Insurance terms

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CO-OP

The Consumer Operated and Oriented Plan program, or CO-OP, is designed to provide nonprofit, member-governed health insurance options.

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers and their families to continue their employer-sponsored health insurance coverage temporarily after leaving a job, usually at a higher cost.

Cancelation

With respect to health insurance, a cancellation refers to the termination of the insurance policy or coverage either by the insurance company or the insured person before the end of the period of coverage.

Cancer Insurance Policy

This type of insurance provides financial support if someone is diagnosed with cancer. It helps cover treatment costs, including medical bills, medications, and other related expenses.

Capitation

This alternative payment model is like a flat-rate subscription for healthcare services. Capitation is a payment method in which healthcare providers receive a fixed amount per patient to cover all necessary medical services. Primary care physicians or integrated hospital-insurer networks will manage total care for a large patient group under an agreed-upon capitated rate paid upfront on a monthly basis by associated health plans. This prepaid lump sum remains the same per member regardless of utilization levels or whether they are healthy versus battling complex diseases. By prepaying for expected care expenses based on large-scale projections, this system incentivizes efficient preventative services over costly acute treatments.

Carrier

A carrier is another name for an insurance company that offers insurance coverage, manages policies, and pays for covered services.

Case Management

When prolonged hospitalizations or complex chronic illnesses lead to intensive ongoing care needs, case management helps coordinate treatments with medical teams, health plan administrators, patients, and family caregivers. These patient-centered services aim to optimize recovery outcomes and quality of life while managing the runaway costs of ambulant visits, home therapies, community care referrals, special equipment acquisition, etc. Case managers help enhance continuity and reduce duplication and contradictions across multi-specialist providers.

Catastrophic Plan

These are high-deductible health plans designed for young or healthy individuals, offering minimal coverage but protection in cases of severe medical emergencies or accidents.

Centers for Medicare and Medicaid Services (CMS)

CMS is the federal agency that provides health coverage to more than 160 million through Medicare, Medicaid, the Children's Health Insurance Program, and the Health Insurance Marketplace.

Certificate of Creditable Coverage

Proof of a person’s current or most recent insurance policy details will come via this official document, usually provided when coverage ends or changes. It provides evidence that legally entitles you to enroll in another individual or group health plan without exclusions or waiting periods imposed based on preexisting conditions. Certificates list the start and end dates, covered dependents, prior payer contact info, policy numbers, etc.

Certificate of Insurance

Think of this as the membership card for an insurance policy. It is a document that confirms your coverage details, such as the type of insurance, coverage period, and benefits included.

Children's Health Insurance Program (CHIP)

CHIP provides low-cost health coverage for children in families who earn too much to qualify for Medicaid but cannot afford private insurance.

Claim

The claim is a request for payment submitted by a healthcare provider to an insurance company for services provided to a patient.

Clause

Since health insurance is a contract, it includes clauses. A clause in this context refers to the financial responsibility of the insurance company to the policyholder as stipulated in the contract.

Closed Formulary

A list of medications (formulary) which may limit drugs to specific physicians, patient care areas, or disease states via formulary restrictions.

Coinsurance

Think of this as cost-sharing in a joint venture. It is the percentage of healthcare costs you share with your insurance company after you have paid your deductible.

Commission

In terms of insurance, a commission is a fee in a percentage of the premium that an insurance company pays an insurance agent in exchange for soliciting applications for insurance for the company.

Community Rating

A rule that prevents health insurers from varying premiums within a geographic area based on age, gender, health status or other factors.

Composite Rate

A composite rate is an insurance premium based on the average risk profile of a group rather than the risk profile of an individual policyholder. A composite rate implies that all members of a particular group pay the same insurance premium for coverage.

Comprehensive Coverage

Comprehensive coverage includes a wide range of healthcare services and treatments, offering extensive protection against various health issues.

Coordination of Benefits

Coordination of Benefits (COB) refers to the rules that determine the primary plan and the secondary plan when an insured has two or more policies covering the same risks. It prevents insurers from overpaying for claims.

