Health Insurance Terms – A Glossary for Understanding the Definitions

First Choice Health Insurance Inc. is First Choice Health Insurance Inc. is an authorized agent for Oregon, Washington, Arizona and Idaho Health Insurance Plans. Use this helpful glossary to guide you in understanding health insurance terminology. One stop shopping saves you time and gas money. Shop conveniently online for individual, group, dental, Medicare, short-term, foreign travel, HSA and student health insurance. Find health insurance definitions that make shopping even simpler. Compare free online quotes and apply online!

Index
Accumulating Affiliation Period Alternative Care Cafeteria Plan Captive Agent Carry–Over Deductible Certificate of Creditable Coverage COBRA Coinsurance Commission Common Application Continuation Contracted Provider Contracted Rate Captive Agent Copay Co–payment See Copay Creditable Coverage Deductible Durable Medical Equipment EPO – See Exclusive Provider Organization Exclusion Period	Exclusive Provider Organization Fee–For–Service FICA Tax Flexible Spending Account FUTA Gate–Keeper Health Insurance Health Maintenance Organization Health Plan Health Reimbursement Arrangement Health Savings Account Highly Compensated Employee Average Benefit Test HIPAA Hospital Accident Policy HRA – See Health Reimbursement Arrangement HSA – See Health Savings Account Indemnity Independent Agent In–Network Insurance Broker	Insurance Carrier – See Insurance Company Insurance Company Key Employee Concentration Test Late Enrollee Lifetime Maximum Limitations Look Back Period Major Medical Policy Managed Care Mandated Benefits Medical Providers Medical Savings Account Medically Necessary Member Provider MSA See Medical Savings Account Network Non–Formulary Usual Customary and Reasonable Waiting Period Waiver

Glossary/Definitions
-A-
Accumulating Deductible Return to Index	The amount paid on individual deductibles is credited and accumulates toward a common family deductible. Once deductible charges add up to the family deductible, no further individual deductibles are due for the year.
Affiliation Period Return to Index	A period that may be imposed by an HMO in lieu of a preexisting condition exclusion period of up to two months (three months for a late-enrollee) where no payment is due and no coverage is provided.
Alternative Care Return to Index	Treatment provided by a chiropractor, naturopath, acupuncturist, or massage therapist as an alternative to medical treatment performed by a physician.
-C-
Cafeteria Plan Return to Index	A Flexible Spending Account (FSA) plan usually incorporating all four types of FSA expenses allowable by the IRS and invoking the use-it-or-lose-it provision.
Captive Agent Return to Index	An insurance agent representing a single insurance company or health plan.
Carry–Over Deductible Return to Index	Those expenses occurring in the last three months of the year, in a year where you have not met your current year's deductible, are carried over and applied to next year's deductible.
Certificate of Creditable Coverage Return to Index	A certificate from your prior health insurance carrier describing how much creditable coverage you have and stating when your prior coverage ended.
COBRA Return to Index	Consolidated Omnibus Budget reconciliation Act of 1986 giving certain employees and their dependents the right to continue their current coverage, at their expense and on a temporary basis, after their group health insurance would otherwise terminate.
Coinsurance Return to Index	Those medical expenses covered on a shared basis between the insured and the insurance company or health plan usually expressed as a percentage as in 20%/80% where the insured pays a 20% share and the insurance company pays an 80%
Commission Return to Index	A small percentage of the premium paid to an insurance agent or producer for assisting you in applying for coverage and providing continuing service after the purchase. Usually built into the premium and paid regardless of whether purchasing through an agent or directly from the company.
Common Application Return to Index	Refers to the application of either the deductible, shared expenses coinsurance), or both in a preferred provider or point-of-service plan. Medical expenses are applied to a single deductible or coinsurance amount resulting in less potential out-of-pocket expenses than if applied separately.
Continuation Return to Index	The right to continue health insurance after no longer eligible for coverage under a group plan if meeting certain conditions. Referred to as COBRA continuation for group of 20 or more employees. State continuation plans for smaller groups apply in some states.
Contracted Provider Return to Index	A medical provider who has an agreement or contract with an insurance company or health plan to accept a set schedule of fees for specified medical services performed.
Contracted Rate Return to Index	The rate providers have agreed to accept for providing a specified medical service in accordance with the terms of a contract. May be likened to a discounted price from a retail price for services.
Copay Return to Index	A small dollar amount due at the time of service and based on a per-visit or per-occurrence basis. A typical example would be physician visit copay due when visiting his office.
