Insurance Definitions

Glossary of Terms

ACA (Affordable Care Act): The Patient Protection and Affordable Care Act, often shortened to the Affordable Care Act (ACA) or nicknamed Obamacare, is a United States federal statute enacted by the 111th United States Congress and signed into law by President Barack Obama on March 23, 2010.

Accelerated Benefits: Also known as "living benefits," are life insurance policy proceeds paid to the policyholder before he or she dies.

APS: (Attending Physician Statement): An attending physician statement (APS) is a report by a physician, hospital or medical facility who has treated, or who is currently treating, a person seeking insurance. In traditional underwriting, an APS is one of the most frequently ordered additional sources of medical background information.

Association Health Plans (AHPs), under the Department of Labor's rule, are group health plans that employer groups and associations offer to provide health coverage for employees.

CIGNA: Cigna is an American worldwide health services organization based in suburban Bloomfield, Connecticut and Philadelphia, Pennsylvania. Its insurance subsidiaries are major providers of medical, dental, disability, life and accident insurance and related products and services, the majority of which are offered through employers and other groups.

Co-Insurance: a type of insurance in which the insured pays a share of the payment made against a claim.

Contracted Rate (PPO Discount): This is the agreed upon price negotiated between the provider and the insurance company (or provider network) for a specific service. The price is less than the provider’s standard charge. The concept is that the provider will see more patients by being a member of the network or authorized provider for the insurance company and discount services for its members.

Co-Pay: (short for copayment) a payment made by a beneficiary (especially for health services) in addition to that made by an insurer.

Declined: When an applicant was not approved for an underwritten plan they are considered “declined”.

Deductible: (in an insurance policy) a specified amount of money that the insured must pay before an insurance company will pay a claim. "a traditional insurance policy with a low deductible."

Discount Plan: If you buy a health insurance plan, it generally covers a broad range of services, and pays you or your health care provider for a portion of your medical bills. With a medical discount plan, you generally pay a monthly fee to get discounts on specific services or products from a list of participating providers.

EPO: EPO stands for "Exclusive Provider Organization" plan. As a member of an EPO, you can use the doctors and hospitals within the EPO network, but cannot go outside thenetwork for care. There are no out-of-network benefits. Often you need a Primary Care Physician in network to manage your care.

Essential Health Benefits: Minimum Essential Coverage (MEC) Any insurance plan that meets the Affordable Care Act requirement for having health coverage. To avoid the penalty for not having insurance you must be enrolled in a plan that qualifies as minimum essential coverage (sometimes called “qualifying health coverage”).

First Dollar: Insurance coverage that provides for the payment of all losses up to the specified limit without any use of deductibles.

Fixed Benefits: A fixed-indemnity insurance plan is a type of supplemental health plan that gives you a fixed cash benefit payout in case you experience specific illnesses or injuries covered by your policy.  Fixed-indemnity plans may only cover a limited set of illnesses, injuries, drugs, and/or medical procedures, and sometimes do not cover hospital costs at all.

HMO: (health maintenance organization) An HMO gives you access to certain doctors and hospitals within its network. A network is made up of providers that have agreed to lower their rates for plan members and also meet quality standards. But unlike PPO plans, care under an HMO plan is covered only if you see a provider within that HMO’s network. There are few opportunities to see a non-network provider. There are also typically more restrictions for coverage than other plans, such as allowing only a certain number of visits, tests or treatments.

If you opt to see a doctor outside of an HMO network, there is no coverage, meaning you will have to pay the entire cost of medical services.

Some other key points about HMOs:

Some plans may require you to select a primary care physician (PCP), who will determine what treatment you need.

With some plans, you may need a PCP referral to be covered when you see a specialist or have a special test done.

If you opt to see a doctor outside of an HMO network, there is no coverage, meaning you will have to pay the entire cost of medical service

Indemnity Health Insurance: Indemnity health insurance plans are also called fee-for-service. These are the types of plans that primarily existed before the rise of HMOs, PPOs, and other network-type plans. With indemnity plans, the insurance company pays a pre-determined percentage of the reasonable and customary charges for a given service, and the insured pays the rest.

With an indemnity plan, there’s no provider network, so patients can choose their own doctors and hospitals. But that means that the providers can balance bill the patient for any billed amounts above what the insurance company pays, since the providers don’t have contracts with the insurer requiring them to accept the insurer’s “reasonable and customary” amounts as payment in full.

