Allowable Charge:
The maximum fee that a health plan will reimburse a provider for a given service.

Annual Maximum:
The maximum amount of benefits paid for specific covered charges on behalf of a covered person during a year. The Annual Maximums accumulate toward and are not in addition to the Lifetime Maximum.

Benefit:
Payments provided for covered services under the terms of the certificate. The benefits may be paid to the covered person, or on his or her behalf to the medical provider. Benefit design includes the types of benefits offered, number of visits allowed, percentage paid or dollar maximums applied, covered person responsibility (cost sharing components) and covered person incentives to use network providers.

Benefit Period:
The maximum length of time for which benefits will be paid.

Claim:
A request for payment of benefits received or services rendered.

Coinsurance:
A payment made by the covered person in addition to the payment made by the health plan on covered charges, shared on a percentage basis. For example, The health plan may pay 80% of the allowable charge, with the covered person responsible for the remaining 20%. The 20% amount is then referred to as the coinsurance amount.

Coordination of Benefits (COB):
The provision which applies when a covered person is covered by two plans at the same time. It is designed so that the payments of both plans do not exceed 100% of the covered charges. COB also designates the order in which the plans are to pay benefits. Under COB, one plan is determined to be primary and its benefits are applied to the claim first. The unpaid balance is usually paid by the secondary plan to the limit of its responsibility. Benefits are thus "coordinated" between the two plans.

Copayment (or Copay):
A way in which the covered person shares in the cost of health care. The certificate may require the covered person to pay a flat dollar amount per unit of service. An example of a common co-pay is $20 per physician office visit.

Covered Charge(s):
The part of an expense incurred which:

• is for care of a sickness or injury or for routine or preventive care;
• is incurred while the person's coverage is in force, or as provided under the Extension of Benefits provision;
• is shown in the covered charges of their benefit;
• is not otherwise excluded or limited.

Deductible:
The amount a covered person must pay each calendar year before benefits for covered charges will be paid.

Dependent:
A person (spouse or child) other than the person who is covered in the subscriber's benefit certificate. Also called a "Member" or "Beneficiary."

Effective Date:
The date on which the coverage goes into effect at 12:01 a.m.

Exclusions:
Specific conditions or circumstances that are not covered under the benefit agreement. It is very important to consult the certificate of coverage to understand which services are not covered benefits.

Explanation of Benefits (EOB):
A form sent to the covered person after a claim for payment has been processed by the health plan. The form explains the action taken on the claim. This explanation usually indicates the amount paid, the benefits available, reasons for denying payment or the claims appeal process.

Encounter Fee:
A charge for each visit to a physician's office.

HMO - Health Maintenance Organization:
Benefits paid only if a network doctor or hospital is used. Premiums can be lower than PPO's but not always. Limited choices and referrals to specialists required, but little out of pocket expense to member with little or no copay for office visits and hospitals.

Indemnity Plan:
Any doctor and hospital may be accessed but costs are higher with lack of network discounts or care management. Usually no preventive benefits but is a catastrophic plan protecting the member from large exposure to financial risk.

Lifetime Maximum:
The maximum amount of benefits that will be paid for covered charges on behalf of any covered person over the time that person is insured by the insurance carrier. Benefits paid under more than one policy or certificate issued through the employer may be added together to determine when a covered person has reached the Lifetime Maximum.

Out-of-Pocket Maximum:
The total amount a covered person must pay before his or her benefits are paid at 100%. It does not include charges applied to the deductible. The Out-of-Pocket Maximum is reached by a covered person's payment of his share of the In-Network or Out-of-Network Coinsurance percentage.

POS - Point of Service:
Looks like an HMO with out of network benefits. No deductible in network but deductible and coinsurance out of network. Referrals required on some plans. Preventive benefits available in network. Rates are usually lower than PPOs.

PPO - Preferred Provider Organization:
Benefits paid for both in and out of a network of doctors. Member makes choice with knowledge that better benefits are available in network. Plans feature office visit copays, deductibles at a variety of levels and then coinsurance to a maximum out of pocket expense. Usually includes copays for prescription drugs.

Pre-Existing Condition:
A sickness or injury in which a covered person has, during the six months just prior to his effective date:

• received medical care or advice for symptoms or a diagnosed condition;
• had drugs or medicines prescribed, whether taken or not; or
• had diagnostic tests ordered, whether performed or not.

Precertification:
A utilization management program that requires the covered person or the health care provider to notify the insurer prior to a hospitalization or surgical procedure. The notification allows the insurer to authorize payment, as well as to recommend alternate courses of treatment.

Prevailing Fee:
The amount customarily charged for the service by other physicians in the area (Often defined as a specific percentile of all charges in the community) and the reasonable cost of services for a given patient after medical review of the case.

Schedule of Benefits:
A list of maximum amounts payable for certain conditions.

[Return to TOP]

This website copyright © 2004-2007 by Evans & Wilmer (except where noted). All rights reserved.