Accidental Death Benefit
An extra benefit which generally equals the face of the contract, payable in addition to other benefits in the event of death as the result of an accident. Also called Double Indemnity.

Accidental Death Insurance
Insurance that provides payment if the death of the insured results from an accident. It is often combined with Dismemberment Insurance in a form called Accidental Death and Dismemberment.

Allowable Charge
The lesser of the following: actual charge, customary charge or prevailing charge. It is the amount on which the insurance company will base its payment.

Allowable Costs
Charges that qualify as covered expenses.

Ambulatory Care
Similar to outpatient treatment in that it is care which does not require hospitalization.

Ambulatory Setting (AS)
An institution such as a surgery center, a clinic, or other outpatient facility, which provides health care on an outpatient basis.

Ancillary
Additional services (other than room and board charges) such as X-rays, anesthesia, lab work, etc.

Approved Charge
Amounts paid by the insurance company as the maximum fee for a covered service.

Assignment of Benefits
A method where the person receiving the medical benefits assigns the payment to a physician or hospital.

COBRA
See Consolidated Omnibus Budget Reconciliation Act of 1986. back to top

Calendar Year
January 1 through December 31 of the same year. Most deductible provisions are on a calendar year basis under major medical plans. back to top

Capitation (CAP)
A rate paid, usually monthly, to a healthcare provider. In return, the provider agrees to deliver the health services agreed upon to any covered person. Usually referred to in HMO plans. back to top

Case Management
The assessment of a person's long term care needs and the appropriate recommendations for care, monitoring and follow-up as to the extent and quality of services to be provided. back to top

Case Manager
A person, usually an experienced professional, who coordinates the services necessary under the Case Management approach. back to top

Certificate of Coverage
This is a document that provides evidence of your prior health coverage that may be required for new group insurance. The insurance company or prior employer usually provides the document. back to top

Coinsurance Clause
A provision stating that the insured member and the insurance company will share all covered expenses in a proportion agreed upon in advance, i.e., 80-20 would mean that the insurance company would pay 80% and the insured member would pay 20% of all covered expenses. back to top

Composite Rate
One rate for all members by their status (single, family, employee + spouse, employee + children) on a group plan regardless of their age or sex. back to top

Comprehensive Major Medical
A modern plan of insurance which has a deductible, high maximum benefits, and a coinsurance feature. It is a combination of basic and major medical coverage that has virtually replaced the old hospital, surgical and medical policies which each had their own separate deductibles. Also called Major Medical Insurance. back to top

Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986
Legislation providing for a continuation of group health care benefits under the group plan for a period of time when benefits would otherwise terminate. Continuation rights apply to enrolled persons and their dependents. Coverage may be continued for up to 18 months if the insured person terminates employment or is no longer eligible. Coverage may be continued for up to 36 months in nearly all other cases, such as loss of dependent eligibility because of death of the enrolled person, divorce, or attainment of the limiting age. back to top

Continuation
Allows terminated employees to continue their group health insurance coverage under certain conditions. In Texas this is for a 6 months period on small groups that do not qualify for COBRA. back to top

Co-pay
This is an arrangement where the covered person pays a specified dollar amount for various services and the health care provider pays the remainder. The covered person usually must pay his or her share when the service is rendered. Similar to coinsurance except that coinsurance is a percentage of certain charges not a specific dollar amount. back to top

Covered Expenses
Healthcare expenses incurred by an insured or covered person that qualifies for reimbursement under the terms of a policy contract. back to top

Date of Service
The date that the healthcare service was provided. back to top

Deductible Carryover Credit
During the last three months of a calendar year, charges incurred for health services can be used to satisfy the deductible for the following calendar year. These credits may be applied whether or not the prior calendar year's deductible had been met. back to top

Dependent Coverage
Insurance coverage on the head of a family which is extended to his or her dependents, including the lawful spouse and unmarried children who are not yet age 25 (in Texas). back to top

