Health Insurance Definitions

A

Access
A patient's ability to access medical care.

Accident Frequency
The number of times an accident occurs. Used in predicting losses upon which premiums are based.

Accident Insurance
Covers accidental bodily injury.

Accident
An unforeseen, unintended event; something unexpected; fortuitous.

Accidental Death Benefit
An extra benefit, typically of the same value as the face of the contract, payable in addition to other benefits resulting from accidental death.

Accrete
A Medicare term referring to the process of adding new people to a health plan.

Act of God
Natural occurrence beyond human control or influence. Such acts of nature include hurricanes, earthquakes, and floods.

Actively-at-Work
Group insurance policies that require an employee to be at work on the day his or her benefits begin.

Activities of Daily Living (ADL)
Everyday tasks of living performed without assistance, such as eating, dressing, and personal hygiene.

Actual Cash Value
An amount equivalent to the replacement cost of a stolen or damaged property at the time of the loss, less depreciation. For vehicles, this amount would be determined by a local area private party sales and dealer quotations. Kelly Blue Book would only be used as a guide and not the final word.

Actual Charge
The amount charged by a physician.

Actuarial
Statistical calculations used to determine insurance rates and premiums, based on projections of utilization and costs for a defined risk.

Actuary
A professional trained in the mathematics of insurance and risk management. Known as a mathematician in most countries outside the United States.

Acute Care
Medical care necessary to bring someone back to good health.

Additional Drug Benefit List (Drug Maintenance List)
Prescription drugs for long-term use.

Additional Insured (Additional Interest)
An organization or individual that is protected under someone else's auto insurance policy, such as a leasing company; exists for liability purposes.

Additional Monthly Benefit
Riders for disability income policies to provide benefits during a claim's first year. They are designed to cover expenses while waiting for Social Security benefits to come into effect.

Adjustable Premium
Enables the insurance company to change the premium rate when a policy is renewed.

Adjusted Average Per Capita Cost (AAPCC)
Estimated average cost of providing Medicare benefits, by county.

Adjuster
A person who investigates and settles insurance claims.

Administrative Costs
Costs related to utilization review, insurance marketing, medical underwriting, agents' commissions, premium collection, claims processing, insurer profit, quality assurance programs and risk management.

Administrative Services Only
An insurer's processing services, provided when the insurer is not funding loss payments.

Admitted Company
An insurance company authorized to do business in a given state.

Age Change
Occurs when a person's age changes, but only for insurance reasons; this often occurs half way between his or her actual birthdates.

Age Limits
The ages below or above which the insurance company will not issue a given policy or renew a policy in force.

Agent
A person who sells insurance products of the insurance company; the person responsible for your insurance coverage needs.

Aggregate Indemnity
A maximum amount that any claimant is able to collect.

Alien Insurance Company
An insurance company incorporated under the laws of a foreign country .

Allied Health Personnel
Health personnel performing duties normally done by dentists, physicians, nurses, or optometrists.

Allocated Benefits
Payment for specific purposes, up to a maximum amount.

Allowable Costs
Charges that are covered by a policy.

Alternative Delivery Systems
Alternate methods of covering health care costs, such as HMO's or IPAs.

Ancillary
Additional services for which fees may be charged.

Anti-Theft Device
A device designed to minimize the chance that an automobile will be vandalized or stolen, or to hasten it's recovery. Alarm systems, keyless entry, and motion detectors are a few examples that could affect insurance premiums.

ASO (Administrative Services Only)
An insurer's processing services, provided when the insurer is not funding loss payments.

Assigned Risk
A risk assigned to insurers by law, which they may not otherwise accept.

Assignment of Benefits
A method whereby a patient pays his or her medical benefits to a hospital or physician.

Assignment
Payment of Medicare benefits directly to the provider.

Auto Insurance Premium Discount
A discount offered to drivers for such safeguards as air bags, seat belts, good driving record, anti-theft devices, multiple vehicles, etc.

Automobile Insurance
Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.

Automobile Insurance Plans (2)
Assigned risk plans, set up by the state to assist those who cannot obtain standard insurance. See Assigned Risk.

B

Backdating
Making the effective date of a policy earlier than the date for which it was applied; this often results in a lower premium.

Base Capitation
The total amount necessary to cover all health care costs of one person, not including mental health, substance abuse or pharmaceutical services.

Basic Auto Policy
Still covers substandard risks, two-wheel motorized vehicles, and commercial vehicles; has been largely replaced by the Basic Auto Policy, which covers both physical damage and liability insurance.