Copayment

Copayments are fixed amounts paid for specific services covered by insurance, often due at the time of service.

Cost Sharing

This involves sharing expenses between an insured person and their insurance company, including deductibles, copayments, and coinsurance.

Cost-Sharing Reduction

A subsidy for eligible individuals or families to reduce out-of-pocket costs such as deductibles, copayments, and coinsurance. If you qualify, you must enroll in a plan in the Silver category to get the extra savings.

Coverage Exclusions

Every policy will list exclusions, or services they don’t cover. Certain prescription meds, alternative treatments, extremely high-cost new therapies, or experimental procedures will almost never be included. Say you want LASIK eye surgery? Most health plans strongly resist covering these vision enhancements as a "non-essential benefit.” Digging through exclusions upfront helps avoid unpleasant surprise bills later.

Covered Services

This term refers to the comprehensive list of medical care, tests, treatments, therapies, and services covered by your health insurance. Everything from preventive scans to complex surgery may fall under this umbrella, as long as it's deemed medically necessary.

Critical Illness Plan

Like a safety net for tough times, this insurance policy pays a lump sum or provides a benefit if the insured person is diagnosed with a serious illness such as cancer, stroke, or heart attack.
A

ACA-Compliant Coverage

Also called Obamacare plans, these are health insurance policies that meet all the coverage requirements laid out in the 2010 Affordable Care Act. This sweeping health reform law set new standards for insurance to better protect consumers. All ACA plans must offer essential health benefits, cover preexisting conditions, have no annual/lifetime dollar limits, and meet other requirements. This improved-quality coverage comes with an individual mandate to have insurance or face a tax penalty.

Accident Insurance

Supplemental insurance that covers expenses if you suffer an unexpected injury from an accident, such as broken bones from a bike crash, concussions on the basketball court, burns from a cooking mishap, and more. Accident insurance helps cover costly medical bills, ambulance fees, or unpaid time off work to recover that your regular medical insurance may not address.

Accountable Care Organization

These are healthcare teams that work together to provide coordinated care, aiming to improve quality and cut costs by sharing responsibilities and rewards.

Actuary

These professionals use statistics and analytics to calculate risk and forecast future costs. Health insurance companies rely on actuaries to crunch the numbers on historical claims data and health trends to accurately predict future expenses. This guides pricing and ensures enough premium payment is collected upfront to cover upcoming medical bills that could randomly hit.

Admitting Privilege

This is an agreement between doctors and hospitals that allows physicians to admit patients to that hospital for medical treatment or care.

Adjuster

An insurance claims adjuster is someone charged with evaluating an insurance claim to determine if and how much an insurance company must pay for the claim under review. An adjuster may be a representative of the insurance company or they may be independent. A claimant can also hire a public adjuster to do their own investigation on the claim, apart from the insurance company.

Advance Care Planning Consultations

These discussions take place between healthcare providers and individuals to determine preferences for future medical care. It includes conversations about end-of-life care wishes, ensuring that healthcare aligns with a person’s values and desires.

Advance Directive

An advance directive is a legal document allowing individuals to spell out their healthcare wishes. It may include instructions about life-sustaining treatments and appointing someone to make healthcare decisions on their behalf if they cannot communicate.

Advance Insurance Premium Payment

This can be the first or binder payment of an insurance policy, or it may be a payment made before the scheduled first payment for a policy that the insurance company makes available to the policyholder, typically, for a discount or as part of a promotion.

Advance Premium Tax Credit

This government subsidy helps reduce the cost of health insurance premiums for eligible individuals or families with lower incomes.

Adverse Determination

With respect to health insurance, an adverse benefit determination refers to a situation where the insurance company denies a benefit, refuses payment for a service already received, or rescinds health coverage.

Adverse Selection

Adverse selection is a situation in which those who expect to need more healthcare services are the ones signing up for insurance. It can lead to imbalanced risk pools and potentially higher costs for insurers, affecting the stability of insurance plans.

Affordable Care Act (ACA)

The ACA is a comprehensive healthcare reform law aimed to improve healthcare accessibility, affordability, and quality in the United States. Sometimes known as Obamacare, it introduced measures such as health insurance marketplaces, subsidies, and protections against insurance denials due to preexisting conditions.