Disability Income Insurance
A form of health insurance that provides periodic payments to replace income, when the insured is unable to work as a result of sickness or injury. back to top

Drug Formulary
A schedule of prescription drugs approved for use that will be covered by the plan and dispensed through participating pharmacies. back to top

Dual Option
Normally refers to a group plan that offers a choice to their employees of either PPO or HMO. back to top

Eligibility Date
The date that a person is eligible for benefits. back to top

Eligibility Period
The period of time during which potential members of a Group Program may enroll without providing evidence of insurability. back to top

Elimination Period
A loosely used term, sometimes designating the waiting period in a Disability Insurance policy. back to top

Employee Contribution
The employee's share of the insurance premiums costs. back to top

Employer Contribution
The portion of the health insurance premiums paid by the employer. back to top

Explanation of Benefits (EOB)
The statement sent to a member showing dates of services, total amounts billed, amounts paid by the insurance plan, and the amount, if any, owed by the member. back to top

Generic Drug
A drug that is exactly the same as a brand name drug and which is allowed to be produced after the brand name drug's patent has expired. It is also called a "generic equivalent." back to top

Home Health Care
Care received at home as part-time skilled nursing care, speech therapy, physical or occupational therapy, etc. back to top

Health Maintenance Organization (HMO)
An HMO is a prepaid medical service plan that provides services for the members. Medical providers contract with the HMO to provide services to plan members. Members must use contracted providers. back to top

Health Savings Account
A Health Savings Account allows individuals to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax free basis. Consumers can sign up for HSAs with providers which will generally be insurance companies and banks. Employers are likely to set up plans for employees as well in which case the employer will generally be arranging the HSA for the employee. To be eligible for a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP), must not be covered by other health insurance (does not apply to specific injury insurance and accident, disability, dental care, vision care, long-term care), is not eligible for Medicare, and can't be claimed as a dependent on someone else's tax return. A HDHP is a health insurance plan with minimum deductible of $1,000 (self-only coverage) or $2,000 (family coverage). The annual out-of-pocket (including deductibles and co-pays) cannot exceed $5,000 (self-only coverage) or $10,000 (family coverage). HDHPs can have first dollar coverage (no deductible) for preventive care and higher out-of-pocket (copays & coinsurance) for non-network services. back to top

Hospice
A service organization primarily designed to provide pain relief, symptom management and supportive services for the terminally ill and their families. back to top

Long Term Care (LTC)
Care provided for persons with chronic diseases or disabilities. The term includes a wide range of health and social services provided under the supervision of medical professionals. back to top

Long Term Care Facility
Usually a state licensed facility that provides skilled nursing services, intermediate care and custodial care. back to top

Long-Term Disability Insurance
A group or individual policy that provides coverage for longer than a short term, often until the insured reaches age 65 in the case of illness and for the remainder of his or her lifetime in the case of accident. See also Short-Term Disability Insurance. back to top

Medical Information Bureau (MIB)
A data pool service that stores coded information on the health histories of persons who have applied for insurance from subscribing companies in the past. Most Life and Health insurers subscribe to this bureau to get more complete underwriting information.

Medically Necessary
A service or treatment that is absolutely necessary in treating a patient and which could adversely affect the patient's condition if it were omitted. back to top

Medicare
The United States federal government plan for paying certain hospital and medical expenses for persons qualifying under the plan, usually those over 65. The hospital benefits are Part A, and the medical expense portion is Part B. Part A is compulsory social insurance; Part B is voluntary government-subsidized, government-operated insurance. back to top

Medicare Beneficiary
Anyone entitled to Medicare benefits based on the designation by the Social Security Administration. back to top

Medicare Supplement Insurance
Insurance coverage sold on an individual or group basis that helps to fill the gaps in the protection provided by the Medicare program. Medicare supplements cannot duplicate any benefits provided by Medicare, but may pay part or all of Medicare's deductibles and co-payments, and may cover some services and expenses not covered by Medicare. back to top

