Glossary of Common Terms

The average number of patient days of service rendered to each inpatient (excluding newborns) during a given period. Varies for patients by diagnosis, age, hospital efficiency, etc. One measure of use of health facilities.

An arrangement in which a plan hires a third party to deliver administrative services to the plan such as claims processing and billing; the plan bears the risk for claims. Common in self-funded health care plans.

If an employee and/or dependents are traveling outside of a geographical area where network facilities are readily available and need medical care, benefits may be provided by non-network facilities without penalty.

A person trained in the insurance field who determines policy rates, reserves and dividends, as well as conducts various other statistical studies.

The exercise of judicial power by hearing, trying and determining the claims of litigants before the court. Also, the review and adjustment of benefit claims and bills to arrive at a correct payment.

Under ERISA, the person designated as such by the instrument under which the plan is operated. If the administrator is not so designated, administrator means the plan sponsor. If the administrator is not designated and the plan sponsor cannot be identified, the administrator may be such person as is prescribed by regulation of the secretary of labor. The administrator's responsibilities are as follows:

1. 1. Act solely in the interest of plan participants and beneficiaries, and for the exclusive purpose of providing benefits and defraying reasonable administrative expenses.
2. Manage the plan's assets to minimize the risk of large losses.
3. Act in accordance with the documents governing the plan.

The tendency of an individual to recognize his or her health status in selecting the option under an insurance plan that tends to be most favorable to him or her (and more costly to the plan). A person with an impaired health status or with expected medical care needs applies for insurance coverage financially favorable to himself or herself and detrimental to the insurance company.

Dental, vision, hearing, prescription drug, supplemental life, disability, etc.

See Adverse Selection

The signed transfer of certain benefits by the insured person to a third party, e.g., to a health care provider such as a physician or hospital.

Commonly used in Canada and Great Britain, it is synonymous with insurance.

Dental corrective services including basic restorative items such as crown repair and fillings, root canal therapy, treatment of gingivitis, and limited oral surgery. Benefits are limited to a fixed dollar amount each year.

A booklet for the employee that contains a general explanation of benefits and related provisions of the health plan. See also Summary Plan Description (SPD).

An attached facility affiliated with a hospital designed as a less expensive and more homelike setting for labor and delivery as an alternative to an operating room.

Independent, nonprofit, voluntary membership organizations formed for the purpose of prepaying medical care expenses for their subscribers (insured persons). Blue Shield plans provide payments mainly for physician services, while Blue Cross plans provide coverage primarily for hospital services.

A drug protected by a patent issued to the original innovator or marketer. The patent prohibits the manufacturer of the drug by other companies as long as the patent remains in effect. See also Generic Equivalent Drugs.

A fiduciary's violation of a duty owed to an employee benefit plan or a participant or beneficiary in such a plan.

An insurance solicitor, licensed by the state, who places business with a variety of insurance companies and who represents the buyers of insurance rather than the companies even though he or she is paid commissions by the companies.

This HRA is specially designed to provide a continuation percentage. Funds will build in the account each year and after termination will be available at the percentage earned for continuation.

A group health insurance policy provision designed to eliminate duplicate payments and provide the sequence in which coverage will apply (primary and secondary) when a person is insured under two contracts.

The Consolidated Omnibus Budget Reconciliation Act of 1985 requires almost every group health plan to provide each participant and qualified beneficiary under the plan the option to pay for continued coverage for a specified period of time under the plan in the event coverage would otherwise have ceased as a result of one of a number of

Defined by the Internal Revenue Code as a plan that permits the participant to choose between two or more benefits consisting of cash and qualified benefits. See also Flexible Benefit Plan.

A deductible that applies to any eligible medical expenses incurred by the insured during any one calendar year.

Use of a drug benefit identification card which, when presented to a participating pharmacy by employees or their dependents, usually entitles them to receive the medication for a minimal copay.

A commercial insurer, a government agency or a Blue Cross or Blue Shield plan that underwrites or administers programs that pay for health, life or other insurance services.

A program separate from the primary group health plan designed to provide a specialized type of care, such as a mental health carve-out.

A document that is given to insured members of a group plan and that outlines the plan's coverage and the member's rights.

Spinal manipulation and other treatment and therapy provided by a licensed Chiropractor. Benefits are limit to a fixed number of visits per year and benefits are capped per visit and per year.