Co–payment See Copay Return to Index
Creditable Coverage Return to Index	Credit for recent prior coverage towards any pre-existing condition exclusion period imposed by a new plan. Credit is on a day-for-day basis and recent coverage must have been within 63 days unless a longer period is allowed by state regulations.
-D-
Deductible Return to Index	The amount, usually on a per calendar year basis, that you pay for medical services in a year before the insurance company or health plan pays any claims on services subject to the deductible. After the deductible has been satisfied, the insurance company shares expenses with you until the outof- pocket limit is reached for that year.
Durable Medical Equipment Return to Index	Medical supplies or equipment such as wheelchairs, walkers, oxygen, artificial limb replacements, dentures, and mechanical devices used to assist in mobility or supplement the joints and limbs that may be covered by an insurance policy.
-E-
EPO See Exclusive Provider Organization Return to Index
Exclusion Period Return to Index	That period of time, when starting coverage on a new health insurance policy, during which coverage for pre-existing conditions is not provided. Coverage for pre-existing conditions starts at the end of the exclusion period. Exclusions Services excluded from coverage.
Exclusive Provider Organization Return to Index	A health plan that limits coverage to a single list of providers with no benefits for services performed by non-member providers except in emergencies. Similar to HMO coverage.
-F-
Fee–For–Service Return to Index	The provision of a medical service in exchange for a fee. This is now commonly used to describe traditional insurance or indemnity plans where the insured has the freedom to go to any medical provider and the insurance company pays on a usual, customary and reasonable basis.
FICA Tax Return to Index	Federal Insurance Contributions Act (FICA) tax consisting of a Social Security tax of 6.2% and a Medicare tax of 1.45%.
Flexible Spending Account Return to Index	A Medical Savings Account or MSA is a combination of a high deductible health insurance policy and a separate savings account for paying for specified medical services on a tax-free basis. Unused funds can be carried forward to future or retirement much like an IRA. If used for medical expenses after age 65, use is also on a tax-free basis.
Formulary Return to Index	A list of prescription drugs selected by an insurance company or health plan and considered "formulary", "preferred", or "approved" drugs. Prescription drugs are chosen based upon clinical information and price and the list is referred to as a formulary drug list.
FSA See Flexible Spending Account Return to Index
FUTA Return to Index	Federal Unemployment Tax Act (FUTA) tax of 2.64% plus any surcharges in effect for the year. A contingency assessment of .06% is also added.
-G-
Gate–Keeper Return to Index	A Primary Care Physician who is responsible for all your health care and controls your access to specialists through the use of a required referral system.
-H-
Health Insurance Return to Index	A group of individuals, usually in a metropolitan area, county, geographic region, or state, who pool their money to cover a portion of the medical expenses of the group. The more of your medical expenses you want paid, the more money you contribute to the group each month in the form of a premium. The insurance company manages the pool of money for the group and incurs administrative expenses on the group's behalf.
Health Maintenance Organization Return to Index	A Health Maintenance Organization (HMO) is a health plan that consists of a network of contracted doctors and hospitals to provide treatment to members of the HMO's plans. An HMO may consist of dedicated facilities where all care is received at the HMO's facilities or selected individual physicians, hospitals and other service providers contracted on an individual basis. An HMO uses the Primary Care Physician (PCP) concept to coordinate all your health care.
Health Plan Return to Index	A health-care-service contractor or health-maintenance organization. Commonly used interchangeably with the term insurance company.
Health Reimbursement Arrangement Return to Index	A Health Reimbursement Arrangement or HRA is a combination of any health insurance policy state approved as an employee benefit plan and a separate arrangement to reimburse employees for all or a portion of the qualified medical expenses not paid by the health insurance policy. An HRA is quite often referred to as a Health Reimbursement Account (Accounts); however it does not require the establishment of a separate funding account, as does a Medical Savings Account (MSA) plan.
Health Savings Account Return to Index	Health Savings Accounts or HSA plans are new for 2004 and allow you to save money to pay for medical expenses on a tax-free basis. An HSA is similar to a Medical Savings Account (MSA) except any individual under age 65 can participate while an MSA is limited to self-employed individuals. An employer can also offer an HSA to his employees, through a Flexible Spending Account (FSA) commonly referred to as a cafeteria plan, and both the employer and employees can contribute to the savings account.