Basic Hospital Expense Insurance
Provides coverage for hospitalization expenses over a certain period.

Basic Limits of Liability
The lowest level of liability coverage that can be purchased, as determined by law. Increased coverage, with increased premiums, is available.

Benefit Levels
The maximum amount available to someone for having had specific services.

Benefit Package
A description of services provided by a given health insurance contract.

Benefit Period
Defines the period during which Medicare benefits are available.

Binder
A temporary or preliminary agreement which provides coverage until a policy can be written or delivered.

Blanket Medical Expense
A provision that covers all medical costs, including drugs and treatment, without a cap.

Blue Book (Red Book)
A publication used for the determination of values for used automobiles and trucks.

Blue Cross
Nonprofit hospital expense prepayment plans.

Bodily Injury Liability
Legal liability for causing injury or death.

C

Cancellation
The termination of insurance coverage during the policy period.

Capitation (CAP)
A monthly payment to a health care provider, in return for which health services are provided.

Carrier
A commercial insurer that processes Part B claims payments, and contracted by the Department of Health and Human Services.

Claim
A formal request for payment of a loss under an insurance contract.

Claimant
The first or third party. That is any person who asserts right of recovery.

Clause
A section or paragraph in an insurance policy that explains, defines or clarifies the conditions of coverage.

Closed Access (Closed Panel)
Requires the insured to select one primary care physician, who is the only one able to refer the patient to other health care providers.

Co-payment
A form of medical cost sharing in a health insurance plan that requires an insured person to pay a fixed dollar amount when a medical service is received. The insurer is responsible for the rest of the reimbursement.

Coinsurance
A form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any, was paid.

Collision Coverage
Insurance coverage which pays for damage to the policyholder's car caused by collision.

Combined Single Limit
Bodily Injury and Property Damage coverage, combined as a single amount.

Commission
Paid to the insurance agent as compensation.

Community Rating
A rating system that does not consider individual characteristics of applicants for health insurance, but only the costs to the community in which they live.

Composite Rate
A standard group rate, without consideration of marital or family status.

Comprehensive Coverage
Coverage in automobile insurance providing protection in the event of physical damage (other than collision) or theft of the insured car.

Comprehensive Major Medical
An insurance plan with a low deductible, high maximum benefits, and coinsurance.

Conditionally Renewable
Allows a contract to be renewed until a specific date or age; the insurer may decline the renewal only under specific conditions.

Confining
Sickness that requires the insured to remain indoors; such a condition is often required for coverage.

Continuation
Allows terminated employees to retain their group health coverage.

Continuous Coverage (Continuous Liability Insurance)
The length of time in which insurance has been maintained on a particular vehicle.

Contributory
Applies to employee plans for which the employee pays part of the premium.

Conventional Indemnity Plan
An indemnity that allows the participant the choice of any provider without effect on reimbursement. These plans reimburse the patient and/or provider as expenses are incurred.

Conversion Privilege
Allows a member of a group health or life insurance plan to convert it to an individual plan, should he or she no longer belong to the group.

Coordination of Benefits (COB)
Determines the primary carrier when an insured is covered by more than one policy.

Cosmetic Procedures
Procedures that are not medically necessary, but instead are intended to improve one's appearance.

Cost of Living Benefit
Estimated average cost of providing Medicare benefits, by county.

Cost Sharing
An arrangement whereby the insured pays part of his or her health costs, including deductibles, coinsurance, and co-payment.

Covered Person
Someone who pays policy premiums on a policy for which he or she is eligible.

Credit Health Insurance
A group disability income insurance policy for which a creditor is protected in case the debtor becomes disabled.

Credit Insurance
Insurance for creditors to protect them against the possible death or disability of the debtor.

Custodial Care
Care for personal needs, such as eating or bathing, which can be done by someone who is not a medical professional.

Customized Equipment (Special Equipment)
Items not covered under standard auto insurance plans, such as electronic equipment, aftermarket exterior pieces, or additional interior amenities.

D

Date of Service
The date one which health service was rendered.

Decline
An insurance company refuses to accept the request for insurance coverage.

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 medical services. Plans may have both per individual and family deductibles.

Defensive Driving Course
A driver improvement course, offered privately or through the Department of Motor Vehicles, which may reduce premiums for some drivers.

Delete
The process of removing someone from Medicare coverage.

Dental Insurance
A group insurance plan that covers certain dental services.

Department of Health and Human Services
A federal department with responsibility for social service programs and Medicare.

Dependent Coverage
Insurance covering the head(s) of a family, and their dependent children.

Depreciation
A decrease in value due to age, wear and tear, etc.