Agent

In healthcare, an agent is a licensed individual who assists in finding and purchasing health insurance plans that match a person's needs. They help buyers navigate the various insurance options available in the market.

Allowed Amount

This is the maximum dollar amount a health insurer agrees to pay for any medical service, treatment, test, etc. Anything above this agreed rate will be billed to patients as "balance billing." Rate negotiations between health providers and insurance carriers establish allowed amounts for every covered service, from a 15-minute doctor visit to an organ transplant surgery.

American Rescue Plan

This legislative package provided economic relief during the COVID-19 pandemic. It included measures to expand and increase subsidies for health insurance plans under the ACA, reducing costs for many individuals and families.

Annual Limit

This refers to the maximum amount an insurance plan will pay for covered services in one year. The ACA prohibited most health insurance plans from imposing annual limits on essential health benefits to ensure adequate coverage for individuals.

Appeal

If a claim is denied by the insurance company, the insured person can request they take a second look and reconsider covering it. Submitting a formal appeal with evidence from your doctor allows you to contest your insurer's decision. Health plans must outline the appeals process, which starts with an internal review and can escalate to external third parties or a court. Appeals allow you to stand up for your right to fair coverage.

Application (App)

With respect to health insurance, an application is a form providing the insurer with certain information necessary to underwrite one’s health risks. It is typically attached to the insurance contract as part of the “entire contract.”

Association Health Plan

These plans allow small businesses or self-employed individuals to join together to purchase health insurance. It aims to give them access to more affordable coverage by leveraging the buying power of a larger group.

Authorized Representative

Someone who you choose to act on your behalf with the Marketplace, like a family member or other trusted person. Some authorized representatives may have legal authority to act on your behalf.
B

Balance Billing

This is the amount a healthcare provider charges a patient for the difference between what their insurance covers and the cost of the services rendered.

Benchmark Plan

This is a plan that is used as a reference point for determining the level of coverage and costs for health insurance offered in a particular area.

Beneficiary

Beneficiaries receive advantages or payments from an insurance policy, as in the case of a person covered by a health insurance plan. Beneficiaries can have any health insurance, including Medicare, Medicaid, or private coverage.

Benefit Cap

Some plans limit coverage for health treatments or services by capping the number of visits or dollar amount they'll shell out for them in a year. For example, an insured person may encounter a hard cutoff after 20 chiropractor sessions or 30 physical therapy appointments annually. Other caps could restrict how much the plan covers for high-cost infertility treatments. While benefit caps aim to prevent overutilization, knowing which critical services have limits can help buyers choose the best insurance policy.

Benefits Year

Unlike the calendar year, which starts fresh on January 1, a benefit year is based on the date when a plan began. This 12-month cycle serves as the basis for all the elements of a policy, from deductibles, out-of-pocket maximums, and covered drugs to in-network providers and more. It's essentially how insurance companies keep track of a person’s accumulating costs and enrollment specifics over time. Switching plans mid-year? Understanding the benefit year provided insight into upcoming changes to expect.

Book of Business

A book of business, in the context of insurance, is a database or “book” that lists all of the insurance policies the insurance company has written or completed.

Brand-Name Drugs

These are medications with exclusive patent-protected names, like Vyvanse for treating ADHD or Keytruda for different types of cancer. Despite high price tags, they advertise directly to patients because no generic equivalents exist yet to compete with them. Being the only one on the shelves gives brand-name drugs the leverage to charge more and maximize profits during the patent protection period. This contributes to rising insurance premiums. If you prefer brand names over generics, be prepared to pay hefty coinsurance costs or copays.

Broker

Brokers are like the matchmakers of insurance. They help buyers find and enroll in the right insurance plan to suit their needs.

Bronze Plan

This is one of the tiers of health insurance plans under the ACA and usually offers lower monthly premiums but higher out-of-pocket costs for healthcare services.

Bundled Plan

Bundled plans combine different types of insurance coverage, like health, dental, and vision, into one convenient plan.
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