Terminology

A

Agent: In insurance, the person authorized to represent the insurer in negotiating, servicing, or effecting insurance policies.

Annual Election Period (AEP): The period when consumers can make a plan choice and members can change plans. For Medicare beneficiaries, this is October 15th through December 7th annually. "Elections" made during this time period will become effective on January 1st of the following year.

Annual Out-of-Pocket Maximum: A dollar amount set by the plan that puts a cap on the amount of money the insured must pay out of his or her own pocket for covered expenses over the course of a calendar year.

Annual Notice of Change (ANOC): An insurance company's annual notification to their plan members of any changes to their premium, benefit, cost sharing or deductible for the next plan year.

Assignment: An agreement by your doctor, provider, or supplier to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.


B

Beneficiary: Any person entitled to benefits under a service or plan.

Benefit period: The way that Original Medicare measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you’re admitted as an inpatient in a hospital or skilled nursing facility. The benefit period ends when you haven’t received any inpatient hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a SNF after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There’s no limit to the number of benefit periods.

Broker: A marketing specialist who represents insurance organizations and who deals with either agents or companies in arranging for the coverage required by the customer.


C

Calendar Year Deductible: The amount of health care expenses that the insured person must pay before insurance payments for covered eligible expenses.

Cancellation: The discontinuance of an insurance policy before its normal expiration date, by either the insured or the company -- or for a Medicare Supplement or Advantage plan, it is when the enrollment is cancelled prior to the effective start date.

Claim: A person's request for payment from an insurer for a loss covered by the insurance policy.

CMS: The Centers for Medicare & Medicaid Services is a US federal agency which administers Medicare, Medicaid, and the State Children's Health Insurance Program.

COBRA (Consolidated Omnibus Budget Reconciliation Act): COBRA requires organizations with 20 or more employees to offer the continuation of group health benefits (Medical, Dental, Vision, and Medical Reimbursement Account) to employees (and covered dependents) upon experiencing a "Qualifying Event." Employers are required to provide initial COBRA notification to covered employees and dependents. A letter is sent detailing an individual's rights upon experiencing a "qualifying event" and an explanation of the conversion privilege. Legislation defines the following six situations as "Qualifying Events" that require COBRA continuation:
•Termination of Employment
•Reduction of Work Hours
•Employee's Death
•Employee's Divorce (or legal separation in some states)
•Medicare Entitlement
•Change in "Dependent" Status

Coinsurance: A specified percentage of the cost of treatment the insured is required to pay.

Commission: The amount of money, usually a percentage of the premiums paid to an insurance agent for selling an insurance policy.

Copay: The fee you pay for certain medical services or for each prescription. For example, you may pay $20 for an office visit or $10 to fill a prescription and the health plan covers the balance of the charges.

Cost-sharing: The coinsurance, copayments and deductibles that the insured must pay for services or prescriptions.

Coverage Gap: The Medicare Part D coverage gap (informally known as the Medicare donut hole) lies between the initial coverage limit and the catastrophic-coverage threshold in the Medicare Part D prescription-drug program administered by the United States federal government. After a Medicare beneficiary exits the initial coverage of prescription-drug plan, the beneficiary is financially responsible for a higher cost of prescription drugs (47.5% of the total cost for brand name drugs and 79%of the total cost for generic drugs for 2013) until he or she reaches the catastrophic-coverage threshold.

Creditable prescription drug coverage: Prescription drug coverage (for example, from an employer or union) that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty if they decide to enroll in
Medicare prescription drug coverage later.

Custodial care: Nonskilled personal care, like help with activities of daily living like bathing, dressing, eating, getting in or out of a bed or chair, moving around, and using the bathroom. It may
also include the kind of health-related care that most people do themselves, like using eye drops. In most cases, Medicare doesn’t pay for custodial care.

D

Declination: The insurer's refusal to insure an individual after careful evaluation of the application for insurance and any other pertinent factors.

Deductible: If your Part D plan has an initial deductible, you are 100% responsible for your drug costs until your expenses exceed this value and you begin your Initial Coverage Phase. Many Medicare Part D plans use the the standard $405 deductible as provided by CMS in their Standard plan design. Some Part D plan providers offer an initial deductible lower than the Standard deductible. Some prescription drug plans do not have a deductible (also called first dollar coverage or a $0 deductible), however the monthly premium for a plan with a $0 deductible may be higher.

Dependent: A person for whom the insured has some legal obligation to. For most plans, it is the insured's spouse and/or children.

Drug Utilization Management (or Coverage Rules): This is when the drug plan requires utilization managment controls for a particular medication.