Member
Anyone covered under a health plan (enrollee or eligible dependent). back to top

Open Access
Allows a participant to see another participating provider of services without a referral. back to top

Open Enrollment Period
A period during which members can elect to come onto a plan, usually without providing evidence of insurability. back to top

Out-of-Pocket Costs
The amounts the covered person must pay out of his or her own pocket. This includes such things as coinsurance, deductibles, etc. back to top

Out-of-Pocket Limit
The maximum coinsurance an individual will be required to pay, after which the insurer will pay 100% of covered expenses up to the policy limit. back to top

Over-The-Counter Drugs (OTC)
A drug that can be purchased without a prescription. back to top

Partial Disability
A condition in which, as a result of injury or sickness, the insured cannot perform all of the duties of his or her occupation but can perform some. Exact definitions vary from policy to policy. back to top

Pre-existing Condition
A physical condition that existed prior to the effective date of a policy. In many Health policies these are not covered until after a stated period of time has elapsed. back to top

Preferred Provider Organization (PPO)
An organization of hospitals and physicians, who provide, for a set fee, services to insurance company clients. These providers are listed as preferred and the insured may select from any number of hospitals and physicians without being limited as with an HMO. Coverage is 100%, with a minimal copayment for each office visit or hospital stay. back to top

Prescription Medication
A drug approved by the Food and Drug Administration that can be dispensed only by prescription. back to top

Preventive Care
Routine physical examinations and immunizations best exemplify this type of care. The emphasis is on preventing illnesses before they occur. back to top

Primary Care
Basic health care provided by doctors who are in the practice of family care, pediatrics, and internal medicine. back to top

Primary Care Network (PCN)
This is a group of primary care physicians who provide services to those members of a particular health insurance plan. back to top

Primary Care Physician
Some health insurance plans require members to select and seek treatment from a primary physician who either renders treatment or refers the member to an appropriate specialist within the approved health care network.

Rating Process
The steps used to determine a premium rate for a particular group based on the amount of risk that group presents. Items that generally go into the rating process include age, sex, type of industry, benefits, and administrative costs. back to top

Reasonable and Customary Charges
The charge for medical services that refers to the amount approved by the insurance company for payment. Customary charges are those that are most often charged by a provider for services rendered in that particular area (geographical and specialty). back to top

Referral
Occurs when a physician or other health provider receives permission to consult another physician or hospital. Example: A Primary Care Provider refers the insured to a Gastroenterologist. back to top

Section 125 Plan
A plan which provides flexible benefits. This plan qualifies under the IRS code that allows employee contributions to be paid with pre-tax dollars. back to top

Self-Funded Plan
Plan of insurance where an employer, who has fairly predictable claim costs, pays the claims rather than the insurance company. back to top

Short-Term Disability Insurance
A group or individual policy usually written to cover disabilities of 13 or 26 weeks duration, though coverage for as long as two years is not uncommon. Contrast with Long-Term Disability Insurance. back to top

Stop-Loss Insurance
This is a type of reinsurance that can be taken out by a health plan or self-funded employer plan. The plan can be written to cover excess losses over a specified amount either on a specific or individual basis, or on a total basis for the group over a period of time such as one year. back to top

Third Party Administrator (TPA)
A firm which provides administrative services for employers and other associations having group insurance policies. The TPA in addition to being the liaison between the employer and the insurer is also involved with certifying eligibility, preparing reports required by the state and processing claims. TPA's are usually used in employer self-funded plans. back to top

Total Disability
A degree of disability, from injury or sickness, that prevents the insured from performing the duties of any occupation for remuneration or profit. The definition in any given case depends on the wording in a covering policy. back to top

Waiting Period
The period of time between the beginning of a disability and the start of Disability Insurance benefits. Also called Elimination period. back to top