Glossary of Terms
Below are a list of terms and definitions
commonly referenced in consumer-driven healthcare.
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Adjudication
Processing claims according to plan rules.
Advocacy
Activities done to help a person or group get something the person or group needs
or wants.
Annual Enrollment
Period
A period of time prior to the beginning of the plan year during which eligible employees
may change their benefit elections.
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Beneficiary
The person(s) designated to inherit any proceeds or income from your account after
your death.
Benefit
Amount payable by the health plan to a claimant, assignee, or beneficiary when the
insured suffers a loss.
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Cafeteria
A benefits plan that allows employees to select from a pool of choices, some or
all of which may be tax-advantaged. Potential choices include cash, retirement plan
contributions, vacation days, and insurance.
Calendar Year
January 1 through December 31 of the same year.
Capitation
A set dollar limit that you or your employer pays regardless of the level or type
of care provided.
Catch-up Contributions
Additional contributions, above those listed as the maximum annual contribution
limits, available to the HSA owner in the year which they reach 55.
Claim
A request by an individual (or his or her provider) to the health plan for payment
or reimbursement for services obtained from a healthcare professional.
Coinsurance
The money that an individual is required to pay for a service, after a deductible
has been paid. Coinsurance is often specified by a percentage.
Consolidated Omnibus
Budget Reconciliation Act (COBRA)
A Federal legislation requiring employers to offer continued health insurance coverage
to employees who have had their health insurance coverage terminated.
Consumer-Driven Healthcare
(CDH)
A term that refers to health plans in which employees have a personal health account,
such as a health savings account (HSA) and/or a health reimbursement arrangement
(HRA), from which they pay medical expenses directly.
Consumer-Driven Health
Plans (CDHP)
Consumer-directed health plans typically offer reduced premium costs, in exchange
for a higher deductible. In addition, many provide incentives and tools to manage
both healthcare decisions and the costs associated with them.
Coordination of Benefits
(COB)
A system to eliminate duplication of benefits when a person is covered under more
than one health plan; benefits under both plans are usually limited to no more than
100% of the claim.
Copay
The flat fee dollar amount of a charge that a covered person must pay for certain
covered services.
Covered Services
Those medical procedures the health plan agrees to pay for.
Custodian
An agent, bank, trust company or other organization which holds and safeguards an
individual's assets for them.
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Date of Service
The day the services are received by a patient.
Deductible
The amount of covered expenses an individual (or family) must pay before benefits
become payable by the health plan; often determined on a calendar year or plan year
basis.
Denial of Claim
Refusal by the health plan to pay or reimburse a claim.
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Effective
Date
The date coverage begins for a covered person under the contract.
EFT
Electronic funds transfer; also referred to as direct deposit.
Eligibility
A generic term applying to enrollment benefits, service reimbursement, (etc.), most
commonly defined as the determination of whether a member qualifies for coverage.
Exclusions
Medical services that are not covered by the health plan.
Explanation of Benefits
(EOB)
A formalized statement to a subscriber and/or provider showing action taken on a
claim.
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Family Coverage
Any coverage specified for more than one individual (individual coverage).
Flexible Spending
Account (FSA)
An employee benefit that allows you to have pre-tax dollars withheld from your paycheck
to pay for un-reimbursed medical, dental, or dependent care expenses. You choose
how much money you want to contribute to an FSA at the beginning of each plan year.
FSA’s cannot be used in conjunction with an HSA account.
First-dollar Coverage
Immediate reimbursement or no payment required for specific covered expenses, without
meeting a deductible. Some preventative services may have first-dollar coverage
under the terms of your health plan.
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Generic Drug
The identical or bioequivalent medicine to a brand name drug in dosage form, safety,
strength, route of administration, quality, performance characteristics and intended
use; although generic drugs are chemically identical to their branded counterparts,
they are typically sold at substantial discounts from the branded price.
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Health Maintenance
Organization (HMO)
An organization set up and operated to provide health services under a pre-paid
or Capitated arrangement; monthly fees to the HMO remain the same regardless of
the types or levels of service provided.
High Deductible Health
Plan (HDHP)
An HDHP is a health benefit plan that typically offers lower premiums in exchange
for higher annual deductibles when compared to traditional health plans.
To be an HSA compatible or “qualified” HDHP, the plan must meet the requirements
of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 for
minimum deductibles and out-of-pocket maximums. High deductible plans may offer
first-dollar coverage of preventive care and still remain qualified.
HIPAA
Legislation that has several national, administrative, and financial provisions.
Enacted in 1996, it addresses subjects including healthcare reform, medical savings
accounts, COBRA revisions, and fraud and abuse. Health reform rules include rules
pertaining to pre-existing conditions, crediting of prior coverage, and guaranteed
renewability. The HIPAA Administrative Simplification section mandates specified
electronic formats for claims and other transactions in addition to mandates for
national identifiers, security and privacy.
Health Reimbursement
Arrangement (HRA)
A tax-favored savings account employees can use to pay for healthcare expenses.
It is employer-funded and lets employees build up savings for future needs. An HRA
can be coupled with a standard or high deductible health plan (HDHP), or can be
offered on its own.
Health Savings Account
(HSA)
A tax-favored savings account you can use to pay for healthcare expenses. It is
owned by you, is 100% vested, and lets you build up savings for future needs. A
requirement for opening an HSA is that it be coupled with a qualified high deductible
health plan (HDHP) that covers catastrophic medical expenses after the deductible.