Drug Tiers: Drug Tiers are the logical grouping of prescription drugs on a Part D plan formulary.

Drug Tier Number: This is the actual numerical tier level from the formulary. Most Part D plans have four or five tiers 1=Preferred Generic, 2=Generic, 3=Preferred Brand, 4=Non-Preferred Brand, 5=Specialty Drugs.

Dual Eligible: Consumers who are eligible to receive both Medicare and Medicaid benefits. Varying amounts of their Medicare and/or insurance premiums, co-pays, deductibles and cost-sharing may be paid by the federal/state governments.

E

Emergency Room Visit: A visit to a hospital for treatment of an accidental injury or for emergency medical care.

Exclusions and Limitations: Conditions, situations and services not covered by the health plan.

Extra Help: A Medicare program to help people with limited income and resources pay Medicare prescription drug plan costs, like premiums, deductibles, and coinsurance. This can also be called the Low or Limited Income Subsidy.

F

Formulary: A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits.

G

Generic Drug: A drug that is considered comparable to a brand-name drug by dosage, strength, administration, quality and performance characteristics, and intended use. It can also be a reference to a drug that that is not marketed.

Grace Period: The specified length of time, after a Life or Health premium payment is due in which the insured may make the payment and keep the policy in force. (Usually 30 days.)

Group Health Insurance: An insurance plan designed for a group, such as employees of a single employer. Insurance is provided to them under a single policy.

Guaranteed Renewable Policy: A health insurance policy that the insurer is required to renew – as long as premiums are paid – at least until the insured attains the age limit specified in the policy, or the policy is cancelled by the insured. The insurer may increase the premium rate for any class of guaranteed renewable policies.

Guaranty Association: Established by each state to support insurers and protect consumers in the case of insurer insolvency, guaranty associations are funded by insurers through assessments.

H

Health Insurance Claim Number: For a Medicare recipient, this is the Medicare ID number on his/her Medicare Card which ends with a letter.

HIPAA: Health Insurance Portability and Accountability Act of 1996: Under this federal law (known as HIPAA), group health plans cannot deny coverage based solely on an individual's health status. This law also gives employees who change or lose their jobs better access to health coverage, guarantees renewability and availability to certain employees and limits exclusions for pre-existing conditions. For example, under this law, group health plans must credit any employee the amount of time that they spent on any health plan prior to the new plan, which is known as "prior credible coverage." A pre-existing condition will be covered without a waiting period when an employee joins a new group plan if the employee has been insured for the previous 12 months with credible health insurance, with no lapse in coverage of 63 days or more. This means that if an employee has been insured for 12 months or more, the employee will be able to go from one job to another and his or her pre-existing coverage will remain intact -- without additional waiting periods. However, if an employee has a pre-existing condition and was not covered previously for 12 months before joining a new plan, the longest the employee will have to wait for their pre-existing coverage to be covered is 12 months.

HMO (Health Maintenance Organization): A health care financing and delivery system that provides comprehensive health care for subscribing members in a particular geographic area using managed care techniques. Most HMOs require that you only utilize physicians within their network, often going so far as to require you to choose a primary care physician who directs most courses of your treatment.

I

IEP: This is the Medicare Initial Election Period when a person turns 65 and is eligible to enroll in a Medigap or Advantage plan.

Inpatient rehabilitation facility: A hospital, or part of a hospital, hat provides an intensive rehabilitation program to inpatients.

Insurance Company: An organization that has been chartered by a governmental entity to transact the business of insurance.

Insured: A person or organization covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy terms.

Insurer: The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public.

J

K

L

Lapse: Termination of a policy due to nonpayment of premiums.

Low Income Subsidy (LIS): A Medicare program to assist limited income and limited resource consumers pay for their prescription drugs.

Lifetime Maximum: The maximum amount of money a plan will pay towards healthcare services over the course of the insured's lifetime.

Lifetime Reserve Days—In Original Medicare, these are additional days that Medicare will pay for when you’re in a hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.

Limited Access (LA): Some drugs are considered "Limited Access" if the drug can only be given out at specific facilities, by specific doctors, or require extra handling or coordination.

LIS: (The Extra Help/Low Income Subsidy Program). Persons on the LIS program who select a qualifying plan will also pay a $0 deductible, pay lower cost-sharing payments and have coverage through the Coverage Gap or Doughnut Hole.

Long-term care: Services that include medical and non-medical care provided to people who are unable to perform basic activities of daily living, like dressing or bathing. Long-term supports and
services can be provided at home, in the community, in assisted living, or in nursing homes. Individuals may need long-term supports and services at any age. Medicare and most health nsurance plans don’t pay for long-term care.

