Stay Aware of Common Health Insurance Terms
Affordable Care Act (ACA) – The comprehensive health care reform law enacted in March 2010 (sometimes known as “Obamacare”)
Allowed amount – Maximum amount on which payment is based for covered health care services. Usually, the preferred provider’s charge minus the agreed upon discount amount.
Appeal – A request for your health insurance company or the Health Insurance Marketplace to review a decision that denies a benefit or payment. If you don’t agree with a decision made by the Marketplace, you may be able to file an appeal. If your health plan refuses to pay a claim or ends your coverage, you have the right to appeal the decision and have it reviewed by a third party.
Balance billing – When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill covered services.
Centers for Medicare & Medicaid Services (CMS) – The federal agency that runs Medicare, Medicaid, and Children’s Health Insurance Programs, and the federally facilitated Marketplace.
Coinsurance – The member’s share of the costs of a covered health care service as (as outlined in the individual health insurance policy), usually calculated as a percentage of the allowed amount.
Copayment – Copayment or copay is a “fixed” payment amount defined in the insurance policy and paid by the member at the time the medical service is received. This amount can vary by the type of covered health care service received.
Deductible – A predetermined amount of monies (as outlined in the individual health insurance policy) that must be paid out-of-pocket by the member before an insurance company will begin to pay.
Dependent – A child or other individuals for whom a parent, relative or other person may claim a personal exemption tax deduction. Under the Affordable Care Act, individuals may be able to claim a premium tax credit to help cover the cost of coverage for themselves and their dependents.
Durable Medical Equipment – Equipment and supplies ordered by a health care provider for everyday or extended use. Coverage for DME may include: oxygen equipment, wheelchairs, crutches or blood testing strips for diabetics.
Excluded services – Health care services that your health insurance or plan doesn’t pay for or cover.
Generic drugs – A prescription drug that has the same active-ingredient formula as a brand-name drug. Generic drugs usually cost less than brand-name drugs. The Food and Drug Administration (FDA) rates these drugs to be as safee and effective as brand-name drugs.
Health Insurance Marketplace – A service that helps people shop for and enroll in affordable health insurance. The federal government operates the Marketplace available at HealthCare.gov, for most states. Some states run their own Marketplaces.
Hospice Services – Services to provide comfort and support for persons in the last stages of a terminal illness and their families.
Hospital readmission – A situation where you were discharged from the hospital and wind up going back in for the same or related care within 30, 60 or 90 days. The number of hospital readmissions is often used in part to measure the quality of hospital care, since it can mean that your follow-up care wasn’t properly organized, or that you weren’t fully treated before discharge.
In-network Coinsurance – The percent (for example, 20%) you pay of the allowed amount for covered health care services to providers who contract with your health insurance or plan. In-network coinsurance usually costs you less than out-of-network coinsurance.
Inpatient care – Healthcare you get when you’re admitted as a inpatient to a health care facility, like a hospital or skilled nursing facility.
Job-based health plan – Coverage that is offered to an employee (and often his or her family) by an employer.
Long-term care – Services that include medical and nonmedical care provided to people who are unable to perform basic activities of daily living such as dressing or bathing. Long-term supports and services can be provided at home, in the community, in assisted living or in nursing homes. Individuals may need long-term supports and services at any age. Medicare and most health insurance plans don’t pay for long-term care.
Medicaid – Insurance program that provides free or low-cost health coverage to some low-income people, families and children, pregnant women, the elderly, and people with disabilities.
Medically necessary – Heath care services or supplies needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms, which meet accepted standards of medicine.
Network plan – A health plan that contracts with doctors, hospitals, pharmacies, and other health care providers to provide members of the plan with services and supplies at a discounted price.
Nonparticipating provider – A provider who doesn’t have a contract with your health insurer or plan to provide services to you. You’ll pay more when seeking care from a non-preferred provider.
Open enrollment period – The yearly period when people can enroll in a health insurance plan. Outside of the Open Enrollment Period, you generally can enroll in a health insurance plan only if you qualify for a special enrollment period. You’re eligible if you have certain life events, like getting married, having a baby, or losing other health coverage.
Oral medications – Medications that administered in a substance that is take through the mouth.
Out-of-Pocket Costs – Expenses for medical care that aren’t reimbursed by insurance. Out-of-pocket costs include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren’t covered.
Pre-authorization – A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.
Preferred provider – A provider who has a contract with your health insurer or plan to provide services to you at a discount. Check your policy to see if you can see all preferred providers or if your health insurance or plan has a “tiered” network and you must pay extra to see some providers. Your health insurance or plan may have preferred providers who are also “participating” providers. Participating providers also contract with your health insurer or plan, but the discount may not be as great, and you may have to pay more.
Primary care physician – A physician (M.D. – medical doctor or D.O. – Doctor of Osteopathic Medicine) who directly provides or coordinates a range of health care services for a patient.
Primary care provider – A physician (M.D. – medical doctor or D.O – Doctor of Osteopathic Medicine), nurse practitioner, clinical nurse specialist or physician assistant, as allowed under state law, who provides, coordinates or helps a patient access a range of health care services.
Provider network – The facilities, practitioners and suppliers your health insurer or plan has contracted with to provide health care services.
Qualifying life event – A change in your situation – like getting married, having a baby or losing health coverage – that can make you eligible for a special enrollment period, allowing you to enroll in health insurance outside the yearly open enrollment period.
Self-administered drugs – Medications that patient’s typically take on their own. Some examples include; Tylenol, milk-of-magnesia, nasal sprays, ointment, vitamins etc. Medicare Part B, for example, generally doesn’t pay for self-administered drugs in the hospital outpatient setting. Patients are encouraged to contact their insurance company about their policies in this regard.
Skilled nursing care – Services from licensed nurses in your own home or in a nursing home. Skilled care services are from technicians and therapists.
State Health Insurance Assistance Program (SHIP) – A state program that gets funding from the federal government to provide free local health coverage counseling to people with Medicare.
Urgent care – Care for an illness, injury or condition serious enough that a reasonable person would seek care right away, but not so severe it requires emergency room care.