An itemized statement of services rendered by a health care provider for a given patient. The claim is submitted to a health benefits plan for payment.

Any entity that reviews and determines whether to pay claims to enrollees or physicians on behalf of the health benefit plan. Claim administrators may be insurance companies or their designated claims review organizations, self-insured employers management firms, third party administrators (TPA's) or other private contractors.

See Co-payment

A co-payment, or co-pay, is the fixed dollar amount an insured person pays for certain medical services such physician office visits or prescription drugs and is separate from, and does not count towards, the regular deductible. Co-payments are often listed on the health insurance card in order for the medical provider to know immediately what amount to charge the employee.

A joint program involving health care providers, purchasers of care, industry, consumers, labor or insurers in an attempt to deal with health care costs, issues and problems.

A policy provision, frequently found in major medical insurance, by which the insured person and the insurer share the hospital and medical expenses resulting from an illness or injury in a specified ratio (e.g., 80%/20%), after the deductible is met.

The process of determining the premium for a group risk on the basis of the average claims experience for a general population instead of a particular employer. This is especially helpful for small groups, whose claims experience over two or three years may not be typical. Community rating is used my most HMO's which use the plans' entire client population to set premiums.

A person or firm specializing in the design, implementation and service or employee benefit plans and paid on a fee-basis primarily.

A plan that provides for employee contributions or a benefit plan under which employees bear part of the cost. In some contributory plans, employees wishing to be covered must contribute; in other contributory plans, employee contributions are voluntary and result in increased benefits.

The right of an individual to convert a group health or life insurance policy to an individual policy should the individual cease to be a member of the group. Under such a provision, a physical examination is usually not required.

The central components of a health care plan, generally comprehensive major medical and hospitalization benefits. These may be supplemented by additional noncore benefits such as dental and vision benefits.

DXL includes blood and urine testing as well as x-ray and other diagnostic tests. Some tests are performed in a physician's office and others are performed at an outside laboratory.

The amount of out-of-pocket expenses that must be paid for health services by the insured before becoming payable by the carrier. Most common in major medical policies, but also found in basis policies.

A feature whereby covered charges in the last three months of the year may be carried over to be counted toward the next year's deductible.

The combination of strategies such as preventative health, health promotion, self-care guidelines, patient education programs and company practices that is designed to reduce actual and perceived need for health care services and promote and support informed, appropriated health care decision making, thereby reducing costs.

A cost-containment strategy involving an exclusive contractual arrangement between an employer and a provider for health care services, usually obtained at reduced prices for employee groups. This may be accomplished without going through a health plan.

In this type of self-insured or self-funded plan, employees' claims are paid directly out of the company's cash flow as part of the expense of doing business; thus, claims settlements are tax deductible when they are paid, not when they are incurred. The company sets aside not reserves and pays not premiums or expense load to an insurer. Most companies that employ a disbursed self-funded plan buy stop-loss insurance (reinsurance), usually in the range of 120% of expected claims, in order to protect themselves against a significantly poorer-than-expected experience.

An employment-based health service program designed to assist in the identification and resolution of a broad range of employee personal concerns that may affect job performance. These programs deal with situations such as substance abuse, marital problems, family troubles, stress and domestic violence, as well as health education and disease prevention. The assistance may be provided within the organizations or by referral to outside resources.

This is paperwork that typically accompanies your reimbursement request from your health carrier or BPC and explains the amount requested and any denial reasons. An EOB is often required by BPC to substantiate HRA claims.

The Employee Retirement Income Security Act of 1974 is a Federal statute that requires persons engaged in the administration, supervision and management of health and welfare and pension plans do so without discrimination. The act defines the role and responsibilities of a fiduciary and establishes other benefit requirements.

Treatment provided for a life threatening or urgent condition requiring immediate attention. Treatment is provided in a hospital emergency room and includes charges for an ambulance and other medical procedures.

The use of the Emergency Room for treatment of a non-acute illness will result in higher out of pocket expense for the covered individual. This benefit item encourages plan participants to utilize the services of a physician's office for non-critical medical care on a more cost-effective basis.

Family planning includes sterilization methods such as vasectomies and tubule ligation.

Home Health Care is the delivery of medical care by nurses or other medical professionals in a patient's home.

A Hospice is a facility for individuals with terminal illnesses. Medical care is provided mainly to relieve pain and increase the patient's comfort. Arrangements are made to reduce the hospital-like setting and provide comfort to a patient with a limited time to live.

