Health Insurance Glossary

The following glossary of helps you to understand the meaning of some specialized terminologies used widely.

Allowable Fee, or Usual and Customary Reimbursement (UCR) – The maximum amount a health insurer will pay for a service or procedure.

Adjusted community rating (ACR) – A rating method under which a health plan or MCO divides its members into classes or groups based on demographic factors such as geography, family composition, and age, and then charges all members of a class or group the same premium. The plan cannot consider the experience of a class, group, or tier in developing premium rates. Also known as modified community rating or community rating by class.

Benefit – A healthcare product or service that is paid for (in part or whole) by the insurance company.

Coinsurance – The amount the insured is required to pay for medical care in a plan after the annual deductible has been met. Coinsurance rate is usually expressed as a percentage. For example, the insurance company may pay 80% of the covered claim, and the insured pays the remaining 20%. This would be called 80/20.

Coordination of Benefits – A system to eliminate duplication of benefits when a person is covered under more than one group health insurance plan. Benefits under the two plans usually are limited to no more than 100% of the claim.

Deductible – The amount of money paid each year by the insured for medical care expenses before an insurance policy starts paying.

Generic Drug – A drug which is the same as a brand name drug and which is allowed to be produced after the brand name drug’s patent has expired.

Health Insurance – A type of insurance that provides benefits as a result of sickness or injury. Includes various types of insurance such as accident insurance, disability income insurance, prescription drug insurance, medical expense insurance, accidental death insurance, and dismemberment insurance.

HMO (Health Maintenance Organization) – Prepaid health plans. You pay a monthly premium and the HMO covers your doctors’ visits, hospital stays, emergency care, surgery, checkups, lab tests, x-rays, and therapy. You must use the doctors and hospitals designated by the HMO.

Indemnity Health Plan – Indemnity health insurance plans are also called “fee-for-service.” These are the types of plans that primarily existed before the rise of HMOs, IPAs, and PPOs. With indemnity plans, the individual pays a pre-determined percentage of the cost of healthcare services, and the insurance company (or self-insured employer) pays the other percentage. For example, an individual might pay 20 percent for services and the insurance company pays 80 percent.

Managed Care – Ways to manage costs, use, and quality of the healthcare system. All HMOs and PPOs, and many fee-for-service plans have managed care.

Maximum Out-of-Pocket – The most money you will be required pay a year for deductibles and coinsurance. It is a stated dollar amount set by the insurance company, in addition to regular premiums.

Noncancellable Policy – A policy that guarantees you can receive insurance, as long as you pay the premium. It is also called a guaranteed renewable policy.

Long-term Disability Insurance – Pays an insured a percentage of their monthly earnings if they become disabled.

LOS – LOS refers to the length of stay. It is a term used by insurance companies, case managers and/or employers to describe the amount of time an individual stays in a hospital or in-patient facility.

POS(Point of Service)Plan – A type of managed care coverage that allows members to choose to receive services either from participating HMO providers or from providers outside the HMO’s network. Members pay less for in-network care. For out-of-network care, members usually pay a deductible and coinsurance.

PPO (Preferred Provider Organization) – A combination of traditional fee-for-service and an HMO. When you use the doctors and hospitals that are part of the PPO, you can have a larger part of your medical bills covered. You can use other doctors but at a higher cost.

Third-Party Payer – Any payer for health care services other than you. This can be an insurance company, an HMO, a PPO, or the federal government.

Short-Term Disability – An injury or illness that keeps a person from working for a short time. The definition of short-term disability (and the time period over which coverage extends) differs among insurance companies and employers. Short-term disability insurance coverage is designed to protect an individual’s full or partial wages during a time of injury or illness (that is not work-related) that would prohibit the individual from working.

Short-Term Medical – Temporary coverage for an individual for a short period of time, usually from 30 days to six months.

Usual, Customary & Reasonable (UCR) – The dollar amount a company has determined to be appropriate for a particular medical service. Each company develops its own UCR. It is often less than doctors actually charge.

Vitamin therapy – The use of vitamins to prevent or cure disease. Many physicians are now recognizing the beneficial uses of anti-oxidant and other vitamins for a wide variety of conditions, often as a complementary therapy to accompany medication or other treatments. One variant on this theme, megavitamin therapy, is still rather controversial.