Specifically, for 2007 the plan must have a deductible of at least $1,100 for individual
coverage and $2,200 for family coverage.
Important Note: If you own an HSA and later become ineligible to make deposits,
you can still receive distributions from your HSA. All that is limited is your ability
to put additional contributions into an HSA.
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Indemnity
Health Plan
Individuals pay the deductible plus a pre-determined percentage of the cost of healthcare
services, and the health plan pays the remaining portion; fees for services are
defined by the providers and vary from physician to physician.
Individual Coverage
Coverage for only one individual.
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Lifetime
Maximum
When benefits to the covered individual total this amount, no more benefits will
be paid for the person under the contract.
Line of Credit
An approved extension of credit used for payment of qualified medical expenses.
An application for credit is submitted and approved or declined based on the member’s
qualifications.
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Managed Care
Medical delivery system that attempts to manage the quality and cost of medical
services that individuals receive; HMOs and PPOs are managed care plans.
Maximum Annual Contribution
The total amount the government allows an HSA holder to add to their account in
a given calendar year.
Member
Often used to refer to the contract holder, policy holder, or subscriber in a health
plan; also known as employee, covered person, enrollee, or insured.
Minimum Available
Balance
Balance required in the HSA account before an initial or subsequent investment trades
can be made.
Mutual Fund
A pool of securities (stocks, bonds, money market assets, or trusts) managed by
an investment adviser.
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Network
A group of doctors, hospitals and other healthcare providers contracted to provide
services to insurance company customers for less than their usual fees.
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Open Enrollment
The period of time during which a person is first eligible to enroll under the contract,
starting on the date of the person's initial date of eligibility and ending several
weeks later, also used to refer to the annual enrollment period.
Out-of-Pocket Maximum
The total amount of the calendar year deductible plus the amount of any coinsurance
and/or copays a covered person must pay each calendar year for covered services
before benefits will be paid at 100%; some services may not apply to the out-of-pocket
maximum.
Overdraft
When the HSA has insufficient funds required for payment, the difference is paid
out of a third party line of credit (subject to credit approval).
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Plan Year
Twelve month period between health plan renewals.
Preferred Provider
Organizations (PPO)
Type of health insurance program where a limited group of physicians and hospitals provide a broad
range of medical care for a predetermined fee; individuals who do not use the preferred providers for
care usually have to pay a higher portion of their medical expenses.
Premiums
The amount paid by the customer on a periodic basis for coverage under the health
plan.
Prescription Drug
List
A list of drugs covered by the health plan often listed as 1st tier (generic), 2nd
tier (brand name preferred), or 3rd tier (brand name non-preferred).
Preventive Care
Healthcare services intended to prevent a medical condition from occurring, or to
detect the onset of a condition early so that it can be more effectively treated.
Preventive care includes regular medical check-ups, screening tests, vaccination,
and the encouragement of a healthy lifestyle.
Pre-existing Condition
A health problem that existed before the date a person’s health plan became effective.
Primary Care Doctor
(PCP)
Usually the first contact for healthcare, often a family physician or internist;
the PCP monitors an individual’s health and treats minor health problems, and refers
out to specialists if further care is needed.
Provider
Any person (doctor, nurse, dentist, therapist) or institution (hospital, clinic)
that provides medical care.
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Qualified
Medical Expense (QME)
Internal Revenue Code Section 213(d) defines qualified expenses, in part, as “medical
care” amounts paid for insurance or “for the diagnosis, cure, mitigation, treatment,
or prevention of disease, or for the purpose of affecting any structure or function
of the body…” To be eligible, these expenses must be to alleviate or prevent a physical
defect or illness. Expenses solely for cosmetic reasons generally are not considered
expenses for medical care. Examples include facelifts, hair transplants and hair
removal (electrolysis). Expenses that are merely beneficial to your general health
(e.g., vacations) are not expenses for medical care. One fact or circumstance that
often, but not always, indicates that medical care involves the treatment or prevention
of disease is whether the care is prescribed by a physician. A mere suggestion by
a physician probably is not enough. In addition, there should be a doctor-patient
relationship between you and the physician prescribing the care.
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Referral
A form provided by a member’s doctor authorizing services from other network providers
if the attention of a specialist is required.
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HSA Saver
A term used to describe an HSA holder who chooses to save money in their HSA and use a line of credit
to pay for health expenses. The member has the option to “save” money in the HSA and use a line of credit
as the primary account for payment of qualified medical expenses.
HSA Spender
A term used to describe an HSA holder who chooses to spend money in their HSA rather than saving it.
The member has the option to " spend" money from the HSA first and a line of credit can be used as overdraft protection.
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Tax-Free
Contributions
When enrollees participate in a payroll deduction program through their employer, deductions
may be taken from payroll before calculating the member’s taxable Federal income, social security
and (for most states) taxable state income.
Trades
Buying and selling of mutual funds.
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Usual, Customary
and Reasonable (UCR)
The amount customarily charged for a service or supply; most plans will only cover
services up to UCR and individuals may be required to pay the full cost of the difference.
Utilization Review
A set of formal techniques designed to monitor the use of, or evaluate the clinical
necessity, appropriateness, efficacy, or efficiency of healthcare services, procedure
or settings.
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Waiting Period
The waiting period is the length of time an employee must continuously work for
the employer before he is eligible to enroll for coverage under the contract.
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