Glossary — Learn Insurance Terms and Phrases

Here are some terms that get thrown around whenever people are talking about insurance. There are some very basic ones — and some pretty advanced ones. Look around — hopefully it will give you a better sense of what the insurance companies are talking about.

  1. ALL
  2. A
  3. B
  4. C
  5. D
  6. E
  7. F
  8. G
  9. H
  10. I
  11. J
  12. K
  13. L
  14. M
  15. N
  16. O
  17. P
  18. Q
  19. R
  20. S
  21. T
  22. U
  23. V
  24. W
  25. X
  26. Y
  27. Z

Activities of Daily Living (ADLs)

In Long Term Care insurance, ADLs are what you do independently everyday – eating, bathing, dressing, moving about (mobility), transferring (for instance, from a bed to a chair), using the toilet, and maintaining bladder and bowel continence; ADLs are used to measure the ability to function

Actuarial value

What did God say when he created actuaries?  He scratched his head and said “Go figure!”  They took him literally.  Jokes aside, actuaries calculate the percentage that the insurance company covers versus what you cover.  So an 80/20 plan means they pay 80% of expenses and you pay 20%.  That’s the (very) short answer.

Acute Care

Medical care that is required for a short period of time to cure a certain illness and/or condition

Adult Day Care

Recreational and/or rehabilitative services provided for persons who benefit from daytime supervision; an alternative between care in the home and in an institution

Advance Premium Tax Credit (APTC)

As of 1/1/14, under the Affordable Care Act (ACA), this is the amount of help you will get from the federal government to help you pay for health insurance IF you qualify and only IF you buy health insurance through an online Exchange, aka Marketplace or in California known as Covered California.  The APTC is also known as a subsidy.

Affordable Care Act

The name of the health care reform law President Barack Obama signed on March 23, 2010.

AGI / Adjusted Gross Income

Line 37 on your 1040 tax form.  This is the income that determines whether or not you’re eligible for a federal subsidy to help pay for your individual health insurance.  In short, it’s your income after expenses but before taxes.  Simple.

Assisted Living Facility

A non-medical institution providing room, board, laundry, some forms of personal care, and usually recreational services; also known as domiciliary care facility, sheltered house, board and care home, community-based care facility, residential care facility, etc.

Beneficiary

In life insurance, the person — or entity — who gets the money after you die

Benefit Period

The longest period of a time a disability or Long Term Care policy will pay you benefits

Benefits

All the things your health, disability or Long Term Care insurance plan covers.

Brand Name Drugs

A drug manufactured by a pharmaceutical company that’s chosen to patent the drug’s formula and register its brand name.  These patents run for 17 years before the drug can be marketed by a generic drug company at a much lower cost to consumers.

Bronze / Silver / Gold / Platinum / Minimum Coverage aka Metallic Tiers

Post Obamacare, all health insurance companies have to offer the same metallic tiers.  You can purchase these plans directly from the insurance company OR from your state exchange – but always contact an experienced broker to help you figure it out!  All companies have to offer these policies without a lot of differences (which might vary slightly from state to state).  So when shopping for new plans,  it’s only about the company and their reputation, doctor network and drug formulary.

Care-giver

In Long Term Care insurance, the key person (usually a relative) overseeing and providing the care for you if you are incapacitated

Cash Value

In a Whole Life life insurance policy, the money you would be paid if you cancel your Whole Life policy; you can also borrow against the Cash Value

Chronic Care

Care for an illness continuing over a long period of time or recurring frequently

Claim

When you go to see an in-network doctor, they submit your medical bills (a claim for benefits) to the insurance company.   Or if you see an out-of-network doctor you submit the claim yourself (if you’re on a PPO).  Once received, the insurance company pays its portion and you might get an invoice from the doctor for the balance.

Co-insurance

Think about the term… what does “co” anything mean (think “co-worker” for example)?  Sharing!  You’re sharing costs with the insurance company.

Co-pay

What you pay for your medical expenses

COBRA

COBRA is short for the Consolidated Omnibus Budget Reconciliation Act.  It is a federal law that allows people to continue benefits for a period of time after group health coverage ends. COBRA applies after a job loss, reduction in hours, death or divorce. The person usually pays the entire premium plus two percent.

Covered California

Part of the health care reform law, Covered California is the state’s health insurance Exchange/Marketplace where individuals and small businesses can compare and buy health insurance.  The Insurance Mom is here to help you make the right decision!

