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  • Alternate Care Benefit
    Payment for a special arrangement of services specifically designed to allow the person to reside in a setting other than a nursing facility (i.e. services to provide assistance, capital improvements such as a ramp, and/or durable medical support.
  • Annual Benefit Cap
    Payment for a special arrangement of services specifically designed to allow the person to reside in a setting other than a nursing facility (i.e. services to provide assistance, capital improvements such as a ramp, and/or durable medical support.
  • Assignment of Benefits
    Payment for a special arrangement of services specifically designed to allow the person to reside in a setting other than a nursing facility (i.e. services to provide assistance, capital improvements such as a ramp, and/or durable medical support.
  • Beneficiary
    Payment for a special arrangement of services specifically designed to allow the person to reside in a setting other than a nursing facility (i.e. services to provide assistance, capital improvements such as a ramp, and/or durable medical support.
  • Benefit Increase Options
    Also known as automatic benefit increase option, automatic increase benefit, and cost of living adjustment benefit. These are optional benefits that provide for annual increases in the benefit amount to offset the effects of inflation. Benefit increase options are paid for at the time of issue and either increases the daily policy benefits by a 5% compounded or simple interest factor. A key element to remember is that the increases begin at the second policy anniversary and continue for the duration of the policy, except where the insurance carrier "caps" the increase at some predetermined amount. These increase options are not to be mistaken with future insurability options.
  • Benefit Period
    A benefit period is a way of measuring a beneficiary's use of hospital and skilled nursing facility services covered by Medicare. A benefit period begins the day the beneficiary is hospitalized. It ends after the beneficiary has been out of the hospital or other facility that primarily provides skilled nursing for rehabilitation services (or, if in the latter type of facility, has not received skilled care there) for 60 days in a row. If the beneficiary is hospitalized after 60 days, a new benefit begins period begins, most Medicare Part A benefits are renewed, and the beneficiary must pay a new impatient hospital deductible. There is no limit to the number of benefit periods a beneficiary can have.
  • Cafeteria Plan
    A plan which offers a choice between two or more benefits, or a choice between cash and one or more qualified benefits, and which complies with Section 125 of the Internal Revenue Code. (Also known as flexible benefit plans or "flex" plans).
  • Claim
    Demand to the insurer by an insured person for the payment of benefits under a policy.
  • COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
    A federal law that requires most employers to allow eligible employees and their beneficiaries to continue to self-pay for their coverage after it normally terminates for up to 18, 24, 29 or 36 months.
  • Co-insurance
    An agreement between the insured and the insurance company where payment is shared for all claims by the policy. A typical arrangement is 80%/20% up to $5,000. The insurance company pays 80% of the first $5,000 and the insured pays 20%. Usually after 80% of $5,000, the insurance company then pays 100% of covered expenses during the remainder of the calendar year up to any limits of the policy. This is also referred to as co-payment.
  • Coordination of Benefits (COB)
    A contractual provision to prevent an insured from receiving benefits under more than one health insurance plan so that the insured's benefits from all sources do not exceed allowable medical expenses or eliminate appropriate patient incentives to contain cost.
  • Co-payment
    A small charge paid at the time a medical service is received. It does not accumulate towards a plan's deductible or out-of-pocket maximum and is designed to discharge utilization. (See Co-insurance)
  • Coverage
    The different types of options selected and the benefits paid under a plan or insurance contract.
  • Deductible
    The amount of covered expenses that the insured must pay before a plan or insurance contract starts to reimburse for eligible expenses.
  • Enrollee
    Health plan participant, member, or eligible individual in a managed Care program.
  • Evidence of Insurability
    A procedure used to review factors concerning a person's physical condition and medical history. From this information, the plan or insurance company evaluates whether the risk of the individual will be accepted and if they will offer coverage.
  • Experience-Rated
    Determination of premium or capitation rates for a group risk based wholly or partly on that group's previous cost and utilization experience.
  • Explanation of Benefits (EOB)
    A document sent to an insured when the plan or insurance company handles a claim. The document explains how reimbursement was made, or why the claim was not paid, and if any additional information is needed. The appeals procedure should be outlined to advise the insured of his/her rights if there is dissatisfaction with the decision.
  • Fiduciary
    Under ERISA, any person who exercises discretionary authority or control over a plan or plan assets.
  • Flexible Spending Accounts
    Special accounts typically funded by an employee's salary reduction to help pay certain expenses not covered by the employer's plan or insurance contract. The advantage of these accounts is that after-tax dollars are converted to before-tax dollars, thereby reducing the actual cost of expenses.
  • Formulary
    List of preferred pharmaceutical products to be used by a managed care plan's network physicians. Formularies are based on evaluations of the efficacy, safety, and cost effectiveness.
  • Grace Period
    Time period that follows the premium due date when the coverage and policy remain in force.
