of a congenital defect, to a level considered normal. Such surgery may have a coincidental cosmetic effect.

Referral: authorization given to a member to visit another provider.

Renewal: usually the annual anniversary of the effective date when changes can be made to the insurance contract, e.g., insurer changes the price, employer changes options in its group plan or changes to another plan.

Resident: an individual who maintains legal domicile within the state where the insurance coverage is issued and is presumed, for purposes of state regulation of insurance, to be a primary resident of the state, as evidenced by any three of the following:

  • Payment of state income tax
  • Employment in the state, other than that normally provided on a temporary basis to students
  • Ownership of residential real estate property in the state
  • State identification card or driver's license
  • Acceptance of future employment in the state
  • Vehicle registered in the state
  • Voter registration in the state
  • Phone bill or utility bill in the state

The residence address in the application must be in the state where health insurance is applied for because insurance is regulated state by state, not federally.

Room expenses: expenses that include the cost of the room, general nursing services and meal services for the member.

Second Opinion: a visit to another professional provider (following a first visit with a different provider) for review of the first provider’s opinion of proposed surgery or treatment.

Second surgical opinion: a mechanism used by managed care organizations to reduce unnecessary surgery by encouraging individuals to seek a second opinion prior to specific elective surgeries. In some cases, the health coverage may require a second opinion prior to a specific elective surgery.

Short Term Health Insurance: health insurance coverage that is of limited duration, usually a six month maximum period. The scope of coverage is usually comprehensive, but when the term of coverage is over, the policy cannot be continued or renewed. However, in most states it can be rebought for another six month period.

Skilled nursing care facility: an institution that provides skilled nursing care (e.g. therapies and protective supervision) for uncontrolled, unstable or chronic condition members. Skilled nursing care is provided under medical supervision to carry out nonsurgical treatment of chronic diseases or convalescent stages of acute diseases or injuries. Skilled nursing facilities do not provide care for high intensity member medical needs, or members that are medically unstable.

Special care units: special areas of a hospital with highly skilled personnel and special equipment to provide acute care, with constant treatment and observation.

Speech therapy (also called speech pathology): services used for diagnosis and treatment of speech and language disorders. A licensed and accredited speech/language pathologist must perform speech therapy.

Spouse: a subscriber’s legal spouse.

Sub-acute medical care: medical care that requires less care than a hospital but often more care than a skilled nursing facility. Sub-acute medical care can be in the form of “transitional care” when a member’s condition is improving, but the member is not ready for a skilled nursing facility or home health care.

Sub-acute rehabilitation: care that includes a minimum of one hour of therapy when a member cannot tolerate or does not require three hours of therapy a day. Sub-acute rehabilitation is generally provided in a skilled nursing facility.

Subscriber: (i) the person in whose name the membership with the insurer is established. The subscriber may or may not be insured under the policy. (ii) The person(s) who signed the application.

Surgery: any variety of technical procedures for treatment or diagnosis of anatomical disease or injury, including, but not limited to cutting, microsurgery (use of scopes), laser procedures, grafting, suturing, castings, treatment of fractures and dislocations, electrical, chemical or medical destruction of tissue, endoscopic examinations, anesthetic epidural procedures, and other invasive procedures. Covered surgical services also include usual and related anesthesia and pre- and post-operative care, including recasting.

Surgical assistant: an assistant to the primary surgeon for required surgical services provided during a covered surgical procedure. the insurer, at its sole discretion, determines which surgeries do or do not require a surgical assistant.

Ultrasound: a radiology imaging technique that uses high frequency sound waves to see organs or the fetus in a pregnant woman.

Underwriting: the process by which an insurance company or pre-paid plan determines whether to accept or reject an application for coverage or to issue coverage with certain modfications. For health plans, modifications may include excluding coverage for identified medical conditions permanently or for a specified period, or an additional premium charge.

Urgent care: care provided for individuals who require immediate medical attention but whose condition is not life-threatening (non-emergency).

Utilization management: a process of integrating review of medical services and care management in a cooperative effort with other parties, including patients, physicians, and other health care providers and payers.

Utilization review: a set of formal techniques designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy or efficiency of, health care services, procedures or settings. Techniques include ambulatory review, prospective review, second opinion, certification, concurrent review, care management, discharge planning and/or retrospective review. Utilization review also includes reviews to determine coverage. This is based on whether or not a procedure or treatment is considered experimental/investigational in a given circumstance (except if it is a specific coverage exclusion), and review of a member’s medical circumstances when necessary to determine if an exclusion applies in a given situation.

Well-child visit: a physician visit that includes the following components: an age-appropriate physical exam, history, anticipatory guidance and education (e.g., examining family functioning and dynamics, injury prevention counseling, discussing dietary issues, reviewing age-appropriate behaviours, etc.), and assessment of growth and development. For older children, a well-child visit also includes safety and health education counseling.

X-ray and radiology services: services including the use of radiology, nuclear medicine and ultrasound equipment to obtain a visual image of internal body organs and structures, and the interpretation of these images.

This health insurance glossary was assembled from various sources and edited according to our best judgment. Some entries are original by us, some are not. We continue to expand the list of definitions in the health insurance glossary as we have the opportunity.

Nothing in this health insurance glossary constitutes advice or recommendation, whether legal, financial planning, for insurance, or otherwise. This health insurance glossary is intended only as a guide to further inquiry.

Health Insurance