What is Health Insurance?

glossary-pic.jpgHealth insurance is insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government.

By estimating the overall risk of healthcare expenses, a routine finance structure (such as a monthly premium or annual tax) can be developed, ensuring that money is available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity.

What is Life Insurance?

Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums. There may be designs in some countries where bills and death expenses plus catering for after funeral expenses should be included in Policy Premium. In the United States, the predominant form simply specifies a lump sum to be paid on the insured's demise.

As with most insurance policies, life insurance is a contract between the insurer and the policy owner whereby a benefit is paid to the designated beneficiaries if an insured event occurs which is covered by the policy.

The value for the policyholder is derived, not from an actual claim event, rather it is the value derived from the 'peace of mind' experienced by the policyholder, due to the negating of adverse financial consequences caused by the death of the Life Assured.

To be a life policy the insured event must be based upon the lives of the people named in the policy.

Brand-name drug:

Prescription drugs marketed with a specific brand name by the company that manufactures it, usually the company that develops and patents it. When patents run out, other companies market generic versions of many popular drugs at lower cost. Check your insurance plan to see if coverage differs between name brand and their generic twins. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Claim:

A request by an individual (or his or her provider) to an individual's insurance company for the insurance company to pay for services obtained from a health care professional. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, Aetna use this term.

COBRA:

 

Consolidated Omnibus Budget Reconciliation Act of 1986. Terminated employees or those who lose coverage because of reduced work hours may be able to buy group coverage for themselves and their families for limited periods of time.

Co-Insurance:

After paying any deductible with your health insurance, this is the percentage of your bills that you will have to pay.

Co-insurance refers to money that an individual is required to pay for services, after a deductible has been paid. In some health care plans, co-insurance is called "co-payment." Co-insurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Co-Payment:

 

Each time you visit a health provider, a co-payment for health insurance is the amount that you will have to pay to receive treatment.

Co-payment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some HMOs require a $10 "co-payment" for each office visit, regardless of the type or level of services provided during the visit. Co-payments are not usually specified by percentages. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

COBRA:
Federal legislation that lets you, if you work for an insured employer group of 20 or more employees, continue to purchase health insurance for up to 18 months if you lose your job or your employer-sponsored coverage is otherwise terminated. For more information, visit the Department of Labor.

Deductible:

Before your health insurance company begins to pay, a deductible is an amount that you are responsible for.

The amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Disability insurance:

Is coverage in your health insurance policy that will pay you money if you are unable to work due to injury.

Effective Date:

The date your insurance is to actually begin. You are not covered until the policies effective date. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Employee Assistance Programs (EAPs):

Is a mental health counseling services that are sometimes offered by insurance companies or employers. Typically, individuals or employers do not have to directly pay for services provided through an employee assistance program. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Employer-Sponsored Health Insurance:

Of Americans who have health coverage, nearly 60 percent secure that coverage through an employer-sponsored plan, often called group health insurance. Millions take advantage of the coverage for reasons as obvious as employer responsibility for a significant portion of the health care expenses. Group health plans are also guaranteed issue, meaning that a carrier must cover all applicants whose employment qualifies them for coverage. In addition, employer-sponsored plans typically are able to include a range of plan options from HMO and PPO plan to additional coverage such as dental, life, short- and long-term disability. Read more about group health insurance. Read recent news articles about employer-sponsored health insurance. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Exclusions:

Is when medical services that are not covered by an individual's insurance policy. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Explanation of Benefits:

The insurance company's written explanation to a claim, showing what they paid and what the client must pay. Sometimes accompanied by a benefits check. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Fee- for- Service:

Payment agreements for health care in which the provider is paid for each service, rather than a pre-negotiated amount for the patient.

Generic Drug:

A "twin" to a "brand name drug" once the brand name company's patent has run out and other drug companies are allowed to sell a duplicate of the original. Generic drugs are cheaper, and most prescription and health plans reward clients for choosing generics. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Group Health Insurance:

Is Coverage through an employer or other entity that covers all individuals in the group. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Health Maintenance Organizations (HMOs):

Health Maintenance Organizations represent "pre-paid" or "captivated" insurance plans in which individuals or their employers pay a fixed monthly fee for services, instead of a separate charge for each visit or service. The monthly fees remain the same, regardless of types or levels of services provided, Services are provided by physicians who are employed by, or under contract with, the HMO. HMOs vary in design. Depending on the type of the HMO, services may be provided in a central facility or in a physician's own office (as with IPAs.) Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

HIPAA:

A Federal law passed in 1996 that allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also creates the authority to mandate the use of standards for the electronic exchange of health care data; to specify what medical and administrative code sets should be used within those standards; to require the use of national identification systems for health care patients, providers, payers (or plans), and employers (or sponsors); and to specify the types of measures required to protect the security and privacy of personally identifiable health care. Full name is "The Health Insurance Portability and Accountability Act of 1996." Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

