DESERT ESTATES INSURANCE SERVICES

Glossary

What is Health Insurance? Health insurance is a type of insurance that pays for medical expenditures. It’s sometimes used more broadly to include insurance covering Disability or Long-Term Care or Custodial care needs. It can be provided through a government-sponsored social insurance program, or purchased through private insurance carriers. It can be purchased on a group basis (e.g., by a firm to cover its employees) or bought by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare costs. Similar benefits paying for medical expenses night also be provided through social welfare programs funded by State and Federal governments.

All insurance is essentially sharing or ‘poolin’ of risk. By estimating the overall risk of healthcare expenses, a routine finance structure (such as a monthly premium or annual tax) can be approximated, thus ensuring that cash dollars are available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, a private business or a not-for-profit entity.

What is Life Insurance? Life insurance or life assurance is a contract between a policy holder and an insurance company, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual’s or individuals’ death or impending death. In return, the policy owner enters into a contract to pay a stipulated amount of money (premium) at regular intervals or in lump sums. There may be designs in some countries where bills and death expenses plus catering for after funeral expenses should be included in Policy Premium. In the United States, the predominant form simply specifies a lump sum to be paid to a beneficiary upon the death of the insured. Besides the monetary payment that the beneficiary receives, the ‘peace of mind’ afforded to the insured(s), owner(s) and beneficiary(ies) cannot be underestimated.

What are Annuities? Annuities are life insurance products offered by life insurance companies but there is no death benefit, as such. They too have an owner and a beneficiary, which can also be known as an annuitant who would receive a payout based on monies contributed to the annuity. They can be ‘qualified’ or ‘non-qualified’. Contributions to annuities with after-tax dollars is considered ‘non- qualified’, whereas contributions with pre-tax dollars are ‘qualified’. Any gain based on interest crediting or rise in stock or bond prices would accumulate on a tax deferred basis.

What is Long Term Care insurance? Long Term Care insurance (aka LTC Insurance) is a type of coverage that pays for services made to care providers for assistance when the insured individual can no longer take care of themselves. LTC benefits are triggered when the insured is impaired in two out of the Six Activities of Daily Living (ADLs) or have suffered a cognitive impairment and require substantial assistance to accomplish these tasks. It usually pays on a daily or monthly basis an amount that is specified under the contract for a specified period of time (or Lifetime) or until one is recovered and able to care for themselves. They can be reimbursement or indemnity contracts and may not pay the full cost of the care required.

What are Brand-name drugs? Brand name drugs are pharmaceutical medications marketed with a specific brand name by whatever company manufactures it, usually the company that has developed and patented it. When a patent runs out, a generic version of that drug can then be marketed at lower cost by other companies. Brand name drug coverage is not always offered on all health insurance plans. Therefore, check your insurance plan before buying to see if coverage differs between name-brand and their generic equivalents.

What is a Claim? A claim is a request by an individual or his or her medical provider to an insured individual’s insurance company for that insurance company to pay for services obtained from a provider of medical services. That could be a doctor, a hospital, a lab, an imaging center or any provider of health care services. Not all claims will be covered under all policies. Claims are paid based on the contract that exists between the insured and the insurance company they are covered by.

What is a Deductible? A deductible is the amount of money that an individual has to pay for health care services before insurance begins to pay all or a portion of the covered health care costs.

What is Co-insurance? Co-insurance is the amount of money that an individual (and in some cases a family) is required to pay for services usually after a deductible is met. In some cases an individual (or family) might be responsible for twenty or thirty or even forty percent of the cost of covered services after the deductible and the insurance company or Employer ould be responsible for the difference. The co-insurance % ratio can vary from policy to policy. After an individual’s (or in some case a family’s) out of pocket maximum is reached in that calendar year the co-insurance ceases.

What is a Co-Payment? A co-payment (or Co-pay) is a predetermined flat fee that an individual pays for health care services in addition to what the insurance covers. For example, some HMOs require a $10 ‘co-payment’ for each office visit, regardless of the type or level of services provided during the visit. In PPO plans a co-pay usually refers to the office visit charge or the flat-dollar cost of a routine check-up. Co-payments do not count towards the annual deductible or annual out of pocket maximums. Co-payments are not usually specified by percentages but in some contracts they might be.