Highly Compensated Employee Average Benefit Test Return to Index	An employee or owner who meets specific compensation and/or ownership criteria and are considered a group which generally cannot be discriminatorily favored under a qualified plan for coverage, participation, contributions or available benefits or rights.
HIPAA Return to Index	Health Insurance Portability and Accountability Act of 1996 (HIPAA) best know for protecting health insurance coverage for workers and their families when they change or lose their jobs and privacy of information among other items. HMO See Health Maintenance Organization
Hospital Accident Policy Return to Index	A policy that pay expenses incurred for hospitalization and surgical procedures due to sickness or accidental injuries, including procedures such as CT Scans and MRIs, and certain post hospitalization expenses. Also referred to as a Hospital Surgical policy.
HRA See Health Reimbursement Arrangement Return to Index
HSA See Health Savings Account Return to Index
-I-
Indemnity Return to Index	Used to describe a policy that provides compensation for damage, loss or injury suffered. See also Fee-For Service.
Independent Agent Return to Index	An insurance agent or insurance producer who is not an employee of an insurance company or health plan and is free to represent more than one company.
In–Network Return to Index	Refers to services received within the insurance company's or health plan's network of approved or contracted providers. Insurance Agent A person required to be licensed under the laws of a state to sell, solicit or negotiate insurance. Now referred to as an Insurance Producer.
Insurance Broker Return to Index	An insurance agent or insurance producer who is not an employee of an insurance company or health plan and represents several insurance companies.
Insurance Carrier See Insurance Company Return to Index
Insurance Company Return to Index	A insurance company, insurance carrier or insurer licensed to conduct business in a state. Insurance Producer A person required to be licensed under the laws of a state to sell, solicit or negotiate insurance.
-K-
Key Employee Concentration Test Return to Index	A test that demonstrates that no more than 25% of nontaxable benefits are provided to key employees including officers or owners who meets specific compensation and/or ownership criteria.
-L-
Late Enrollee Return to Index	An employee eligible for coverage on a group health plan who failed to enroll when first eligible and during the time allocated for enrolling usually within 30 days after the eligibility date.
Lifetime Maximum Return to Index	The maximum dollar amount an insurance company will pay in claims during the lifetime of an insurance policy. A policy may have provisions to credit back a portion on an annual basis.
Limitations Return to Index	Refers to services that have a limited benefit either in terms of a dollar amount or a number of occurrences.
Look Back Period Return to Index	That period of time, when determining a pre-existing condition exclusion period, used to define what is a preexisting condition based on when it occurred.
-M-
Major Medical Policy Return to Index	A comprehensive insurance policy that covers most medical expenses up to a maximum limit, usually after a deductible and coinsurance (shared expenses) have been met.
Managed Care Return to Index	A system of delivering health care where care is delivered through a specified network of doctors and hospitals contracted with an HMO or Preferred Provider Organization.
Mandated Benefits Return to Index	Benefits required to be included in a policy by virtue of state or federal insurance regulations.
Medical Providers Return to Index	Persons or firms providing medical care including, but not limited to, physicians, hospitals, surgical centers, urgent care clinics, ambulance services, skilled nursing homes and durable medical equipment suppliers.
Medical Savings Account Return to Index	A Medical Savings Account or MSA is a combination of a high deductible health insurance policy and a separate savings account for payment of medical expenses on a taxfree basis. It is limited to self-employed business owners and companies employing from two to 50 employees.
Medically Necessary Return to Index	Considered necessary by a physician to treat a medical condition and not to include preventive care or elective services unless otherwise covered by an insurance policy.
Member Provider Return to Index	A provider of medical services belonging to a network of providers contracted with a certain insurance company or health plan.
MSA See Medical Savings Account Return to Index
-N-
Network Return to Index	An insurance company's group or list of approved or contracted providers from which you can obtain service at the plan's highest benefit level.
Non–Formulary Return to Index	Not on an insurance company's approved drug list and usually only available at a highest cost (lower benefit level).
-U-
Usual Customary and Reasonable Return to Index	Those charges for medical services that are considered usual, customary and reasonable in the geographic area you are a part of by an insurance company or health plan.
-W-
Waiting Period Return to Index	A probationary period established by an employer, within required limits, that must be satisfied prior to your becoming eligible for enrollment in the company's group health plan.
Waiver Return to Index	Your agreement with the insurance company, on an individual health insurance policy, to waive treatment for a specified medical condition as a pre-requisite for being approved for the policy applied for.
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