HSA:

 

In-network:

Providers or health care facilities that are part of a health plan's network of providers with which it has negotiated a discount. Insured individuals usually pay less when using an in-network provider, because those networks provide services at lower cost to the insurance companies with which they have contracts. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Independent Practice Associations:

IPAs are similar to HMOs, except that individuals receive care in a physician's own office, rather than in an HMO facility. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Indemnity plan:

This plan for health insurance pays for your medical expenses while letting you choose the doctor that best suits your needs. Many times this is also known as a reimbursement insurance plan.

Individual Health Insurance:

Health insurance coverage on an individual, not group, basis. The premium is usually higher for an individual health insurance plan than for a group policy, but you may not qualify for a group plan. Read recent news articles about individual health insurance. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Lifetime Maximum Benefit (or Maximum Lifetime Benefit):

The maximum amount a health plan will pay in benefits to an insured individual during that individual's lifetime. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Limitations:

A limit on the amount of benefits paid out for a particular covered expense, as disclosed on the Certificate of Insurance. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Managed Care:

A medical delivery system that attempts to manage the quality and cost of medical services those individuals receive. Most managed care systems offer HMOs and PPOs that individuals are encouraged to use for their health care services. Some managed care plans attempt to improve health quality, by emphasizing prevention of disease. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Medicare:

 

MSA (Medical Savings Account):

A tax-advantaged personal savings account used along with a high deductible health policy. You may deposit money into this account on a pre-tax basis to set aside money for medical care and expenses that qualify, including annual deductibles and co-payments.

Network:

A group of doctors, hospitals and other health care providers contracted to provide services to insurance companies customers for less than their usual fees. Provider networks can cover a large geographic market or a wide range of health care services. Insured individuals typically pay less for using a network provider. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Out-Of-Pocket Maximum:

A predetermined limited amount of money that an individual must pay out of their savings, before an insurance company or (self-insured employer) will pay 100 percent for an individual's health care expenses. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Point-Of-Service (POS) Plan:

A certain managed care plan combing features of health maintenance organizations (HMOs) and preferred provider organizations (PPOs). You may choose whether to go to a network provider and pay a flat dollar amount or to an out-of-network provider and pay a deductible and/or coinsurance charge

Premium:

The amount you must pay in exchange for health insurance coverage.

Pre-existing Conditions:

This is a condition that existed before you obtained your health insurance coverage. In most cases an insurance company will make you wait a few months before these conditions are covered.

A medical condition that is excluded from coverage by an insurance company, because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Preferred Provider Organizations (PPOs):

 

You or your employer receives discounted rates if you use doctors from a pre-selected group. If you use a physician outside the PPO plan, you must pay more for the medical care. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Primary Care Provider (PCP):

A health care professional (usually a physician) who is responsible for monitoring an individual's overall health care needs. Typically, a PCP serves as a "quarterback" for an individual's medical care, referring the individual to more specialized physicians for specialist care. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, Aetna and United Health use this term.

Provider:

Provider is a term used for health professionals who provide health care services. Sometimes, the term refers only to physicians. Often, however, the term also refers to other health care professionals such as hospitals, nurse practitioners, chiropractors, physical therapists, and others offering specialized health care services. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Reasonable and Customary Fees:

The average fee charged by a particular type of health care practitioner within a geographic area. The term is often used by medical plans as the amount of money they will approve for a specific test or procedure. If the fees are higher than the approved amount, the individual receiving the service is responsible for paying the difference. Sometimes, however, if an individual questions his or her physician about the fee, the provider will reduce the charge to the amount that the insurance company has defined as reasonable and customary. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Rescission:

Is a controversial insurance industry practice that has come under fire as an unfair tactic used to deny coverage to policyholders. If you've been a victim of rescission, your insurance company has received a claim from you, and then – after reviewing your application and medical history for undisclosed conditions or inconsistencies – has cancelled your policy at a point when you needed it most. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, and Aetna use this term.

Stop-loss:

The dollar amount of claims filed for eligible expenses at which point you've paid 100 percent of your out-of-pocket and the insurance begins to pay at 100%. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.

Waiting Period:

Is a period of time when you are not covered by insurance for a pre-existing problem. Most carriers such as Anthem Blue Cross, Blue Shield, HealthNet, Aetna and United Health use this term.

Well Baby:

A Health service, which include immunizations provided by the member’s participating medical group, up to a certain age as specified by the carrier. This benefit is usually provided in HMO plans and/or POS plans. The level of benefit will vary for PPO plans if specified as a benefit.