Glossary

HEALTH INSURANCE TERMS

The source for some of the definitions in this glossary is the U.S. Bureau of Labor Statistics. Other definitions are from PAI. Be sure to see your group's summary plan description for specific terms as they apply to your coverage.

A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z

A

ASO (Administrative Services Only) - an arrangement in which an employer hires a third party to deliver administrative services to the employer, such as claims processing and billing; the employer bears the risk for claims.

Accidental Injury - accidental bodily injury caused by unexpected external means, resulting, directly and independently of all other causes, in necessary care rendered by a physician.

Actively at Work - a time when the Employee is permanent, full-time, and working for the Employer. The Employee must be Actively At Work on the Member's Effective Date of coverage, performing his or her normal duties, unless the employee's absence from work is due to a Health Status Related Factor.

Admission - the period of time between a Covered Person's entry as a registered bed-patient into a Hospital or Skilled Nursing Facility and the time the Covered Person leaves or is discharged from the Hospital or Skilled Nursing Facility.

Allowed Amount - the charge most frequently made to the majority of patients for the same service or procedure. The charge must be within the range of the charges most frequently made in the same or similar medical service area for the service or procedure as billed by the other Physicians.

Ambulatory Surgical Facility - any public or private specialized facility (state licensed and approved whenever required by law) with an organized medical staff of physicians that:
a. has permanent facilities equipped and operated primarily for the purpose of performing surgical procedures on an outpatient basis; and
b. has continuous physician services and registered professional nursing service whenever a patient is in the facility; and
c. does not provide accommodations for patients to stay overnight.

Ancillary Services - services rendered in connection with inpatient or outpatient care in a hospital or in connection with medical emergency including the following: ambulance, anesthesiology, assistant surgeon, pathology, and radiology. This term also includes services of the attending physician or primary surgeon in the event of a medical emergency.

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B

Benefit Percentage - the portion of eligible expenses payable by the Plan in accordance with the coverage provisions as stated in the Plan.

Birthing Center - a free-standing facility that:


Brand Name Drug - a Prescription Drug manufactured by one company. A Preferred Brand Name Drug is one preferred for use by the Prescription Benefit Manager and is normally less expensive than an equivalent Non-Preferred Brand Name Drug.

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C

Cardiac Rehabilitation - a medically supervised rehabilitation program designed to improve a patient's tolerance for physical activity or exercise.

Close Relative - includes the spouse, mother, father, grandparents, sister, brother, child, or in-laws of the Covered Person.

Coinsurance - the portion of eligible expenses that is payable by the Participant.


Company - the employer sponsoring this plan.

Copayment - the amount payable by the Member each time the Member receives a Covered Service, subject to a copayment as shown on the Schedule of Benefits. There may be separate copayments for different services. Some plans require that a deductible first be met for some specific services before a copayment applies.

Cosmetic Procedure - a procedure performed solely for the improvement of a Covered Person's appearance rather than for the improvement or restoration of bodily function.

Covered Participant - any employee or dependent covered under this Plan.

Covered Service - a service or supply as specified in the Covered Services section and on the Schedule of Benefits for which benefits will be provided under the terms of the Plan of Benefits.

Creditable Coverage - with respect to an individual, coverage of the individual under any of the following:

  1. a group health plan;
  2. Health Insurance Coverage;
  3. Medicare;
  4. Medicaid;
  5. Title 10 United States Code Chapter 55 (i.e. medical and dental care for members and certain former members of the uniformed forces and their dependents);
  6. a medical care program of the Indian Health Service or of a tribal organization;
  7. a state health benefits risk pool;
  8. a health plan offered under chapter 89 of title 5. United States Code (the Federal Employee Health Benefits Program);
  9. a public health plan (any plan established or maintained by state, county or other political subdivision of a state that provides Health Insurance Coverage); or
  10. a health benefit plan under Section 5(e) of 22 United States Code 2504(e), the Peace Corps Act. Creditable Coverage does not include coverage consisting solely of those benefits excepted from the definition of Health Insurance coverage.