Treatment for psychological, family, and interpersonal problems as well as drug and alcohol abuse in an inpatient facility such as a hospital or rehabilitation clinic. Benefits are limited to a maximum limit per year and lifetime.

Surgery performed in a hospital once admitted.

The maximum dollar amount the health insurance plan will pay for each covered person each year.

Major restorative services such as inlays, crowns, bridges, dentures and associated repairs. Orthodontia is not included.

The physician and hospital charges related to labor and delivery including scheduled physician office visits, hospital room, surgical charges, and supplies. Benefits are paid the same as any other illness unless indicated otherwise according to a separate benefit schedule.

The list of hospitals and, in some cases, other medical providers who have agreed to discount their normal charges, set maximum limits on charges, and bill the insurance plan directly on behalf of employees for whom their employer has entered into a managed care agreement. Higher benefits are provided to employees who use the facilities on the network list.

Those medical facilities that have not entered into a managed care agreement with an employer. Benefits are less for employees who use facilities that are not on the network list.

Treatment and training provided by Occupational Therapists and clinics to assist patients with the acquisition or relearning of job related skills, often following an injury or illness.

An organ transplant is the surgical removal and replacement of organs allowing a patient to regain use of vital bodily functions.

The maximum dollar amount a covered individual will be required to pay during a calendar year excluding deductibles and co-payments. Out-of-pocket maximums will be higher for the use of non-network facilities.

Treatment for psychological, family, and interpersonal problems as well as drug and alcohol abuse in an outpatient facility such as a counselor's office or clinic. Benefits are limited to a fixed number of visits per year with a fixed maximum benefit amount payable.

Surgery performed in a physicians office or other outpatient clinic or surgical center.

Medical care provided by a doctor, or his or her staff, directly in the doctor's office for illness or preventative care including examinations and treatment. Coverage for some diagnostic, X-ray, and lab work and outpatient surgery may be covered through a different benefit than the Physician Office Visit.

As a result of pre-certification, the patient may be asked to have medical tests completed prior to admission. These tests help to determine the appropriate course of medical treatment prior to a hospitalization. The cost of pre-admission testing is typically paid by the health plan.

A requirement for a covered individual or provider to call a toll free number listed on the plastic insurance card prior to a hospitalization or surgical procedure. In some cases a second opinion may be requested by the insurance plan in order to verify the necessity or cost of a recommended treatment or procedure. The cost of a second opinion is paid for by the health plan. A board of medical professional's review recommended treatments in order to direct plan participants in the most beneficial and cost effective medical care.

Failure to call the pre-certification number prior to hospitalization or surgical procedure results in higher out-of-pocket expense to the employee.

A Prescription Drug Card is a plastic card that, when presented to a pharmacist, entitles an employee to purchase covered prescriptions by simply paying a co-payment. Co-payments are lower for generic drugs to encourage the employee to purchase the less costly prescription medication. However, the employee has the choice of purchasing a name brand medication, if available, but with a higher required co-payment.

Two annual dental check-ups per year including teeth cleaning, bitewing x-ray's and fluoride treatment constitute preventative dental care.

A benefit provided annually to each covered person for routine physical exams including school physicals and related lab or x-rays. This benefit includes routine gynecological exams, pap smears, mammograms and related expenses. This benefit also includes proctology exams, proctoscopy and related expenses. Well baby check-ups, immunizations and inoculations are also included. Prenatal care may also be included in this benefit.

This is the summary document that explains the plan to all participants.

A nursing home or other extended care facility.

Training and therapy provided by Speech Therapists or Speech Pathologists to help correct speech defects or problems.

This benefit pays 100% of charges for medical care received in the event of an accident up to a fixed dollar amount per accident, per person, per year prior to a deductible being met.

A disorder of the jaw often treated with mouthpieces or outpatient surgery. Benefits are limited to a fixed dollar amount per year and lifetime.

Vision Care provides a fixed dollar amount for a variety of services and items provided by an Optometrist or Vision Care Center. Benefits include eye examinations and payments for frames and lenses including contact lenses. Any medically necessary surgical procedures would be covered under the major medical plan of benefits.

The series of scheduled procedures required of infants during their first year. Charges include immunizations and inoculations and well as regular check-ups by nurses and physicians.