Glossary of Common Insurance Terms

Assignment of benefits: By signing a form (usually the insurance claim form), you authorize the insurance company to pay the physician directly. Otherwise payment must be made directly to you. Most physicians will ask you to sign the form if you don’t want to pay your bill before the insurance company pays its share.

Capitation: Payment to health providers according to the number of patients they agree to serve rather than the amount of service rendered.

Claim form: Form stating what information an insurance company needs to make payment. Many providers submit this information electronically rather than on paper.

Co-insurance: Arrangement whereby the patient and the insurance company share costs. The insurer typically pays 75% to 80% of covered costs beyond any deductible amount, and the patient pays the rest. Some policies set an upper limit to co-insurance expense, after which the company pays all additional charges.

Conversion privilege: Provision that enables those insured by group contracts to obtain an individual policy under various circumstances, such as leaving the job that provided the group coverage.

Coordination of benefits: Provision that prohibits collecting identical benefits from two or more policies, thereby profiting when you are ill. After the primary company pays, other companies calculate their coverage of the remainder. All group policies contain a coordination clause, but some individual policies do not.

Co-payment: Fixed dollar amount paid whenever an insured person receives specified health-care services.

Deductible: The amount you must pay before the insurance company starts paying.

Discount plan: Plans consistening of discounts said to be available from a list of providers who have enrolled in the program. These are not insurance and should be regarded skeptically because buyers often find that providers they want to use are not enrolled, even though their names might appear on lists provided by the plans.

"Dread disease" coverage: Policies that cover cancer and/or other diseases specified serious diseases. They generally are a poor idea.

Endorsement or rider: Attachment to the basic insurance policy that changes its coverage.

Exclusions: Specified conditions or circumstances for which the policy does not provide benefits.

Gatekeeper: Health-care provider, usually a primary care specialist, who supervises all aspects of a patient’s care and must authorize care (except in emergencies) from other providers before the plan will pay for it.

Grace period: Number of days that you may delay payment of your premium without losing your insurance.

Guaranteed renewability: Policy where the company agrees to continue insuring you up to a certain age (or for life) as long as you pay the premium. Under this provision, the premium structure cannot be raised unless it is raised for all members of a group or class of insured, such as all people living in your state with the same kind of policy.

Indemnity carrier: Insurance company or other organization offering specified coverage within a framework of fee schedules, limitations, and exclusions.

Inpatient services: Services received while hospitalized.

Loss ratio: Percentage of pemium dollars an insurance company pays in benefits to policyholders. Also called benefit-cost ratio.

Managed care: Health-care system (such as an HMO or PPO) that integrates the financing and delivery of services by using selected providers, utilization review, and financial incentives for members who use the providers and procedures authorized by the plan.

Open enrollment: Period during which insurance plan must accept eligible people regardless of their health status.

Outpatient services: Services obtained at a hospital by people who are not confined to the hospital.

Participating physician: Physician who agrees to abide by the rules of a plan in return for direct payment by the insurance company. The agreement includes acceptance of a fixed fee schedule, a monthly fee per eligible patient, or other fee limitation.

Pre-existing condition: Health problem a person had before becoming insured. Some policies exclude these conditions, whereas others do not.

Participating provider: Someone who has contracted with an insurance company to provide services to insured individuals under specified conditions. The conditions may include fee limits, utilization review, continuing education requirements, availability during specified hours, and several other factors.

Portability: The legal right, after employment terminates, to transfer from a group insurance plan to another group or individual plan.

Provider: Any source of health-care services, such as a hospital, physician, pharmacist, or laboratory.

Quality assurance: Internal peer-review process that audits the quality of care delivered. The process should include a mechanism to identify and prevent discrepancies in care.

Reasonable charge: The amount a company will pay for a given service based on what most providers charge for it.

Subscriber: Individual who contracts for health insurance coverage.

Universal health care: Health care coverage for all eligible residents of a political region; often includes dental and mental health care as well as medical care.

Utilization review: Case review to determine whether the care rendered was necessary and appropriate.

Waiting period: Specified time between issuance of a policy and coverage of certain conditions. Typically there are waiting periods for maternity benefits and pre-existing conditions. Also called elimination period.

Waiver of premium: Policy provision that, under certain conditions, an insurance policy will remain in force without further payments by the policyholder. It is used most often in cases of permanent and total disability.

This page was revised on August 9, 2009..

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