The following is a glossary of health insurance terms that may help answer your questions:
Coinsurance — A percentage of a health care provider's charge for which the patient is financially responsible under the terms of the policy.
Co-payment — A flat-dollar amount which a patient must pay when visiting a health care provider.
Deductible — A dollar amount that a patient must pay for health care services each year before the insurer will begin paying claims under a policy. PPACA limits annual deductibles for small group policies to $2,000 for policies that cover an individual, and $4,000 for other policies. These amounts will be adjusted annually to reflect the growth of premiums.
ERISA — The Employee Retirement Income Security Act of 1974 (ERISA) is a comprehensive and complex statute that federalizes the law of employee benefits. ERISA applies to most kinds of employee benefit plans, including plans covering health care benefits, which are called employee welfare benefit plans.
External review / appeal — An external review provides the consumer with the opportunity to have a person or entity with no connection to the health plan resolve the consumer’s dispute. The external review process decides whether the particular treatment is medically necessary and, therefore, should be covered by the health plan. PPACA requires all health plans to provide an external review process that meets minimum standards.
Grandfathered plan — A health plan that an individual was enrolled in prior to March 23, 2010. Grandfathered plans are exempted from most changes required by PPACA. New employees may be added to group plans that are grandfathered, and new family members may be added to all grandfathered plans.
Group health plan — An employee welfare benefit plan that is established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement or otherwise.
Health Maintenance Organization (HMO) — A type of managed care organization (health plan) that provides health care coverage through a network of hospitals, doctors and other health care providers. Typically, the HMO only pays for care that is provided from an in-network provider except for emergency services. Depending on the type of coverage you have, state and federal rules govern disputes between enrolled individuals and the plan.
In-Network provider — A health care provider (such as a hospital or doctor) that is contracted to be part of the network for a managed care organization (such as an HMO or PPO). The provider agrees to the managed care organization’s rules and fee schedules in order to be part of the network and agrees not to balance bill patients for amounts beyond the agreed upon fee.
Internal review / appeal — An internal review or appeal is the consumer’s first opportunity to challenge a health plan’s denial of payment, treatment or services. The consumer has a right to appeal after a denial, reduction, or termination of treatment. In addition, the consumer has a right to appeal after a failure by the health plan to pay for a benefit or after a health plan rescinds coverage except in cases of fraud or intentional misrepresentation. PPACA requires all plans to conduct an internal review upon request of the patient or the patient’s representative.
Pre-existing condition exclusion — The period of time that a consumer does not receiv health insurance coverage for health care services received due to a pre-existing medical condition. The ACA prohibits pre-existing exclusions for all plans beginning January 2014.
Preferred Provider Organization (PPO) — A type of managed care organization (health plan) that provides health care coverage through a network of providers but also provides coverage for out-of-network providers. Typically the PPO requires the policyholder to pay higher costs when they seek care from an out-of-network provider. Depending on the type of coverage you have, state and federal rules govern disputes between enrolled individuals and the plan.
Preventive benefits — Covered services that are intended to prevent disease or to identify disease while it is more easily treatable. The ACA requires insurers to provide coverage for preventive benefits without deductibles, co-payments or coinsurance.
Premium — The periodic payment required to keep a policy.
Rescission — Rescission occurs when a health plan retro-actively terminates health care coverage. Health plans terminate coverage for individuals in this way when the health plan believes that there was significant misrepresentation or an omission of important information by the consumer on the application for coverage. The health plan chooses to retro-actively terminate coverage in these situations because the health plan believes that it would never have offered coverage in the first place if not for the consumer’s false statements. PPACA prohibits rescissions except in cases of fraud or intentional misrepresentation of a relevant fact.
Self-insured — Group health plans may be self-insured or fully insured. A plan is self-insured (or self-funded) when the employer assumes the financial risk for providing health care benefits to its employees, i.e., the employer pays the claims itself. A plan is fully insured when all benefits are guaranteed under a contract of insurance that transfers that risk to an insurer.
Waiting period — A period of time that a consumer must wait for their health insurance plan to start. Premiums are not collected during this period. Under Massachusetts law, a waiting period is the time after an insurance policy begins when the insurer does not cover some or all hospital or medical expenses but must cover emergency services.
Source: National Association of Insurance Commissions and The Center for Insurance Policy and Research