Custodial Care

In Long Term Care insurance, services that can be given safely and reasonably by a non-medical person, designed mainly to assist with ADLs, including bathing, eating, dressing and other routine activities

Death panels

Don’t exist!   A politician warned that Obamacare would have death panels deciding if sick or elderly people would be allowed to get insurance or letting them die. This wasn’t ever a provision of the ACA.

Deductible

The medical expenses you are responsible for before your health insurance plan helps you

Disability

In Disability insurance, your physical or mental inability to perform the major duties of your occupation because of sickness or injury

Drug List (aka Formulary)

Used by insurance companies, a pre-approved list of preferred, commonly prescribed prescription drugs. These drugs are chosen by a team of doctors and pharmacists because of the drugs’ clinical superiority, safety, ease of use and cost (but mostly costs!).

Earned Income

Gross salary, wages, commissions, fees, etc., you get from being actively employed

Elimination Period

The consecutive number of days for which no benefits are payable at the start of a disability or Long Term Care claim

EMTALA law (Emergency Medical Treatment and Labor Act)

A law that says that emergency rooms cannot refuse any patient, regardless of their ability to pay.

EOB – Explanation of Benefits

An Explanation of Benefits (sometimes called a Claims Summary), is a document the health insurance company sends you and your medical providers telling you how your medical claims (expenses) have been processed. For you it is simply an FYI. The EOB lists the treatments that took place, the portion of the cost that is covered (called the negotiated rate), and the amount remaining for you to pay directly to the doctor. From the EOB (or Claims Summary), the doctor (or hospital) will send you an adjusted bill. When you receive an EOB from your health insurance company, keep it filed away in a safe place (where the dog can’t eat it!) so that you have it available for reference when you receive the bill from your doctor.   Use the information on the EOB to make sure your doctor (or hospital) is billing you for the correct amount.

EPO

Exclusive Provider Organization.   An EPO network is a PPO-HMO mash-up.   Benefits are available only IN the EPO network.   Like a PPO network, you can pick and choose your own doctors at any time.   But there are NO benefits OUT of the network, except for emergencies.

Essential Health Benefits

As of 1/1/14, under the Affordable Care Act (ACA) there will be 10 Essential Health Benefits that every health insurance plan must include:

1.  Ambulatory patient services

2.  Emergency services

3.  Hospitalization

4.  Maternity and newborn care

5.  Mental health and substance use disorder services, including behavior health treatment

6.  Prescription drugs

7.  Rehabilitative and habilitative services and devices

8.  Laboratory services

9.  Preventive and wellness and chronic disease management

10.  Pediatric services, including oral and vision care

Exclusions

Certain conditions and causes which are not covered by a policy

Federal Poverty Level / FPL

The feds decide the income brackets for Medi-caid, cost-share reduction plans with a subsidy, subsidized plans, or not qualifying for assistance.  The FPL guidelines are based on tax filing household and income.  It changes every year.

Formulary (aka Drug List)

Used by insurance companies, it is a pre-approved list of preferred, commonly prescribed prescription drugs. These drugs are chosen by a team of doctors and pharmacists because of the drugs’ clinical superiority, safety, ease of use and cost (but mostly costs!).

FSA / Flexible Spending Account

If your employer offers this, an account in which to put tax-free money to pay for medical expenses, but you can only contribute a certain amount determined by the feds every year.

Future Increase Option

In Disability Insurance, an optional benefit which allows you to purchase additional coverage up to a stated age, regardless of health, as long as your income warrants the increase

Generic Drugs

A prescription drug that has the same active-ingredient formula as a brand-name drug. A generic drug is known only by its formula name and its formula is available to any pharmaceutical company. Generic drugs are rated by the Food and Drug Administration (FDA) to be as safe and as effective as brand-name drugs. Usually, generics cost a lot less for you and the insurance company.

Gold / Platinum / Minimum Coverage / Bronze / Silver aka Metallic Tiers

Post Obamacare, all health insurance companies have to offer the same metallic tiers.  You can purchase these plans directly from the insurance company OR from your state exchange – but always contact an experienced broker to help you figure it out!  All companies have to offer these policies without a lot of differences (which might vary slightly from state to state).  So when shopping for new plans,  it’s only about the company and their reputation, doctor network and drug formulary.

Grandfathered Plans

If you bought your health insurance before 3/23/10 and haven’t made any changes to it since, you have a Grandfathered Plan.   It does not have to meet the requirements of the federal reform laws known as the Patient Protection and Affordable Care Act (PPACA).

Guaranteed Issue

Starting 1/1/14, guaranteed issue means health insurance companies have to issue health insurance to nearly anyone — no matter what their health or health history. In other words, coverage is guaranteed to nearly anyone.

