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Hassle-Free Health Coverage: Definitions of Key Health Insurance Terms

ACCIDENTAL

In a health insurance policy, accidental means an unexpected cause of bodily injury. A related term- accidental means-the mishap itself must be accidental...not just the resulting injury. An example: You are chopping wood when the ax slips from your hand and cuts your foot; this is accidental means. However, if your finger gets in the way of the ax, it may not count as accidental means.

ACCIDENTAL DEATH AND DISMEMBERMENT

AD&D coverage is a policy or a provision of a policy that pays either a specific amount or a multiple of a weekly disability benefit. The full coverage takes effect if the policyholder loses his or her sight-or two limbs-in an accident. (A lower amount is payable if the person loses one eye or one limb.)

ACUTE CARE

Acute Care means skilled, medically necessary care provided by medical and nursing professionals in order to restore the person to health or the ability to function. For example, acute care would be rendered to persons recovering from major surgery.

ADDITIONAL INSURED

A person other than the named insured who is protected under the terms of a policy. Usually, additional insureds are added by endorsement or are described in the definition of insured in the policy.

AGE CHANGE

The date on which a persons age-for insurance purposes-changes is an important coverage point. In most policies, health insurers use the age at the previous birthday for rate determinations.

ASSISTED LIVING FACILITY

Assisted Living Facility means a senior residential community which makes custodial and nursing care available to residents who need it, while allowing them to live in a home-like setting.

BASIC PREMIUM

This is a fixed cost charged in a retrospective rating plan. The basic plan is a kind of starting point-a percentage of the standard premium, designed to give the insurance company enough money to cover administrative expenses and commissions.

BENEFIT PERIOD

The benefit period defines the period during which you are eligible for benefits. Usually, a 90-day benefit period starts with each illness and commences the day you are admitted to a hospital and ends when you haven't been hospitalized for a period of 60 consecutive days.

CAPITATION

Capitation (CAP) is the fixed amount of money paid on a monthly basis to an HMO medical group or to an individual health provider for the full medical care of an individual.

CASE MANAGEMENT

Case Management means the assessment of a person's LTC needs and the appropriate recommendations for care, monitoring and follow-up as to the extent and quality of the services provided.

CASE MANAGER

A case manager is a health professional (e.g. nurse, doctor, social worker) affiliated with a health plan who is responsible for coordinating and approving the medical care of an individual enrolled in a managed care plan.

CLOSED PANEL

This is a system in which insured people must select one primary care physician who will refer patients to other health care providers within the plan. This is also called a closed access or gatekeeper system.

CO-INSURANCE

Co-Insurance is the percentage of your medical bills that you are expected to pay. Co-Insurance payments usually constitute a fixed percentage of the total cost of a medical service covered by the plan. If a health plan pays 80 percent of a physicians bill, the remaining 20 percent which the member pays is referred to as co-insurance.

CO-PAYMENT

A co-payment is the fee paid by a plan member for medical services. A co-payment would be the out-of-pocket expenses you are expected to pay, such as $10 for an office visit or $5 for a prescription.

COVERED EXPENSES

Health care expenses incurred by an insured person that qualify for reimbursement under the terms of a policy are, simply, covered expenses. This is an easy concept to describe in the abstract-but it can become quite complicated in a dispute.

DEDUCTIBLE

The sum of money that an individual must pay out of pocket for medical expenses before a health plan reimburses a percentage of additional covered medical expenses is called the deductible. Deductibles for family coverage are often $200 to $500 per year.

ELIMINATION PERIOD

Elimination Period (EP) means the period of time, usually expressed in days or months, at the beginning of a confinement in a long-term care facility, during which no benefits are payable. The EP could be defined as a "time deductible."

FEE-FOR-SERVICE

Health insurance plans which reimburse physicians and hospitals for each individual service they provide are called fee-for-service plans. These plans allow insureds to chose any physician or hospital.

FORMULARY

This is a health plan's list of approved prescription medications for which it will reimburse members or pay for directly.

GATEKEEPER PHYSICIAN

The primary care physician who directs the medical care of HMO members is the gatekeeper physician. The primary care physician determines if patients should be referred for specialty care.

HEALTH CARE FINANCING ADMINISTRATION

The Health Care Financing Administration (HCFA), part of the Department of Health and Human Services, administers Medicare and Medicaid with the assistance of Social Security Administration offices throughout the country. The HCFA establishes standards for medical providers and organizations if they are to satisfy the requirements to be certified as a qualified Medicare provider.

HEALTH MAINTENANCE ORGANIZATIONS (HMOS)

These are health plans that contract with medical groups to provide a full range of health services for their enrollees for a fixed pre-paid, per-member fee. There are three different kind of HMOs:

Group model HMOs contract with independent groups of physicians that provide coordinated care for large numbers of HMO patients for a fixed, per-member fee. These groups will often care for the members of several HMOs.

Staff model HMOs employ salaried physicians and other health professionals who provide care solely for members of one HMO.

Independent practice associations (IPA) contract with groups of independent physicians who work in their own

offices. These independent practitioners receive a per-member payment or capitation from the HMO to provide a full range of health services for HMO members. These providers often care for members of many HMOs.