What does Effective Date mean? The effective date is the date that your insurance actually begins. This might be different than the ‘issue date’. One is not covered until 12:00:00 AM of the policy’s effective date. Most carriers such as Anthem Blue Cross, Blue Shield, Health Net, Aetna and United Health use this term.

What is Employer-Sponsored Health Insurance? Nearly 60 percent of Americans who have health coverage secure that coverage through an employer-sponsored plan, often called group health insurance. Group health plans are guaranteed issue, meaning that a carrier must cover all applicants whose employment status qualifies them for coverage, usually after a waiting period has passed. That waiting period might vary from employer to employer. Employer sponsored plans typically are able to offer a range of plan options from HMO and PPO plan to additional coverage such as dental, life, short- and long-term disability but not all are required to do so. Sometimes an employer will select one or more plans in a given price range and offer only those plans. Additionally, some employers require the employee to pay a portion of the premium. This is known as a contributory plan. In a non-contributory plan the employer pays the entire premium.

What are Exclusions? Exclusions are medical services that are not covered by an individual’s insurance plan. Government mandates that certain services cannot be excluded, but not all. Be sure to read your health plan contract or summary carefully so as to be an educated consumer.

What is the Explanation of Benefits? An explanation of benefits is what an insurance company sends the insured as a written explanation to a claim. It shows what the insurance has paid and what the client must pay. Sometimes it is accompanied by a benefits check. It will note any discount that is calculated into the price that you will be billed for by your medical provider and tell you what the amount you would then need to pay. It also tracks what is the amount calculated towards your deductible and out-of-pocket limit.
What does Generic Drug mean? A generic drug is a considered to be an equivalent to a brand name drug. Generics are offered by competing drug companies once the brand name company’s patent has run out. Generic drugs are less expensive, so prescription and health plans reward their policyholders for choosing generics.
What is Group Health Insurance? Group health insurance is coverage offered through an employer or other entity that offers coverage to all individuals in the group. Sometimes a portion of the premium would be required to be paid by the individual member.

What is a Health Maintenance Organizations or HMO? A Health Maintenance Organization is a type of insurance plan that usually requires you to have a Primary Care Physician (PCP) that has agreed to accept a prepaid  or ‘capitated’ amount as a fixed monthly fee for services, instead of a separate charge for each visit or service. Though usually out of pocket expenses can be lower the main drawback of HMOs is that they require you to be referred to a specialist for medical problems that the PCP cannot treat. In most plans the PCP is a member of a medical group and can only refer you to a specialist in his or her own medical group. Payment can be denied for services not authorized by the PCP who sometimes must get a preauthorization form his own medical group or the insurance company to which he is contracted. HMOs vary in design. HMOs can also be ‘Staff Models’ or ‘Network Models’. Kaiser is a good example of a staff model HMO. In staff model HMOs the doctor works directly for the Insurer in a central facility. In a ‘Network Model’ HMO the doctor might have his or her own practice and be affiliated with a hospital. Except in a medical emergency the insured must remain in-network as services outside of the network might not be paid.

What does ‘In-network mean? Medical providers or health care facilities that are ‘in-network’ can be either  affiliated with an HMO network or a PPO network. Some medical providers can be in both. Any medical provider that has joined an insurance company’s network has agreed to accept a discounted or ‘contracted’ rate for their services most HMO providers are paid a capitation fee for each insured who is signed up with them as their Primary Care Provider.  These savings can be to the benefit of the policyholder when they haven’t reached their deductible and out-of-pocket limit.

An Independent Practice Associations (IPA) is an alliance of physicians that own their practices, as opposed to physicians that might be employed by some entity such as a health maintenance organization. Physicians in an IPA are legally organized as a corporation, professional corporation, partnership or foundation so as to contract as a group to provide services. The economic risk is shared, but overhead is not. The IPA can contract with a health maintenance organization (HMO) to service enrollees but additionally can still service non-HMO clients.