Custodial Care - care provided primarily for maintenance of the patient or care designed essentially to assist the patient in meeting his or her activities of daily living. Custodial Care includes, but is not limited to, help in walking, bathing, dressing, feeding, preparation of special diets, and supervision over self-administration of medications that do not require the technical skills or professional training of medical or nursing personnel in order to be performed safely and effectively. Custodial Care is not primarily provided for therapeutic value in the treatment of a sickness, injury, disease, or condition.

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D

Deductible - the amount of Covered Services as indicated in the Schedule of Benefits that the Member must pay each benefit period before benefits are paid by the plan. Plans may have both per individual and family deductibles.


Detoxification - a Hospital service providing treatment to diminish or remove from a Patient's body the toxic effects of chemical substances, such as alcohol or drugs, usually as an initial step in the treatment of a chemical-dependent person. The amount of days needed for treatment is determined through Psychiatric Pre-Certification.

Durable Medical Equipment - equipment prescribed by the attending physician that is medically necessary; is not primarily or customarily used for non-medical purposes; is designed for prolonged use; and serves a specific therapeutic purpose in the treatment of an injury or illness.

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E

Emergency Medical Condition - a sudden, unexpected, acute medical condition that without medical care within forty-eight (48) hours of onset, could result in death or cause serious impairment of bodily functions.

Employer - the entity that is sponsoring this group health plan and its related subsidiaries.
 
Experimental or Investigational - one or more of the following is true of a treatment, procedure, device, drug or medicine:
a. it cannot be lawfully marketed without U.S. Food and Drug Administration approval, and approval for marketing for the condition treated has not been given at the time the device, drug or medicine is furnished; or
b. reliable evidence shows that to determine its maximum tolerated dose, toxicity, safety, and/or efficacy (or efficacy as compared with the standard - of treatment or diagnosis):

  1. it is undergoing phase I,II, or III clinical trials or is under study; or
  2. further clinical trials or studies are needed, according to the experts' consensus of opinion. Reliable evidence - only published reports and articles in the authoritative medical and scientific literature; or the written protocol or written informed consent used by the treating facility (or by another facility studying substantially the same treatment, procedure, device, drug or medicine).

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F

Flexible Benefits Plan (Cafeteria plan) (IRS 125 Plan) - A benefit program under Section 125 of the Internal Revenue Code that offers employees a choice between permissible taxable benefits, including cash, and nontaxable benefits such as life and health insurance, vacations, retirement plans and child care. Although a common core of benefits may be required, the employee can determine how his or her remaining benefit dollars are to be allocated for each type of benefit from the total amount promised by the employer. Sometimes employee contributions may be made for additional coverage. Gatekeeper - Under some health insurance arrangements, a gatekeeper is responsible for the administration of the patient's treatment; the gatekeeper coordinates and authorizes all medical services, laboratory studies, specialty referrals and hospitalizations.

Flexible Spending Accounts or Arrangements (FSA) - accounts offered and administered by employers that provide a way for employees to set aside, out of their paycheck, pretax dollars to pay for the employee's share of insurance premiums or medical expenses not covered by the employer's health plan. The employer may also make contributions to an FSA. Typically, benefits or cash must be used within the given benefit year or the employee loses the money. Flexible Spending Accounts can also be provided to cover childcare expenses, but those accounts must be established separately from medical FSAs.

FMLA - the Family and Medical Leave Act of 1993, as amended.

Full-time Employment - a basis whereby an Employee is employed by the Company for, at least, a set number of hours determined by the Company and stated in the Eligibility section of this document. Such work may occur either at the usual place of business of the Company or at a location to which the business of the Company requires the Employee to travel, and for which he receives regular earnings from the Company.

Full-time Student - a participating Dependent child who is enrolled in and regularly attending an accredited college, university, or vocational or technical school. For the purpose of this definition Full-time - a minimum of twelve semester or quarter hours, unless the school's definition of Full-time attendance is less. For vocational and technical schools, the definition of full-time attendance must be provided by the school itself. Full-time student status will end the actual day of graduation or the actual day a student does not return to a Full-time student status, as determined by the curriculum of the college or University.

