Glossary of Common Insurance Terms Used in the U.S.
Cincinnati Children's Hospital Medical Center provides a glossary of common insurance terms used in the U.S.
- Beneficiary
- This is the person(s) that would receive a benefit upon death of the person covered by the plan or policy. Some plans or policies may designate a beneficiary while other plans such as life insurance and pension allow you to select a beneficiary. For plans that require you to select a beneficiary you should do this while completing your plan paperwork.
- Benefit
- Amount paid to or on behalf of a claimant, assignee or beneficiary when the insured suffers a covered loss, injury or accident.
- Benefit Period
- The time period during which a plan will pay for covered benefits. Some covered benefits may have limits, such as number of visit limits or dollar limits, during each benefit period. The benefit period will usually end early upon certain events, such as termination of employment.
- Carrier
- An insurance company that actually underwrites and issues an insurance policy. The term refers to the fact that the company carries (or assumes) certain risks for the policyholder.
- Certificate of Coverage
- A statement of coverage, also known as a Certificate of Insurance, that an individual receives when insured under a group contract. The certificate serves as proof of insurance, and outlines benefits and provisions.
- Claim
- Request by the insured (or his / her provider) to an insurance company to pay for services obtained from a health care provider. The claim is usually submitted in a pre-determined format or a claim form.
- COBRA (Consolidated Omnibus Budget Reconciliation Act)
- U.S. Federal Regulations that require employers of a certain size to offer continued group medical and dental coverage to former employees for up to 18 months.
- Co-insurance
- After paying the deductible, the percentage or amount of covered expenses that the insured pays. In some health plans this may also be called a "co-payment."
- Example: Suppose you select a medical plan with a $1,000,000 lifetime maximum, $200 annual deductible with 90/10 co-insurance thereafter, and a $1,500 annual out of pocket maximum. If you incur covered expenses of $13,500, you would first pay the $200 deductible; then out of the remaining $13,300 in covered expenses, you would pay 10% up to the $1,500 out of pocket maximum (that is, $1,300); the health plan would pay for the remaining expenses ($11,800). Once you meet your out-of-pocket maximum the plan will pay 100% of most covered expenses for the remainder of the benefit period. Note that prescription drugs and certain other benefits may not count towards your out-of-pocket maximum and will not be paid at 100% once the out-of-pocket maximum is met.
- Co-pay or Co-payment
- A form of medical cost sharing in a health plan that requires an insured person to pay a fixed dollar amount when a medical service is received. For example, you might pay $20 for a doctor's office visit, no matter what the doctor's office charge is for the visit. The insurer will pay the remainder of the charge after your co-payment. Note there may be different co-payments for different services. Some plans may also require a deductible be met before a co-payment applies.
- Deductible
- A fixed dollar amount during the benefit period -- usually a year -- that an insured person pays before the insurer starts to make payments for covered services. Plans may have both individual and family deductibles. Some plans may have different deductibles for specific services. For example, a plan may have a hospitalization deductible per admission. Deductibles may also differ if services are received from an approved provider, usually referred to as a "network" provider, versus a provider not on the approved list.
- Denial of claim
- The refusal by an insurer to pay for services received by an insured. Denial may be due to a pre-existing condition, use of a non-network provider or numerous other reasons. If an insurer denies a claim they are required to tell you why the claim was denied and notify you of your right to appeal the decision. Cincinnati Children's benefits staff can help you understand if a claim was properly denied or not.
- Eligible Dependent
- A person must be an eligible dependent of an employee in order to be covered under an employer's health care plan. In general, your spouse and children under the age of 19 will be considered eligible dependents. Many plans also allow children over the age of 19 to remain eligible for coverage up to age 24 or 25 as long as they are full-time students. Parents of an employee are not eligible for coverage through the employee and must purchase an individual policy. Cincinnati Children's benefits staff can refer you to various resources should you need to purchase an individual policy for a parent.
- Emergency evacuation
- Coverage for emergency medical evacuation to the nearest qualified medical facility or the country of residence, as determined by the insurance company; expenses for reasonable travel and accommodations resulting from the evacuation; and the cost of returning to either the country of residence or the country where the evacuation occurred, up to the reasonable maximum limit. This type of insurance is required for J-1 Exchange Visitors. (See also Repatriation.)
- Exclusions
- Services not covered by an insurance policy or plan. These would usually be due to pre-existing conditions or other limitations noted in the policy or plan.
- Health Care
- The term "health care" generally refers to medical, prescription drug, dental and vision care services.
- Individual Policy
- An insurance policy (life, health or disability) that provides coverage for an individual person (and, in some cases, his / her immediate family members). This is in contrast to a group policy that provides coverage for a group of individuals such as coverage through an employer.
- Insured
- Person that purchases an insurance policy or that is enrolled in an insurance plan.
- Network or Participating Provider
- A network or participating provider is a hospital, pharmacy, physician or other health services provider who has contracted with a plan to provide services to covered plan members. Network providers typically have negotiated rates for plan services.
- Out-of-pocket maximum
- Maximum amount of money that an insured must pay out of his / her own pocket during a benefit period, before a plan or policy will pay 100% for the remainder of the benefit period. Note that prescription drugs and certain other services may not count towards an out-of-pocket maximum.
- Pre-existing conditions
- A pre-existing condition is defined as any injury, illness, sickness, disease, or other physical, medical, mental or nervous condition, disorder or ailment that existed at the time of application or during the past (period specified by each insurance plan) prior to the effective date of the insurance. Under U.S. law past insurance coverage is required to offset any pre-existing condition period unless a 63-day break in coverage occurred. In addition, pregnancy cannot be considered a pre-existing condition. The Cincinnati Children's benefits staff can help you determine if a pre-existing condition could be excluded under a Cincinnati Children's sponsored heath plan.
- Policy or Plan maximum
- Maximum amount that a policy or plan will pay for covered expenses. Maximums can be based on a benefit or policy period, per year, life time or per injury / sickness as stated in the specific policy or plan. If a maximum is based on a one-year period that period may be different than the plan coverage period.
- Premium
- Agreed upon fees paid for coverage of benefits under an insurance plan for a defined period. Premiums can be paid by employers, employees or shared by both the insured individual and the plan sponsor.
- Repatriation of remains
- If a covered illness / injury results in a death, expenses for repatriation of bodily remains or ashes to the country of residence. This type of insurance is required for J-1 Exchange Visitors. (See also Emergency Evacuation.)
- Self-insured Plan
- A plan offered by an employer under which the employer assumes the major cost and risk of claims for plan members rather than a carrier. Employers may offer both self-insured plans and plans fully insured by a carrier to their employees.
- Third Party Administrator (TPA)
- An individual or firm hired by an employer to handle claims processing, pay providers, and manage other functions related to the operation of health insurance when the employer has a self-insured plan.
- UCR (Usual, Customary & Reasonable charges)
- UCR (Usual, Customary & Reasonable) charges represent the average or most common amount charged by providers for a particular service, treatment, or supply in the same geographic area. Typically information on rates for procedures is compiled into a data bank and updated periodically. When a claim is submitted for a plan with UCR benefits, the insurance company before making the claim payment reviews the UCR rate and double checks that hospitals and doctors are not billing excessively for the particular service or procedure. Most well respected plans follow the UCR schedule.