Individual Health Insurance is health insurance that is offered on an individual or family but not a group basis.

A Lifetime Maximum Benefit is the amount that a policy will pay out over the course of the period of the contract. There is no longer a Lifetime Maximum for health insurance claims under the Affordable Care Act.

Limitations put a cap on the amount of benefits that might be paid out for a particular covered expense. The Certificate of Insurance will list these limitations.

Managed Care is a system to deliver medical services that attempts to manage the cost and quality of medical services that an individual insured might receive. Many managed care systems offer HMOs and PPOs that individuals are encouraged to use for their health care services. There are two types of HMOs, Network Models and Staff models. Network model HMO providers are independent of the insurance company and are usually members of a medical group that is contracted with a hospital facility. Most all Insurance carriers, such as Anthem Blue Cross, Blue Shield or Health Net offer HMO Network Model HMOs. Doctors on a Staff  Model HMO are employees of the Insurance company that owns the facility in which they operate. Kaiser is an example of a Staff Model HMO. Prevention of disease is a key component of managed care.

A Network of providers is a group of doctors, hospitals, labs, imaging centers and other types of health care providers that are contracted to provide services to an insurance company’s members for a substantial discount on what they would normally bill for the same service. These can be HMO or PPO provider networks. Provider networks usually cover a large geographic market and offer a wide range of health care services. There can be many types of primary doctors and specialists in each network. Insured individuals usually always pay less when using an in- network provider. HMOs require the insured to use only contracted network providers that are usually associated with the primary doctor’s medical group, except in the case of an emergency. Under a PPO plan contract the insured can use out of network providers but will usually pay more for the privilege.

Out-Of-Pocket Maximum is the amount of money that an insured must pay before his or her insurance carrier or, in self funded plans, their employer are responsible to pay 100% for an individual’s in-network health care costs. The out-of-pocket maximum is calculated on a calendar year basis and starts over every January 1st. If one uses an out-of-network provider or providers that can change in excess of the contracted rate cost for a particular service then only the contracted rate cost goes towards the in-network out of pocket maximum. There is often a separate out-of-pocket maximum for out of network charges.

A Pre-existing Condition is an illness or injury that existed prior to the individual obtaining coverage through a particular insurance company. Usually there is a period of time after which the insured must be recovered before the waiting period for pre-existing conditions expires and coverage can begin.
Preferred Provider Organizations offer discounted rates if you use doctor, labs and facilities from their network of contracted providers. If you use a medical provider that is outside the PPO plan’s network then one must pay more for those medical services.

A Primary Care Provider is a health care professional (usually an internist or family doctor) who is responsible for monitoring an individual’s overall health. Typically, a PCP supervises an individual’s medical care, referring the individual to more specialized physicians for specialized services. Usually, the term Primary Care Doctor (PCP)

A Provider is a health care professional who provides health care services. Sometimes, the term refers only to physicians. Oftentimes, however, the term might refer to some other type of health care professional, such as hospitals, nurse practitioners, chiropractors, physical therapists, and others offering specialized health care services.

A Reasonable and Customary Fee (R&C) is the average fee charged by a particular type of health care practitioner within a geographic area for a certain medical service. A plan that pays according to the R&C benefit schedule (aka Usual, Customary & Reasonable or UCR) will usually pay more for the service than the contracted rate (i.e. allowed amount) payment schedule. If an individual questions his or her provider about the cost for a particular service then the provider will sometimes reduce the charge to the amount that the insurance company has defined as Reasonable and Customary.

Stop-loss is defined as the dollar amount of claims filed for eligible expenses at which point you’ve paid 100% of your out-of-pocket maximum and the insurance begins to pay at 100%. The Stop-loss amount is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.

A Waiting Period is a length of time that an insured is not covered by insurance for a particular medical problem. Waiting Periods are usually associated with PPOs and Self-funded plans. HMOs usually do not have waiting periods.