Individual Mandate: The health care reform legislation that became law in 2010 - known officially as the Affordable Care Act and also as Obamacare - requires most Americans to have a basic level of health insurance coverage. This requirement is commonly referred to as the law's "individual mandate."

Inpatient: a patient who stays in a hospital while under treatment.

Limited Benefits Plan: Limited-benefit plans are medical plans with much lower and more restricted benefits than major medical insurance, but with lower premiums. Limited-benefit plans include critical illness plans, indemnity plans (policies that only pay a pre-determined amount, regardless of total charges), and “hospital cash” policies. These plans are not regulated by the Affordable Care Act and are not suitable to serve as a person’s only medical coverage.  But in some cases, they can be a good supplement to a high-deductible major medical plan.

Major Medical: major medical insurance designed to compensate for particularly large medical expenses due to a severe or prolonged illness, usually by paying a high percentage of medical bills above a certain amount.

MediShare: Unlike traditional health insurance, these plans do not “insure” people but rather “share” healthcare costs among a large pool of people. Members pay into the system and upon receiving a bill from their physician other members of the plan will contribute to help pay the bill. Medi-Share is not insurance. It's simply a way to help cover the cost of medical expenses.

Many states do not consider Medi-Share an insurance company, which means consumers have little or no legal protection if a claim is not paid, coverage is denied, or the ministry goes bankrupt.

Network: A provider network is a list of the doctors, other health care providers, and hospitals that a plan has contracted with to provide medical care to its members. These providers are called “network providers” or “in-network providers.”

Obama Care: See ACA

Outpatient: a patient who receives medical treatment without being admitted to a hospital.

POS: A point-of-service plan (POS) is a type of managed care plan that is a hybrid of HMO and PPO plans. Like an HMO, participants designate an in-network physician to be their primary care provider. But like a PPO, patients may go outside of the provider network for health care services.

PPO: (Preferred Provider Organization) PPO plans provide more flexibility when picking a doctor or hospital. They also feature a network of providers, but there are fewer restrictions on seeing non-network providers. In addition, your PPO insurance will pay if you see a non-network provider, although it may be at a lower rate.

Here are some key features:

You can see the doctor or specialist you’d like without having to see a PCP first.

You can see a doctor or go to a hospital outside the network and you may be covered. However, your benefits will be better if you stay in the PPO network.

Pre-existing Condition: In the context of healthcare in the United States, a pre-existing condition is a medical condition that started before a person's health benefits went into effect.

Premium: An insurance premium is the amount of money that an individual or business must pay for an insurance policy. The insurance premium is income for the insurance company, once it is earned, and also represents a liability in that the insurer must provide coverage for claims being made against the policy.

Primary Care Physician: A primary care physician, or PCP, is considered your main doctor. They are responsible for dealing with the majority of your health care issues. Depending on the type of health insurance you have, your insurer may require you to have a PCP. The PCP would manage and direct your health care.

Shared Responsibility Payment: The individual shared responsibility provision of the Affordable Care Act requires you and each member of your family to have qualifying health care coverage (called minimum essential coverage), qualify for a coverage exemption, or make an individual shared responsibility payment when you file your federal income tax return.

Short Term Plan: (a.k.a limited duration) Short-term, limited duration (STLD) health insurance has long been offered to individuals through the non-group market and through associations.  The product was designed for people who experience a temporary gap in health coverage. Unlike other products that are considered “limited benefit” or “excepted benefit” policies – such as cancer-only policies or hospital indemnity policies that pay a fixed dollar benefit per inpatient stay – short-term policies are generally considered to be “major medical” coverage; however, short-term policies are distinguished from other comprehensive major medical policies because they only provide coverage for a limited term, typically less than 365 days.  Short-term policies are also characterized by other significant limitations, including the types of services covered, often with a dollar maximum.

Term Life Insurance: Life insurance that pays a benefit in the event of the death of the insured during a specified term.

There are certain restrictions and payment caps relating to pre-existing conditions.

Trump Care: The American Health Care Act of 2017 (H.R. 1628) often shortened to the AHCA, or nicknamed Trumpcare, is a United States Congress bill to partially repeal the Patient Protection and Affordable Care Act (ACA), also known as Obamacare.

Underwriting (UW): Medical underwriting is a health insurance term referring to the use of medical or health information in the evaluation of an applicant for coverage, typically for life or health insurance.

(Note: This I intended to be quick reference guide only. This is not legal or medical advice. This is not a comprehensive glossary of terms used in the industry, nor are these legal definitions. See your policy for a full description of all plans, plan features, benefits, exclusions limitations, etc.)

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