M

Maximum-Out-Of-Pocket (MOOP): This is an Advantage plan member's protection against that 20% that Medicare does not pay.  Medicare sets the maximum and minimum MOOP range annually but each Advantage plan sets its own which is a huge thing for the member. It pays to shop plans.  As you receive coverage benefits, deductibles, co-pays and coinsurance all count toward the MOOP; however, prescription drugs and a monthly premium (if applicable) do not count.   The MOOP set by your particular Advantage plan is your safety net in case you need it. 

Medicaid: According to the Health Insurance Association of America, Medicaid is defined as a “government insurance program for persons of all ages whose income and resources are insufficient to pay for health care. Medicaid is state-administered and financed by both the states and the federal government” (HIAA, pg. 232).

Medically necessary: Health care services or supplies needed to prevent, diagnose, or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.

Medicare: A national program, administered by the U.S. federal government since 1965, that guarantees access to health insurance for Americans ages 65 and older and younger people with disabilities as well as people with end stage renal disease (Medicare.gov, 2012) and persons with Lou Gehrig’s Disease. Apply for Medicare at http://www.socialsecurity.gov/medicareonly/.

Medicare Advantage Plan: These are health plans with only medical coverage (MA), and also plans that include medical with prescription drug coverage (MAPD). These plans are offered by private insurance companies that contract with the federal government (Medicare) to administer Medicare coverage. The member would show their plan's insurance card instead of their Medicare card to providers and/or pharmacies.

Medicare Advantage Disenrollment Period: The 45 day period is January 1st through February 14th annually when a health plan member can disenroll from their current plan to return to Original Medicare, and select a Prescription Drug Plan in which to enroll for their Part D coverage; however, they cannot enroll in another Advantage Plan until the next Open Enrollment (October 15-December 7).

Medicare-approved amount: In Original Medicare, this is the amount a doctor or supplier that accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges.
Medicare pays part of this amount and you’re responsible for the difference.

Medicare health plan: A plan offered by a private company that contracts with Medicare to provide Part A and Part B benefits to people with Medicare who enroll in the plan. Medicare health plans include all Medicare Advantage Plans, Medicare Cost Plans, Demonstration/Pilot Programs and Programs of All-inclusive Care for the Elderly (PACE).

Medicare Part A: Hospital insurance. Part A is paid for by a portion of Social Security tax. It helps pay for inpatient hospital care, skilled nursing care, hospice care and other services.

Medicare Part B: Medical insurance. Part B is paid for by the monthly premiums of people enrolled and by general funds from the U.S. Treasury. It helps pay for doctors' fees, outpatient hospital visits, and other medical services and supplies that are not covered by Part A.

Medicare Part C: (Medicare Advantage) plans allow you to choose to receive all of your health care services through a provider organization. These plans may help lower your costs of receiving medical services, or you may get extra benefits for an additional monthly fee. You must have both Parts A and B to enroll in Part C.

Medicare Part D: Prescription Drug coverage. The costs are paid for by the monthly premiums of enrollees and Medicare. Unlike Part B in which you are automatically enrolled and must opt out if you do not want it, with Part D you have to opt in by filling out a form and enrolling in an approved plan.

Medicare plan: Refers to any way other than Original Medicare that you can get your Medicare health or prescription drug coverage. This term includes all Medicare health plans and Medicare Prescription Drug Plans.

Medicare Savings Program:

Medigap Policy:  A Medigap policy (also called a Medicare Supplement Plan) refers to various private health insurance plans sold to supplement the 20% that Medicare does not pay.  Most of these policies do not include prescription drug coverage.  These policies are guaranteed renewable as long as you pay the premium.

Monthly Prescription Drug Premium: This is the amount you need pay each month for this plan. This monthly premium must be paid even if you are in the initial deductible phase or the coverage gap (donut hole) phase.

 

N

Network: A group of doctors, hospitals and other health-care providers contracting with a health plan, usually to provide care at special rates and to handle paperwork with the health plan.

Non-Formulary Drugs: Non-formulary drugs often require a higher copayment. Non-formulary drugs are those that have not yet been reviewed or have been denied formulary status, typically because they offer no extra benefit over the drugs already on a plan's formulary list.

 

O

Out-of-Network: Health care services received outside the HMO, POS or PPO network.

Out-of-Pocket Expense: Any medical care costs not covered by insurance, which must be paid by the insured.  See MOOP.

P

Part B Drugs: A drug may be covered either by Medicare Part B (doctor) or Part D (prescription). It depends on how it is used. Part B drugs are usually administered in a doctor's office.