  • Guaranteed Issue Underwriting
    The applicant is guaranteed coverage up to an agreed amount or level without evidence of insurability (see Evidence of Insurability).
  • Health Maintenance Organization (HMO)
    An organization that provides a wide range of comprehensive health care services for a specified group of enrollees for a fixed, pre-paid premium. There are several models of HMOs: Group Model, Individual Practice Association (IPA), Staff Model and Network Model.
  • Hospital Indemnity Insurance
    Hospital indemnity coverage is insurance that pays a fixed cash amount for each day you are hospitalized up to a designated number of days. Some coverage may have added benefits such as surgical benefits or skilled nursing home confinement benefits. Some policies have a maximum number of days or a maximum payment amount.
  • Indemnity Insurance
    Health care insurance plan providing benefits in a predetermined amount for covered services. Traditionally, the insurer pays on a fee-for-service basis with no involvement in the actual delivery of health care services.
  • Insurability
    The health status of an insurance applicant, which makes him/her acceptable to an insurance company, i.e. health, financial condition, occupation.
  • Long-term Care (LTC)
    Continuum of maintenance, custodial, and health services to the chronically ill, disabled, or mentally impaired over a lengthy period of time. Services may be provided in long-term care or on an outpatient basis (subacute care, rehabilitation facility, nursing home, mental hospital, outpatient, or at-home basis).
  • Managed Care
    Term used to describe the coordination of financing and provision of health care to produce high-quality health care for the lowest possible cost. A system that imposes control on the utilization of medical services and on the providers who renders the care. Managed care is provided through managed indemnity plans; Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), Health Maintenance Organizations (HMOs), or any other cost management environment.
  • Medicaid
    State programs with federal matching funds for public health assistance to persons, regardless of age, whose income and resources are insufficient to pay for health care.
  • Medicare
    Federally sponsored program under the Social Security Act that provides hospital benefits, supplementary medical care, and catastrophic coverage to persons 65 years of age and older and to some younger persons who are covered under Social Security benefits.
  • Network Providers
    Limited grouping or panels of providers in a managed care arrangement with several delivery points. Enrollees may be required to use only network providers or may have financing liability for using non-network providers for medical services.
  • Non-Network Providers
    Non-contracted or unapproved health providers who are outside a managed care arrangement.
  • Out-of-Network Care
    Medical services obtained by managed care plan members from unaffiliated or non-contracted health care providers. In many plans, such care will not be reimbursed unless previous authorization is obtained.
  • Out-of-Pocket Expenses
    Those health care costs that must be borne by the insured.
  • Out-of-Pocket Maximum
    The maximum amount that an insured is required to pay under a plan or insurance contract.
  • Participating Provider
    A provider who has agreed to contract with a managed care program to provide eligible services to covered persons.
  • Portability
    Provides access to continuous health insurance coverage so the insured does not lose coverage due to any change in health or personal status (such as employment, marriage, or divorce).
  • Pre-existing Condition
    A condition or diagnosis which existed (or for which treatment was received) before coverage began under a current plan or insurance contract, and for which benefits are not available or are limited.
  • Preferred Provider Organization (PPO)
    Managed care arrangement consisting of a group of hospitals, physicians, and other providers who have contracts with an insurer, employer, third-party administrator, or other sponsoring group to provide health care services to covered persons in exchange for prompt payment and increased patient volume.
  • Premiums
    Periodic payment to keep an insurance policy in force.
  • Self-Funding
    An arrangement under which all or some of the risk associated with providing coverage is not covered by an insurance contract.
  • Stop-Loss Insurance
    Protection purchased by self-insured and some managed care arrangements against the risk of large losses or severe adverse claim experience.
  • Supplementary Coverage
    Insurance to help cover those parts of Medicare Part B that are non-reimbursable.
  • Third-Party Administrator (TPA)
    Method by which an outside person or firm, not a party to a contract, provides specific administrative duties (including premium accounting, claims review and payment, arranges for utilization review and stop-loss coverage) for a self- funded plan. Entity may also handle payment of claims.
  • Underwriters
    Insurance professionals who determine if and on what basis an insurer will accept an application for insurance.
  • Utilization
    Patterns of usage for single medical service or type of service (hospital care, prescription drugs, physician visits). Measurement of utilization of all medical services in combination usually is done in terms of dollar expenditures. Use is expressed in rates per unit of population at risk for a given period, such as number of annual admissions to a hospital per 1,000 persons over age 65.
  • Waiting Period
    Date of hire and the employees eligibility to qualify for a plan of insurance or if already insured that time period before one is eligible for benefits (i.e. elimination period).
  • Waivers
    Term usually associated with the Medicare or Medicaid programs by which the government waives certain regulations or rules for a managed care or insurance program to operate in a certain geographic area. Can also relate to exclusions in life and disability insurance (reference "Rider").


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