Guaranteed Renewable

In Disability Insurance, a type of insurance which cannot be cancelled or altered by the insurance company as long as you continue to pay premiums on time

HDHP / High Deductible Health Plan

An HSA-compatible plan with a high deductible.

Health Savings Account

A very good, smart money management tool which allows you to save tax free money to pay for medical expenses

HMO – Health Maintenance Organization

A Health Maintenance Organization (it used to be called Managed Care, but The Insurance Mom now refers to it as Mangled Care!).  An HMO requires that you see only doctors or hospitals on their list of providers, and sometimes at a specific facility. An HMO also requires that you choose a Primary Care Physician (often sight unseen), who will provide all of your medical care and refer you to an approved specialist if they think it’s necessary. Generally an HMO will not cover medical expenses incurred by seeing someone who is not in the HMO group. Usually an HMO will have limited coverage for emergency medical care when you travel outside your own coverage area. In The Insurance Mom’s opinion, when you choose an HMO you lose control over your own medical destiny.

Home Health Care

Refers to a wide range of services, from skilled care and physical therapy to personal care delivered at home or in a residential setting

In-Network

A doctor, lab or hospital who is contracted with the insurance company and who must discount their fees for you

Medi-caid / Medi-Cal

A government program for folks with lower incomes to help them pay for medical care.  In CA, this program is called Medi-Cal.

Medicare

A federal government insurance program to assist those age 65 and over and the disabled with medical and hospital expenses. In addition to hospital and doctor expenses, Medicare covers only skilled care in a skilled nursing facility and limited skilled nursing care at home. It does not provide benefits for personal or custodial care. Medicare requires co-payments and deductibles.

Medicare Part A

The part of Medicare that helps pay for hospital care. It also covers nursing home, home health and hospice care.

Medicare Part B

The part of Medicare that helps pay for doctors and outpatient care.

Medicare Part D

The part of Medicare that helps pay for prescription drugs. Insurance companies must be approved sponsors before they can offer Medicare Part D Prescription Drug plans.

Medicare Supplement Plans

Private insurance policies that supplement Medicare benefits by covering co-payments and deductibles for medical and hospital expenses. These policies do not provide coverage for personal or custodial care.

Medicare-for-all

This is a universal health insurance model in which the federal Medicare program expands to cover everyone, but still allows for the purchase of private insurance to help supplement the coverage.

Metallic Tiers aka Minimum Coverage / Bronze / Silver / Gold / Platinum

Post Obamacare, all health insurance companies have to offer the same metallic tiers.  You can purchase these plans directly from the insurance company OR from your state exchange – but always contact an experienced broker to help you figure it out!  All companies have to offer these policies without a lot of differences (which might vary slightly from state to state).  So when shopping for new plans,  it’s only about the company and their reputation, doctor network and drug formulary.

Minimum Coverage / Bronze / Silver / Gold / Platinum aka Metallic tiers

Post Obamacare, all health insurance companies have to offer the same metallic tiers.  You can purchase these plans directly from the insurance company OR from your state exchange – but always contact an experienced broker to help you figure it out!  All companies have to offer these policies without a lot of differences (which might vary slightly from state to state).  So when shopping for new plans,  it’s only about the company and their reputation, doctor network and drug formulary.

Network

The hospitals, health care professionals and labs that have contracted with a health plan to provide health care services.    When a provider is “in-network” they must discount their prices to you.

Non-Formulary

Any drug not on the formulary (a comprehensive list of pre-approved drugs, generic and brand name, that an insurance company will cover). You get no coverage for it.

Non-Grandfathered Plan

If you bought your health insurance after 3/23/10 or made any changes at all to a plan you bought before 3/23/10, you have a Non-Grandfathered Plan.   It must meet the requirements of the federal reform laws known as the Patient Protection and Affordable Care Act (PPACA).

Office Visit Fee

What the doctors charge you just for showing up and reading old magazines; sometimes you pay only a co-pay

Open Enrollment / OE

Under the guidelines of the Affordable Care Act (ObamaCare), this is the ONLY time of the year people can buy new individual health insurance or make changes to their existing plan.  Right now, those dates are November 1st through January 31st of every year, but for plans starting January 1st and later.

Out-of-Network

A doctor, lab or hospital who can charge you as much as they like (watch out!)

Out-Of-Pocket Maximum

The most medical expenses you are responsible for in any calendar year

Patient Protection and Affordable Care Act (PPACA)

The name of the health care reform law President Barack Obama signed on March 23, 2010.

