Message from Wiley Long
President - ColoHealth
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Glossary of Terms

Coinsurance . . . Copayment . . . EOB . . . What does it all mean?

At ColoHealth.com, we understand how confusing it can be to decipher all the insurance terms and acronyms that come with purchasing a health plan. Therefore, we’re providing you with the definitions of the most commonly used insurance terms and acronyms.

When reading the definitions, please keep in mind that this glossary is provided as a general guide. These definitions are for illustrative purposes only and are not meant to be exhaustive. Definitions and plan options may vary by state and plan. If you obtain coverage, please refer to your contract for a complete listing and exact definition of terms, as your contract language will prevail.

 

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A

Ancillary Services - services, other than those provided by a physician or hospital, which are related to a patient’s care, such as laboratory work, x-rays and anesthesia.

C

Calendar Year - the period beginning January 1 of any year through December 31 of the same year.

Case Management - a process whereby a covered person with specific health care needs is identified and a plan which efficiently utilizes health care resources is designed and implemented to achieve the optimum patient outcome in the most cost-effective manner.

Certificate of Coverage - a document given to an insured that describes the benefits, limitations and exclusions of coverage provided by an insurance company.

Claim - Information a medical provider or insured submits to an insurance company to request payment for medical services provided to the insured.

Coinsurance - The portion of covered health care costs for which the covered person has a financial responsibility, usually a fixed percentage. Coinsurance usually applies after the insured meets his/her deductible.

Consolidated Omnibus Budget Reconciliation Act (COBRA) - a federal law that, among other things, requires employers to offer continued health insurance coverage to certain employees and their beneficiaries whose group health insurance has been terminated if they undergo a triggering event.

Contract Year - the period of time from the effective date of the contract to the expiration date of the contract.

Coordination of Benefits (COB) - a provision in the contract that applies when a person is covered under more than one medical plan. It requires that payment of benefits be coordinated by all plans to eliminate overinsurance or duplication of benefits.

Copayment - a cost-sharing arrangement in which an insured pays a specified charge for a specified service, such as $25 for an office visit. The insured is usually responsible for payment at the time the service is rendered. This charge may be in addition to certain coinsurance and deductible payments.

Covered Person - an individual who meets eligibility requirements and for whom premium payments are paid for specified benefits of the contractual agreement.

Covered expenses - services for which the health insurance makes either a full or partial payment.

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D

Deductible - the amount of eligible expenses a covered person must pay each year from his/her own pocket before the plan will make payment for eligible benefits.

Deductible Carry Over Credit - charges applied to the deductible for services during the last 3 months of a calendar year which may be used to satisfy the following year’s deductible.

Dependent - a covered person who relies on another person for support or obtains health coverage through a spouse, parent or grandparent who is the covered person under a plan.

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E

Effective Date - the date insurance coverage begins.

Eligible Dependent - a dependent of a covered person (spouse, child, or other dependent) who meets all requirements specified in the contract to qualify for coverage and for who premium payment is made.

Eligible Expenses - the lower of the reasonable and customary charges or the agreed upon health services fee for health services and supplies covered under a health plan.

Emergency: the sudden, and at the time, unexpected onset of a health condition that requires immediate medical attention where failure to provide medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person’s health in serious jeopardy.

Explanation of Benefits (EOB) - the statement sent to an insured by their health insurance company listing services provided, amount billed, eligible expenses and payment made by the health insurance company.

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F

Formulary - a list of particular prescription drugs for which an insurer provides additional coverage or a lower copay.

H

Health Savings Account - special plans in which money can be deposited into a tax-deferred health savings account from which you can withdraw money on a pre-tax basis for qualified medical care and expenses.

I

Insured - a person who has obtained health insurance coverage under a health insurance plan.

L

Lifetime limit - the total maximum the policy will pay.  Most plans have at least $1 million, and many have $2- to $5 million in lifetime coverage.

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M

Managed Care - a health care system under which physicians, hospitals, and other health care professionals are organized into a group or “network” in order to manage the cost, quality and access to health care. Managed care organizations include Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs).

N

Network - doctors, hospitals, and other medical providers that are contracted to provide services for a particular plan. PPO members have less out-of-pocket expense when they use network providers.

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O

Out-of-Pocket Maximum - the total payments that must be paid by a covered person (i.e., deductibles and coinsurance) as defined by the contract. Once this limit is reached, covered health services are paid at 100% for health services received during the rest of that calendar year.

Outpatient medical care: non-surgical services provided in a provider’s office, the outpatient department of a hospital or other facility, or the member’s home.

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P

Participating Provider - a medical provider who has been contracted to render medical services or supplies to insureds at a pre-negotiated fee. Providers include hospitals, physicians, and other medical facilities.

Physician: A doctor of medicine or osteopathy who is licensed to practice medicine under the laws of the state or jurisdiction where the services are provided.

Pre-existing condition - a health problem that existed before your coverage went into effect.  Many plans won't cover preexisting conditions.

Preferred Provider Organization (PPO) - a health care delivery arrangement which offers insureds access to participating providers at reduced costs. PPOs provide insureds incentives, such as lower deductibles and copayments, to use providers in the network. Network providers agree to negotiated fees in exchange for their preferred provider status.

Premium - the amount you pay (usually monthly) for your insurance.

Preventive care: comprehensive care that emphasizes prevention, early detection and early treatment of conditions through routine physical exams, immunizations and health education.

Provider - a physician, hospital, health professional and other entity or institutional health care provider that provides a health care service.

Primary Care Physician (PCP) - a physician that is responsible for providing, prescribing, authorizing and coordinating all medical care and treatment. Note: PPOs typically allow you to go to any doctor in the network, and do not require that you consult with a PCP.

Prescription drugs: prescription drugs include:

  • Brand name prescription drug: the initial version of a medication developed by a pharmaceutical manufacturer or a version marketed under a pharmaceutical manufacturer's own registered trade name or trademark.
  • Legend drug: a medicinal substance, dispensed for outpatient use, which under the Federal Food, Drug & Cosmetic Act is required to bear on its original packing label, “Caution: Federal law prohibits dispensing without a prescription.”
  • Formulary: a list of pharmaceutical products developed in consultation with physicians and pharmacists and approved for their quality and cost effectiveness.
  • Generic prescription drug: drugs determined by the FDA to be bio-equivalent to brand name drugs and that are not manufactured or marketed under a registered trade name or trademark.

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R

Reasonable and Customary (R &C) - a term used to refer to the commonly charged or prevailing fees for health services within a geographic area. A fee is generally considered to be reasonable if it falls within the parameters of the average or commonly charged fee for the particular service within that specific community. Note: charges within a PPO network are not normally limited to reasonable and customary fees.

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U

Underwriting - the act of reviewing and evaluating prospective insureds for risk assessment and appropriate premium.

Usual and customary charge - the amount a plan will pay for a particular procedure, usually based on a prevailing average.

W

Well-child visit: a physician visit that includes the following components: an age-appropriate physical exam, history, anticipatory guidance and education (e.g., examining family functioning and dynamics, injury prevention counseling, discussing dietary issues, reviewing age-appropriate behaviors, etc.), and assessment of growth and development. For older children, a well-child visit also includes safety and health education counseling.

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