Health Insurance Definitions
Health insurance definitions are a handy thing to have sitting near by when you are shopping for individual health insurance and group health insurance. The following is a list of terms related to health insurance and their definitions to help you better understand the information you come across while getting the quote you need.
Understanding the industry lingo and definitions will make you an informed shopper, and help you find the health insurance you need.
When you are finished searching through the various health insurance terms and definitions then use our free quote finder to compare plans from top insurance companies side by side online.
Glossary Of Health Insurance Definitions A-K
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Agent – State licensed sales person. Agents can either be independent, representing several insurance companies or they can be an exclusive agent (captive agent) to one company.
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Benefit – This is the amount that the insurance company will pay out in the case of a claim.
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Brand Name Drug – Prescription drugs that are marketed under a specific name. Everyone is familiar with Ibuprofen. Ibuprofen is the generic name. Brand names are Motrin and Advil. Brand names have a lot to do with the ten year patent that drug companies have on medications. At the end of the ten years the patent runs out and generics can be released. Brand name drugs always cost more than the generics and insurance companies sometimes will not pay for them if generics are available, or they will charge higher co-pays for them.
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Case Management – The system used by employers and insurance companies to make sure that those insured get appropriate health care coverage.
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Claim – The “bill” for the insurance company. This is the request made by either the health care provider or the person holding the policy for payment.
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Co-Insurance – A secondary insurance company that will help cover costs of care.
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Co-Pay – A predetermined flat fee that is paid by the patient for health care services in addition to what the health insurance company covers.
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COBRA – Consolidated Omnibus Budget Reconciliation Act – This is federal regulation that allows you, if you work for a company larger than 20 people, to continue to purchase health insurance for up to 18 months in case you lose your job or your coverage is terminated for some other reason.
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Deductible – A percentage of your health insurance costs, determined by your health care plan, that you have to pay before the insurance company covers any costs.
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Dependents – Spouse, unmarried children or another person you are legally responsible for.
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Exclusions – Exclusions are the things that the insurance company will not cover, such as elective plastic surgery.
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Explanation of Benefits – This is the statement you get from your insurance company telling you what they paid on your claims.
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Generic Drug – When the patent on a drug has run out a generic identical version can be made at a lower cost. Generic drugs are cheaper and these are what the insurance company prefers to cover.
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Group Insurance – Coverage through your employer or other group (such as an association). Premiums are typically paid in part or in whole by the employer.
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Health Maintenance Organization – (HMO) These are “pre-paid” insurance plans where either the employee or the employer pay a fixed monthly fee for service. The fee never changes but you are often regulated to going to a specific doctor or clinic under contract with the HMO.
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HIPAA – Health Insurance Portability and Accountability Act – Federal law that allows a person to qualify immediately for equal health insurance coverage when they change employment or relationships. It also spells out the measures that must be taken to insure a patient’s privacy of personal identifiable information and mandates the standards that are to be used in an electronic exchange and retrieval system of medical records.
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In Network – Doctors are said to be in network if they participate in a given insurance plan.
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Indemnity Health Plan – This is the standard health insurance plan where you pay for your care up front and submit a claim to your insurance company to be reimbursed.
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Individual Health Insurance – This is an insurance policy that you pay for yourself and that your employer has nothing to do with.
Glossary Of Health Insurance Definitions L-Z
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Lifetime Maximum Benefit – The maximum amount that an insurance company will pay out in claims during your lifetime.
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Long-Term Disability Insurance – Long term disability insurance will pay a portion of the holder’s monthly earnings in the event of long term disability or injury.
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Managed Care – A medical system that attempts to manage the care its customers receive by focusing on preventative care. These are usually HMOs and PPOs.
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Network – The group of doctors, hospitals, clinics, and specialists contracted through your insurance company at specific rates.
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Out-of-Network – Doctors, hospitals, clinics, specialists, etc…that accept your insurance plan.
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Out-of-Pocket – These are the costs that you have to pay for yourself and include deductibles and co-pays.
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Pre-Admission – The process of certain procedures you must go through with the insurance company before the insurance company will cover your costs. This is to determine if something is medically necessary to save money.
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Pre-Existing Condition – A condition that is excluded from your health insurance policy because it existed prior to your coverage.
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Preferred Provider Organization – (PPO) This is a medical plan where you receive discounted rates for using specified doctors, hospitals, clinics, etc.
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Primary Care Provider – Your main doctor. This is the doctor that is responsible for your routine care (physicals, ear aches, etc.).
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Provider – The health professional that is providing health care and includes doctors, nurses, hospitals, clinics, therapists, etc.
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Rider – Extra coverage that is purchased for additional coverage that is not standard. (This can also refer to a particular condition that is not covered under a policy).
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Risk – This is the chance of loss that an insurance company takes when they opt to insure you. Risk is determined by the likelihood that you will have medical problems. Examples are weight and if you are smoker or non-smoker.
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Short Term Disability – Short term disability protects an individual’s wages during an extended time off due to injury or illness. Each insurance company has a different time frame that they use for determining short term disability but it usually is under 6 months.
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Underwriter – The underwriter is the company that assumes responsibility for the policies and issues insurance.
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Waiting Period – The time frame varies but this is the amount of time that insurance companies make you wait until they will cover pre-existing conditions.
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