GLOSSARY -Health Insurance

GLOSSARY
Coinsurance
The percentage of health care allowable charges you must pay after
you have met your deductible.
Coordination of Benefits (COB)
Method of integrating benefits payable under more than one health
insurance plan so that the insured’s benefits from all sources do not
exceed 100 percent of allowable medical expenses.
Copayment
A specific charge you pay for a specific medical service. For example,
you may pay $10 for an office visit or $5 for a prescription and the
health plan covers the rest of the medical charges.
Cost Sharing
Policy provisions that require individuals to pay, through copayments,
deductibles and coinsurance, a portion of their health care expenses.
Deductible
The amount of money you must pay, generally annually, to cover your
medical care expenses before your insurance policy or HMO plan
starts paying.
Eligible Expenses
Expenses defined in the health plan as being eligible for coverage.
This could involve specified health services, fees or “usual, customary
and reasonable charges.”
Elimination Period
A specified number of days at the beginning of each period of
disability  (in disability income policies) or hospital confinement (in
hospital confinement indemnity policies), during which no benefits
are paid.
Enrollee
An individual who is enrolled in an MCHIP.
Evidence of Coverage (EOC)
Document that summarizes the provisions and benefits of a managed
care health insurance plan.
Evidence of Insurability
A statement or proof of physical condition and/or other information
affecting a person’s eligibility for insurance.
Exclusions
Specific conditions or circumstances for which the policy or plan will
not provide benefits.
Explanation of Benefits (EOB)
The statement sent to a participant in a health policy or managed care
plan listing services, amounts paid by the plan, and total amount billed
to the patient.
Fee-For-Service
A payment system for health care where the provider is paid for each
service rendered rather than a pre-negotiated amount for each
patient.
Formulary
List of prescription medications covered by an insurance company.
Fully Insured Plan
Employer-purchased insurance coverage from a licensed insurance
company, wherein the insurance company assumes the risk.
Gatekeeper
Role of the primary care physician or PCP in HMOs and other forms of
MCHIPs.  The Gatekeeper coordinates care and makes referrals to
specialists.
Grace Period
Specified time (usually 31 days) following the premium due date
during which insurance remains in force and a policyholder may pay
the premium without penalty.
Grievance Procedure
A procedure which allows a member of a health plan or a provider of
benefits to express complaints, protest a decision, and seek remedies.
Group Certificate
The document provided to each member of a group plan.  It describes
the benefits provided under the group plan.
Guaranteed Renewable Contract
Contract under which an insured has the right, commonly up to a
certain age, to continue the policy by the timely payment of
premiums. Under guaranteed renewable contracts, the insurer
reserves the right to change premium rates by policy class.
Health Maintenance Organization (HMO)
Prepaid managed care health insurance plans in which you pay a
premium and the HMO covers your cost of care to see doctors,
hospitals and other providers within the HMO’s network, at prenegotiated rates, subject also to your payment of a specified amount
as services are delivered. You generally must choose a PCP who
coordinates all of your care and makes referrals to any specialists you
might need.
Indemnity Plan
Traditional health insurance that usually covers a percentage of the
cost of care (often 80%) after the consumer pays an annual
deductible.  Patients with an indemnity plan can choose any doctor or
Individual Insurance
A policy that provides protection to a policyholder and may extend
coverage to his or her family; sometimes called personal insurance, as
distinct from group insurance.
Lifetime Maximum
The total amount of benefits that a health care plan will pay over a
policyholder’s lifetime.
Maximum Out-of-Pocket Costs
The most a member will pay considering copayments, coinsurance,
deductibles, etc., usually on a calendar year or policy year basis.
Medicaid
A joint state and federal public assistance program that pays for health
care services for low income or disabled persons.
Medicare
A federally administered health insurance program that covers the
cost of hospitalization, medical care, and some related services for
most people over age 65, people receiving Social Security Disability
Insurance payments, and people with End Stage Renal Disease
(ESRD).
Medicare Supplement Insurance
Insurance coverage sold on an individual or group basis which helps
to fill the gaps in the protection provided by the Medicare program.
This insurance is also called “Medigap program.”
Multiple Employer Welfare Arrangement (MEWA)
An arrangement by which two or more employers form a coalition to
offer a health plan to their employees.
Noncancelable
A health insurance policy that the insured has a right to continue in
force by payment of premiums, as set forth in the contract, for a
period of time as set forth in the contract. During that period of time,
the insurer may not make any change in any provision of the contract,
including the premium.
Out-of-Network Care
Medical services obtained by managed care health insurance plan
members from non-participating or non-preferred providers. In many
plans, such care will not be reimbursed unless previous authorization
for such care was obtained.
Out-of-Pocket Costs
Health care costs the covered person must pay out of his or her own
pocket, including such things as coinsurance, copayments,
deductibles, etc.
Pre-Admission or Pre-Certification Authorization
A requirement that the health care plan must approve, in advance,
certain hospital admissions or certain procedures.
Pre-existing Condition Exclusion
Generally, a limitation or exclusion of health benefits based on the fact
that a physical or mental condition was present before the first day of
coverage. HIPAA and some state laws limit the extent to which a
health plan or issuer can apply a preexisting condition exclusion in
certain instances.
Preferred Provider Organization (PPO)
A network of health care providers that have agreed to provide
medical services to a health plan’s members at discounted costs.  The
cost to use physicians within the PPO network is generally less than
using a non-network provider.
Premium
The amount you pay in exchange for health insurance coverage.
Primary Care Physician (PCP)
Under many MCHIPs, the physician (often a physician, internist, or
pediatrician) who manages your healthcare.  With some exceptions,
you must first consult with your PCP for healthcare needs. A PCP
makes referrals to specialists if necessary.
Provider
Any person or institution that provides medical care.
Referral
The process under which an HMO member receives authorization
(generally from his or her PCP) to receive or obtain care from a
specialist or hospital.
Rescind
To nullify or make void a policy or coverage. In many cases, when and
if a company rescinds a policy, premiums are refunded.
Underwriting
Process by which an insurer determines whether or not, and on
what basis, it will accept and classify the risks associated with an
application for coverage.