PDP: Prescription Drug Plan. This is a plan that offers prescription drug coverage only for Medicare Part D.

Policy: The written forms that make up the insurance contract between an insured and insurer. A policy includes the terms and conditions of the coverage, the perils insured or excluded, etc.

Policy Declarations: The part of the insurance contract that lists basic underwriting information, including the insured's name, address and description of insured locations as well as policy limits.

Policy Period: The amount of time an insurance contract or policy lasts.

PPO (Preferred Provider Organization): An organization where providers are under contract to an insurance company or health plan to provide care at a discounted or negotiated rate. Typically, you can see any doctor in the PPO network without requiring special approval, and you usually do not need to choose a primary care physician. Most PPOs will also allow you to seek care outside of the PPO network; however, the benefits are usually reduced and the insured has a greater out-of-pocket expense.

Premium: The periodic payment to Medicare, an insurance company, or a health care plan or prescription drug plan.

Preventive services: Health care to prevent illness or detect illness at an early stage, when treatment is likely to work best (for example, preventive services include Pap tests, flu shots, and screening mammograms.)

Primary Care Physician (PCP): A general or family practitioner who serves as the insured's personal physician and first contact with a managed care system. The PCP will usually direct the course of your treatment and/or refer you to other doctors and/or specialists in the network.

Prior Authorization: This is when a plan requires you or your doctor to get prior approval from the plan for certain drugs.

Provider: A provider is the doctor, physicians' group, clinic or hospital that provides services to take care of your health care needs.

 

Q

Quality Improvement Organization (QIO): A group of practicing doctors and other health care experts paid by the federal government to check and improve the care given to people with Medicare.

Quanitity Limits: A drug may be subject to quantity limits. The actual quantity limit is shown as Q:Amount/Days. For Example: Q:6/28Days means the quantity limit is a quantity of 6 pills per 28 days. Q:90/365Days would mean that the plan limits this drug to 90 pills for the entire year.

R

Rate: The pricing factor upon which the insurance buyer's premium is based.

Rated Policy: Sometimes called an "extra-risk" policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured is a smoker.

Referral: A written order from your primary care doctor for you to see a specialist or get certain medical services. In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don’t get a referral first, the plan may not pay for the services. Some specialists require a referral even if the insurance plan doesn't require one.

Riders: An addition to an insurance policy that becomes a part of the contract.

S

SEP: This is a Special Election Period specified by Medicare when a Medicare beneficiary can enroll or change his/her coverage outside of the Annual Election Period or Initial Enrollment Period. This may be due to a change in status (Medicaid eligible) or a move to a different county within a state or another state.

Service Area: A geographic area where a health insurance plan accepts members if it limits membership based on where people live. For plans that limit which doctors and hospitals you may use, it’s also generally the area where you can get routine (non-emergency) services. The plan may disenroll you if you move out of the plan’s service area.

Skilled Nursing Facility (SNF): Skilled nursing care and rehabilitation services provided on a continuous, daily basis, in a skilled nursing facility. Examples of skilled nursing facility care include physical therapy or intravenous injections that can only be given by a registered nurse or doctor.

Step Therapy: This is when there may be effective and lower-cost drugs that can be used to treat the same medical condition as the one prescribed. You may be required to try a lower cost drug but if your doctor can request the plan to cover the previously prescribed drug if is more effective for you.

 

T

Tier: This term refers to the system of classifying types of drugs into groupings (formulary) beginning with what is the least expensive to the most expensive according to type. Tier 1 is common generics. Tier 2 is the more expensive generics. Tier 3 is the more common brand name drugs. Tier 4 is the more expensive and less common brand names. Tier 5 is the most expensive and more commonly are injectables.

TTY: A teletypewriter (TTY) is a communication device used by people who are deaf, hard-of-hearing, or have a severe speech impairment. People who don’t have a TTY can communicate with a TTY user through a message relay center (MRC). An MRC has TTY operators available to send and interpret TTY messages.

 

U

Underwriter: (a) A company that receives the premiums and accepts responsibility for the fulfillment of the policy contract; (b) the company employee who decides whether or not the company should assume a particular risk; (c) the agent who sells the policy.

Underwriting: The process of reviewing applications for coverage. Applications that are accepted are then classified by the underwriter according to the type and degree of risk.

Urgent Care: Urgent care is appropriate when a medical urgency arises which necessitates immediate care, but has not reached the level of extreme emergency. Most managed care plans require you to seek urgent care at a participating urgent care facility or hospital.

Usual, Customary and Reasonable Fee: The maximum dollar amount of a covered expense that is considered eligible for reimbursement under a major medical policy.