Platinum / Minimum Coverage / Bronze / Silver / Gold aka Metallic Tiers

Post Obamacare, all health insurance companies have to offer the same metallic tiers.  You can purchase these plans directly from the insurance company OR from your state exchange – but always contact an experienced broker to help you figure it out!  All companies have to offer these policies without a lot of differences (which might vary slightly from state to state).  So when shopping for new plans,  it’s only about the company and their reputation, doctor network and drug formulary.

POS Plans (Point of Service)

No, not THAT POS abbreviation 🙂   Point-Of-Service network model which combines the HMO and PPO models in one plan.

PPACA (Patient Protection and Affordable Care Act)

The name of the health care reform law President Barack Obama signed on March 23, 2010.

PPO – Preferred Provider Organization

With a PPO, you can see any doctor you like, or visit any hospital usually within a preferred network of providers.  You always have the option of seeing doctors or visiting hospitals that are “out-of-network,” but you will spend more of your own money on medical expenses.   In a PPO, you do not have to choose a Primary Care Physician, and you can usually see any specialist without a referral (although a recommendation is always nice!).   The PPO offers choice, flexibility, and more control over your medical life.

Pre-existing Condition

An injury, illness, or physical condition which existed prior to the issue of a health, disability, life, or Long Term Care policy

Premium

What you pay to own the policy

Professional Services

All medical services you receive, from a doctor, lab, hospital, etc.

QLE/SEP (Qualifying Life Event / Special Enrollment Period)

This is the only exception to the Open Enrollment rule.  If you have a QLE, you have a 60 day SEP to buy new individual health insurance or make changes to your existing plan.  Examples of QLE’s include marriage, divorce, birth of a child, moving to a new state, recent immigration to the US, loss of employer sponsored health insurance, COBRA running out, and more.  Please remember that ALL insurance companies are requiring paper documentation to prove your Qualifying Life Event (QLE).

Respite Care

In Long Term Care insurance, nursing home or home care that temporarily replaces the existing level of support received from an informal, non paid caregiver for the purpose of providing care and supervision to the patient while relieving the caregiver

SEP/QLE (Special Enrollment Period / Qualifying Life Event)

This is the only exception to the Open Enrollment rule.  If you have a QLE, you have a 60 day SEP to buy new individual health insurance or make changes to your existing plan.  Examples of QLE’s include marriage, divorce, birth of a child, moving to a new state, recent immigration to the US, loss of employer sponsored health insurance, COBRA running out, and more.  Please remember that ALL insurance companies are requiring paper documentation to prove your Qualifying Life Event (QLE).

SHOP

Small Business Health Option Plans.   SHOP is part of your state’s Exchange/Marketplace (in CA it’s Covered California), where small businesses (with under 50 employees) can shop for  group health insurance for their employees.    However, there is no requirement for small employers to provide any insurance at all.

Silver / Gold / Platinum / Minimum Coverage / Bronze aka Metallic Tiers

Post Obamacare, all health insurance companies have to offer the same metallic tiers.  You can purchase these plans directly from the insurance company OR from your state exchange – but always contact an experienced broker to help you figure it out!  All companies have to offer these policies without a lot of differences (which might vary slightly from state to state).  So when shopping for new plans,  it’s only about the company and their reputation, doctor network and drug formulary.

Single Payer

This model of health insurance creates one source of payment to providers, which could be State or Federal.   The State or Feds would collect taxes and federal funds then decided how to distribute payment to providers of medical services, and control when you can see your doctor and what services you could get.

Single Payer

A government run health care program.   A combination of federal funds, state funds, and (a lot of) taxpayer’s money to pay for medical services.

Skilled Nursing Facility

State licensed institutional setting which provides nursing and rehabilitative care provided by or under the direction of skilled medical personnel – available 24-hours a day & ordered by a physician under a treatment plan.

Socialized medicine

Aka universal health coverage, a government-run insurance system combined with private insurance policies.

Subsidies

As of 1/1/14, under the Affordable Care Act (ACA), this is the amount of help you will get from the federal government to help you pay for health insurance IF you qualify and only IF you buy health insurance through an online Exchange, aka Marketplace or in California known as Covered California.  Subsidies are also known as an Advance Premium Tax Credit (APTC).

Tax Credits

Part of the Affordable Care Act (Obamacare),  people get a tax credit to help them pay for their insurance premium.  Tax credit eligibility is determined by the FPL guidelines (your annual household income).

Term Life Insurance

Pure life insurance that protects you for a fixed period of time, no bells and whistles here

Underwriting

The process used by an insurance company to assess the risk of providing insurance to you, meaning they look at your current health status and history

Whole Life Insurance

Along with its siblings, Universal and Variable, combines life insurance with an investment feature (also known as the Cash Value)

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