 

Important Terms
The following terms are often used in connection with LTC
insurance.  Many are also used in this Guide.
ATTAINED AGE RATING – Premiums are based on the covered individual’s
age at the time of application of the policy or certificate.  Premiums  will
increase as the individual ages regardless of his or her age when first enrolled.
COGNITIVE IMPAIRMENT –  A deficiency in a person’s short or long-term
memory; orientation as to person, place and time; deductive or abstract
reasoning; or judgement as it relates to safety awareness.  Long-term policies
must provide coverage of Alzheimer’s disease, senile dementia, organic brain
disorder or other similar diagnoses.
COMBINATION POLICY – A long-term care policy that includes benefits for
nursing home care and home health care.
DUPLICATE COVERAGE – Do not buy more than one policy.  Consider
increasing current coverage instead.  If you replace a policy with another new
policy, regulations in Virginia require agents or insurance companies to a) offer
to check on all your other policies for possible duplicate coverage, b) warn you
in writing not to cancel any policy until the “free-look” period is over and you are
satisfied with the new one and c) give credit for time spent under your previous
policy toward satisfying pre-existing condition waiting periods.
ELIMINATION PERIOD –  The length of time the individual must receive
covered services before the insurance company will begin to make payments.
The longer the elimination period in a policy, the lower the premium.
EXPENSE INCURRED (REIMBURSEMENT) DISBURSEMENT METHOD –
The benefit is paid when an expense is incurred for an eligible service.  The
amount paid is the lesser of the expense incurred or the dollar limit of the
policy.
FREE-LOOK – All long-term care policies must provide a “free-look” period of
at least 30 days that will allow you to review your purchase.  For a full refund
of any premium paid, return the policy before the end of the 30 day period.
GUARANTEED RENEWABLE – Long-term care insurance policies issued in
Virginia must be at least guaranteed renewable.  Under a guaranteed
renewable policy, the insured is the only one who voluntarily can cancel the
policy.  The easiest and most common way the insured does that is to simply
stop paying the premiums.  The company may not change policy provisions or
refuse to renew your coverage.  Premiums, however, may be raised for an
entire class of policyholders.
HOME HEALTH CARE POLICY – A policy that pays for skilled care or personal
assistance in the home.  Do not confuse at home recovery benefits with more
extensive home health care benefits.  Recovery benefits often are limited to
short periods, usually no longer than your hospital or nursing home stay.
INDEMNITY DISBURSEMENT METHOD – The benefit is a set dollar amount
paid after a determination of eligibility and is not based on the specific service
received or on the expenses incurred.
INFLATION PROTECTION – In Virginia, companies must offer at least one of
three methods of increasing the daily benefit amount to offset the effect of
inflation.  You may reject or accept the offer.  The three methods available are
a) benefit level increases compounded annually of at least 5%,  b) the
guarantee of periodic opportunities to increase benefit levels without providing
evidence of insurability or health status, or c) coverage of a specific percentage
of actual reasonable charges without a specific maximum indemnity amount.  If
you reject the inflation protection, it MUST be in writing. Refer to the section
entitled, “Virginia Long-Term Care Partnership,” for Partnership policy
requirements.
NONCANCELABLE – A long-term care policy that cannot be cancelled by the
insurance company and for which the rates cannot be changed by the
insurance company.
NONFORFEITURE BENEFITS – A nonforfeiture benefit provides that after a
policyholder has paid into a policy for a specified period of time, the
policyholder continues to have some benefits even if he/she is unable to
continue paying premiums.  Those benefits take different forms and affect
the policy price.

NURSING HOME POLICY – A policy that pays for care in a licensed nursing facility.
PRE-EXISTING CONDITION – A pre-existing condition is an illness or disability for
which you received medical advice or treatment during a period of time before you
applied for insurance.  Most policies do not pay for pre-existing conditions during the
waiting period after you become insured.  State law limits the long-term care pre-existing
policy waiting period to six months.
SKILLED CARE – Daily nursing and rehabilitative care that can be performed only by,
or under the supervision of, skilled medical personnel.  Usually this care must be
ordered by a physician and required 24 hours a day.

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