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G

Generic Drug - a Prescription Drug approved by the FDA as a bioequivalent substitute and manufactured by one or more companies as a result of the expiration of the original patent for the equivalent Brand Name Drug. Brand Name Drugs that are cross-licensed to other companies, who then market the brand name drug under a Generic name prior to the patent expiring may be considered and processed under the Brand name level of benefits.

Genetic Information - information about genes, gene products, and inherited characteristics that may derive from the individual or family member. This includes information regarding carrier status and information derived from laboratory tests that identify mutations in specific genes or chromosomes, physical medical examinations, family histories, and direct analysis of genes or chromosomes.

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H

Health Insurance Coverage - benefits consisting of medical care provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as medical care under any Hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health issuer except for those types indicated in Medical Exclusions and Limitations.

Health Status-Related Factor - any of the following factors: health status (medical condition, including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability, including conditions arising out of acts of domestic violence, or disability.

HIPAA - the Health Insurance Portability and Accountability Act of 1996, as amended.

Home Health Care - an agency or organization that:

  1. Is licensed an primarily engaged in providing skilled nursing care and other therapeutic services; and
  2. Has policies established by a professional group associated with the agency or organization that includes at least one physician and one registered nurse (R.N.) who provide full-time supervision of such services; and
  3. Maintains complete medical records on each individual and has a full-time administrator.


Hospice Care - a coordinated plan of home and inpatient care that treats the terminally ill patient and family as a unit.  The plan provides care to meet the special needs of the family unit during the final stages of a terminal illness. Care is provided by a team made up of trained medical personnel, homemakers, and counselors. The team acts under an independent hospice administration and it helps the family unit cope with physical, psychological, spiritual, social, and economical stress.

Hospice Care Program - a formal program directed by a physician to help care for a person with a life expectancy of six (6) months or less. It must meet the standards set by the National Hospice Organization. If such Program is required by a state to be licensed, certified or registered, it must also meet that requirement to be considered a Hospice Care Program.

Hospital - a short term, acute care (1) general Hospital, (2) children's hospital, (3) eye, ear, nose, and throat Hospital, (4) maternity Hospital, or (5) any other type of short-term acute care Hospital licensed by the state in which it operates, which for compensation from its patients and on an inpatient basis, is primarily engaged in providing diagnostic and therapeutic facilities for the medical or surgical diagnosis and treatment of injured or sick persons, by or under the supervision of a staff of Physicians duly licensed to practice medicine, and which provides continuous twenty-four (24) hour-a-day service by licensed, registered, graduate nurses physically present and on duty. The term Hospital does not include long-term, chronic care institutions that are, other than incidentally, a nursing home or place for rest, the aged, drug addicts, alcoholics, the treatment of mental or nervous conditions, or rehabilitative care whether or not such institution or facility is affiliated with or part of a Hospital.

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I

Illness - a bodily disorder, disease, physical or mental sickness, functional nervous disorder, pregnancy or complication of pregnancy.  The term illness when used in connection with a newborn child includes, but is not limited to, congenital defects and birth abnormalities, including premature birth.

Intensive Care Unit - an accommodation in a hospital, which is reserved for critically and seriously ill patients requiring constant audiovisual observation as prescribed by the attending physician, and which provides room and board, nursing care by registered nurses whose duties are confined to care of patients in the intensive care unit, and special equipment or supplies immediately available on a standby basis segregated from the rest of the hospital's facilities.

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J

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K

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L

Lifetime - while a person is covered under this Plan. Lifetime does not mean during the lifetime of the Covered Person.

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M

Managed Care Provisions - features within health plans that provide insurers with a way to manage the cost, use and quality of health care services received by group members. Examples of managed care provisions include:

Maximum Out-of-Pocket Expense - The maximum dollar amount a group member is required to pay out of pocket during a year. Until this maximum is met, the plan and group member shares in the cost of covered expenses. After the maximum is reached, the insurance carrier pays all covered expenses, often up to a lifetime maximum. (See Lifetime definition.)

Maximum Plan Dollar Limit - the maximum amount payable by the insurer for covered expenses for the insured and each covered dependent while covered under the health plan. Plans can have a yearly and/or a lifetime maximum dollar limit. The most typical of maximums is a lifetime amount of $1 million per individual.