A growing number of HMOs now offer a Point of Service (POS) option. These "escape hatch" plans allow HMO members to seek care from non-HMO physicians, but the premiums for POS plans are more costly than those for traditional HMOs. Moreover, when an HMO member receives care from a non-participating physician or hospital, the HMO pays far less than its usual 100 percent coverage of necessary medical services.

HEALTH INSURANCE PLAN

This term includes an HMO, preferred provider organization or traditional health insurance plan that covers a set range of health services.

HOME HEALTH CARE

Home Health Care is care received at the patient's home, such as part-time skilled nursing care, speech, physical or occupational therapy, or part-time services of home health aides.

HOSPICE CARE

Hospice Care refers to nursing services provided to the terminally ill. It's offered in a hospice, a nursing home, or in the patient's home-where nurses and social workers can visit on a regular basis. The purpose of the care is to keep the patient comfortable and to enable the patient to die with dignity.

INDEMNITY CONTRACTS

Indemnity Contracts are policies which provide a daily benefit, such as $50, $60, $70 per day, for each day of confinement in a hospital or long-term care facility. This method of payment can be contrasted with an expense incurred contract which reimburses for actual expenses incurred while confined.

INTERMEDIATE NURSING CARE

Medically supervised health care and services for individuals who do not require the level of care and supervision provided by hospitals or nursing homes is called Intermediate Nursing Care. Typically, the degree of care provided is between acute and custodial care.

INTERMEDIARY

Intermediary: A private insurance company contracted by the Department of Health and Human Services for the purpose of processing payments to patients and health care providers.

LIMITED HEALTH INSURANCE

These special health insurance policies provided limited coverage for specific injuries or illnesses-such as travel accidents, particular diseases and hospital income.

LONG-TERM CARE

Long-Term Care (LTC) is care which is provided for persons with chronic disease or disabilities. The term includes a wide range of health and social services which may involve adult day care, custodial care, home health care, hospice care, intermediate care, respite care and skilled nursing care. LTC does not include hospital care.

MANAGED CARE

Managed care refers to a broad and constantly changing array of health plans which attempt to control the cost and quality of care by coordinating medical and other health-related services. The vast majority of Americans with private health insurance are currently enrolled in managed care plans.

Proposals currently being considered by the United States Congress would, if enacted, guarantee that many millions of Americans who are covered by Medicare and Medicaid will soon join managed health care plans. The following are some of the key terms associated with managed care.

MEDICAID

Medicaid is the federal-state health insurance program for low income Americans. Medicaid also foots the bill for nursing-home care for the indigent elderly and mentally disabled.

MEDICARE

Medicare is a federal health insurance program for persons age 65 or older, individuals with permanent kidney failure and certain persons who are totally disabled. The program was implemented in 1965 as part of the amendments to the Social Security Act of 1935.

Hospital Insurance of Medicare provides for inpatient hospital care, skilled nursing home care, home health care and hospice care. Part A of Medicare is automatically made available to persons age 65 who have been covered under Social Security.

Medical Insurance of Medicare is a voluntary program which covers physician's services, physical therapy, ambulance expenses, medical equipment and generally, out-patient services. A premium is charged to the individual when Part B coverage is elected.

NURSING HOME CARE

Nursing Home Care includes nursing and custodial care provided in a nursing home setting.

PEER REVIEW

Groups of doctors who are paid by the federal government to conduct pre-admission, continued stay and reviews of services provided to Medicare patients by Medicare approved hospitals are referred to as peer review organizations (PROs).

PREVENTIVE CARE

An approach to health care which emphasizes preventive measures such as routine physical exams, diagnostic tests (e.g. PAP tests), immunization, etc.

PREFERRED PROVIDER ORGANIZATION

A health plan that encourages savings by establishing a network of preferred providers-health professionals who agree to provide medical services to plan members for discounted rates. Plan members may go "out of network" to seek medical services from non-affiliated medical professionals. Members are charged higher co-payments for this option.

PRIMARY CARE PHYSICIAN

These physicians provide basic health services to their patients. General practitioners, pediatricians, family practice physicians and internists are recognized by health plans as primary care physicians. HMOs require that members be assigned to a primary care physician who functions as a gatekeeper.

PROSPECTIVE PAYMENT

A system of Medicare reimbursement which bases most hospital payments on the patient's diagnosis at the time of hospital admission rather than the costs the hospital actually incurs prior to discharging the patient is called a prospective payment system.

RESPITE CARE

Normally associated with hospice care, respite care is for the family of the patient. The patient may be admitted to a nursing home or hospice for care. This care constitutes a respite-or break-for family members taking primary care of the patient.

RISK CONTRACT

This is an arrangement through which a health provider agrees to provide a range of medical services to a population of patients for a pre-paid sum of money. The physician is responsible for managing the care of these patients and risks losing money if expenses exceed the pre-determined amount.

SKILLED NURSING CARE

Skilled Nursing Care is daily nursing and rehabilitative care that is performed only by, or under the supervision of, skilled professional or technical personnel. The care is based on a physician's orders and performed directly by or under the supervision of a registered nurse. This care would include administering prescription drugs, medical diagnosis, minor surgery, etc.

A Skilled Nursing Facility is a facility, licensed by the state, which provides 24-hour-a-day nursing services under the supervision of a physician or registered nurse.

UTILIZATION REVIEW

This includes the various methods used by health plans to measure the amount and appropriateness of health services used by its members. These checks can occur before, during and after services have been sought or received from health professionals.

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