Medically Necessary - the usual and customary expense incurred upon the recommendation and approval of a physician for the medical services and supplies generally furnished for cases of comparable nature and severity in the particular geographical area concerned. Any agreement as to fees or charges made between the individual and the physician shall not bind the Plan in determining its liability with respect to necessary expenses. These incurred expenses must be:

  1. consistent with the symptoms of diagnosis and treatment of the condition, Illness, or Injury;
  2. appropriate with regard to standards of good medical practice;
  3. not primarily for the convenience of the patient, the physician or other provider;
  4. the most appropriate level of services which can safely be provided to the patient. When applied to an inpatient, it - that the patient's medical symptoms or conditions require that the services or supplies cannot be safely provided to the patient as an outpatient.


Medicare - the program of medical care benefits provided under Title XVII of the Social Security Act of 1965 as amended.

Mental Disorder - neurosis, psychoneurosis, psychopathy, psychosis or mental or emotional disease or disorder of any kind.

Mental and Nervous Treatment - treatment for Mental and Nervous disorders or conditions, as accepted by the general psychiatric community.

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N

Newborn - an infant from the date of his birth until the initial Hospital discharge.

Newborn Care - inpatient Physician Hospital services including initial work-up and pediatric exam, but excluding services for Illness or Injury.

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O

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P

Pharmacy - a licensed establishment where prescription drugs are filled and dispensed by a pharmacist licensed under the laws of the state where the pharmacist practices.

Physician - a legally licensed medical or dental doctor or surgeon to the extent that, within scope of his or her license, is permitted to perform services provided under this Plan. (See Covered Expenses section for a list of Physicians covered under this Plan.)

Plan - the system of health benefits established by the employer with claims and other services administered by the company under the terms of an Administrative Services Agreement.

Plan Administrator - the Company that is responsible for the day-to-day functions and arrangement of the Plan.  The Plan Administrator may employ persons or firms to process claims and perform other Plan connected services.

Plan Sponsor - the Employer.

Pre-existing Condition(s) - conditions for which medical advice or treatment was received or recommended in the six (6) months immediately before the Member is covered under any health plan offered by the Employer. Pregnancy is not a Pre-existing Condition.

Preferred Provider - a Physician, Hospital, or other Provider who has a signed contract with one of the networks noted in this Plan and who has agreed to provide Covered Services to a Member and submit claims to the Plan Supervisor and to accept the Fee Schedule amount as payment in full for Covered Services. The Participating status of a Provider may change.

Preferred Provider Organization (PPO) Plan - an indemnity plan where coverage is provided to participants through a network of selected health care providers (such as hospitals and physicians). The enrollees may go outside the network, but would incur larger costs in the form of higher deductibles, higher coinsurance rates, or nondiscounted charges from the providers.

Premium - agreed upon fees paid for coverage of medical benefits for a defined benefit period. Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the Plan sponsor.

Premium Equivalent - for self-insured plans, the cost per covered employee, or the amount the firm would expect to reflect the cost of claims paid, administrative costs, and stop loss premiums.

Prescription Medication - a drug, including insulin and diabetic syringes and supplies, that has been determined to be safe and effective by the Food and Drug Administration (FDA) and which may, under Federal or state law, be dispensed only when ordered by a Physician who is duly licensed to prescribe such medication.

Primary Care Physician (PCP) - a physician who serves as a group member's primary contact within the health plan. In a managed care plan, the Primary Care Physician provides basic medical services, coordinates, and, if required by the plan, authorizes referrals to specialists and hospitals.

Psychiatric Day Treatment Facility, as used herein, - an institution that:

  1. is a mental health facility that provides treatment for individuals suffering from acute mental, nervous, or emotional disorders, in a structured psychiatric program utilizing individualized treatment plans with specific attainable goals and objectives appropriate both to the patient and the treatment modality of the program, and is clinically supervised by a doctor of medicine who is certified in psychiatry by the American Board of Psychiatry and Neurology; and
  2. is accredited by the Program for Psychiatric Facilities or its successor, or the Joint Commission on Accreditation of Hospitals; and
  3. treats its patients for not more than eight (8) hours in any twenty-four (24) hour period.

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Q

QMCSO - a Qualified Medical Child Support Order in accordance with the Omnibus Budget Reconciliation Act of 1993 (COBRA), as amended.

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R

Rehabilitation Hospital - a licensed facility that is engaged primarily in providing rehabilitation care to patients on an inpatient basis. Rehabilitation care consists of the combined use of medical, educational, and vocational services to enable patients disabled by disease or injury to achieve the highest possible level of function ability. Services are provided by or under the supervision of an organized staff of physicians. Continuous nursing services are provided under the supervision of a registered nurse.

Reinsurance - the acceptance by one or more insurers, called reinsurers or assuming companies, of a portion of the risk underwritten by another insurer that has contracted with an employer for the entire coverage.

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S

Schedule of Benefits - the pages so titled and made part of this handbook that specify the amount of coverage provided and the applicable Copayments, Coinsurance, Deductible, and limitations.

Self-insured Plan - a plan offered by employers who directly assume the major cost of health insurance for their employees. Some self-insured plans bear the entire risk. Other self-insured employers insure against large claims by purchasing stop loss coverage. Some self-insured employers contract with insurance carriers or third party administrators for claims processing and other administrative services; other self-insured plans are self administered. Minimum Premium Plans (MPP) are included in the self-insured health plan category. All types of plans (Conventional Indemnity, PPO, EPO, HMO, POS, and PHOs) can be financed on a self-insured basis. Employers may offer both self-insured and fully insured plans to their employees.

Skilled Nursing Facility (this term also applies to a facility which refers to itself as an extended care facility or convalescent facility) - a facility that:

  1. is licensed to provide professional nursing services on an inpatient basis to patients convalescing from injury or illness to help restore patients to self-care in essential daily living activities; and
  2. provides continuous nursing services by licensed nurses for twenty-four (24) hours of every day, under the direction of a full-time registered nurse (R.N.); and
  3. provides services for compensation and under the full-time supervision of a physician; and
  4. maintains a complete medical record on each patient; and
  5. is not, other than incidentally, a clinic, a place for rest, a place devoted to care of the aged, a place for treatment of mental disorders or mental retardation, or a place for custodial care.


Stop Loss Coverage - a form of reinsurance for self-insured employers that limits the amount the employers will have to pay for each person's health care (individual limit) or for the total expenses of the Employer (group limit).

Substance Abuse - the condition caused by physical and/or emotional dependence on drugs, narcotics, alcohol or other addictive substances resulting in a chronic disorder which affects physical health and/or personal or social functioning. This does not include dependence on tobacco or ordinary caffeine-containing beverages.

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T

Third Party Administrator (TPA) - an individual or firm hired by an employer to handle claims processing, pay providers, and manage other functions related to the operation of health insurance. The TPA is not the policyholder or the insurer.

Totally Disabled as applied to an employee (unless specifically provided otherwise) - the complete inability of an employee to substantially perform the important daily duties of the employee's own occupation, for which the employee is reasonably suited by education, training or experience. As applied to a dependent, the term - the dependent is prevented solely because of a non-occupational injury or nonoccupational disease from engaging in all of the normal activities of a person of like age and sex and in good health.

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U

Urgent Care - covered services required in order to treat an unexpected Illness or Injury that is not life-threatening and required in order to prevent a significant deterioration of the member's health if treatment were delayed.

Usual and Customary Charges - those charges made for medical services and/or supplies essential to the care of a Covered Participant, which will be considered reasonable and customary if they are the amount normally charged by the service provider for similar services and supplies, and do not exceed the amount ordinarily charged by most providers of comparable services and supplies in the geographic area where the services or supplies are received, as set forth by the Plan Supervisor per industry-accepted guidelines. In determining whether charges are usual and customary, due consideration will be given to the nature and severity of the condition being treated and any medical complications or unusual or extenuating circumstances.  The Plan Administrator has the discretionary authority to decide whether a charge is usual and customary.

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V

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W

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XYZ

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