Designated Mental Health Provider
An organization that provides mental health and substance abuse services, and is hired by a health plan.

Disability Income Insurance
Provides payments to replace lost income when the insured is unable to work due to sickness or injury.

Dismemberment Benefit
The benefits payable for loss of various parts of the body.

Double Indemnity
Payment of double the standard benefit under certain circumstances, such as that of accidental death.

Dread Disease Policy
Coverage issued for all medical expenses, up to a limit, resulting from specified diseases.

Driver Education
A course covering at least 30 hours of professional classroom instruction.

Driver Improvement Courses
Optional coverage that covers any vehicle operated by the insured person.

Driver Training
A course covering at least six hours of behind-the-wheel instruction.

Drug Formulary
A schedule of prescription drugs that may be covered under a policy.

Drug Maintenance List (Additional Drug Benefit List)
Prescription drugs for long-term use.

Duplication of Benefits
Duplication in coverage between two or more organizations or insurance companies.

E

Earned Premium
That part of the premium applicable to the expired part of the policy period, including the short-rate charge on cancellation.

Effective Date (Inception Date)
The date on which an insurance policy coverage starts.

Elective Benefits
Allows the insured to choose to receive lump sum payments instead of interrupted payments for certain types of injuries.

Eligibility Date
The date on which a person is eligible to receive benefits.

Eligibility Requirements
Requirements one must fulfill in order to receive coverage, often for a group insurance or pensions plan.

Eligible Dependent
A dependent of an insured, for whom a policy provides coverage.

Eligible Expenses
Expenses that a policy will cover.

Emergency Accident Benefit
A group medical benefit that covers emergency treatment expenses.

Employee Benefit Program
Benefits offered by an employer.

Employee Contribution
An employee's share of his or her premium costs.

Employer Contribution
The cost of a health plan to an employer.

Encounter
Each visit to a health care provider.

Endorsement (Rider)
Amendment to the policy used to add or delete coverage.

Enrollment Period
The period during which an employee may sign up for a contributory health plan.

EOB (Explanation of Benefits)
A statement of services rendered, and their costs to the insurance plan and to the patient.

EPO (Exclusive Provider Organization Plan)
A more restrictive type of preferred provider organization plan under which employees must use providers from the specified network of physicians and hospitals to receive coverage; there is no coverage for care received from a non-network provider except

Evidence of Insurability
Evidence required for the underwriting of a policy.

Examination
A medical exam taken by an applican't for life or health insurance.

Excepted, Excluded or Probationary
A period between the date on which a health policy comes into effect, and the date that coverage begins for some or all physical conditions.

Exclusion
Certain causes and conditions, listed in the policy, which are not covered.

Exclusive Provider Organization Plan (EPO)
A more restrictive type of preferred provider organization plan under which employees must use providers from the specified network of physicians and hospitals to receive coverage; there is no coverage for care received from a non-network provider except

Expected Claims
Estimated claims for a person or group, based on statistics.

Expense
A policy's share of a company's operating costs, which are used to determine premium rates and dividends.

Experience Rating
Determination of the premium rate for an individual risk, made partially or wholly on the basis of that risk's own past claim experience.

Experience
The record of claims made or paid within a specified period.

Experimental or Unproven Procedures
Health care services that are determined to be scientifically unproven or ineffective.

Expiration Date
The date on which the policy ends.

Explanation of Benefits (EOB)
A statement of services rendered, and their costs to the insurance plan and to the patient.

Extended Care Facility
An institution, such as a nursing home, which provides 24-hour nursing care.

Extended Coverage
Allows benefits to be distributed after termination of coverage.

Extended Non-Owner Liability
Policy providing broader liability coverage for certain people (such as family members) who operated a trailer or automobile that does not belong to them; this covers carrying people or property for a fee, or using vehicles provided by employers to employees who do not own vehicles themselves.

F

Family Automobile Policy
A package for both liability and physical damaged to the vehicle(s) of the insured; has been replaced by the Personal Auto Policy.

Family Dependent
Someone who is eligible for coverage because or she is a child or spouse of the insured.

Family Expense Policy
A policy that provides coverage for family medical expenses.

Fee-for-Service Reimbursement
A health care system in which providers are paid for each individual service.

Fee Maximum
The maximum amount payable to a provider for a specific service.

Fee Schedule
A list of maximum fees for providers.

Financial Ratings
Reflects the financial strength of insurance companies, and their ability to meet their obligations to their policyholders. Major rating organizations include Standard & Poor's, Moody's, and AM Best.

Financial Responsibility Laws
Laws requiring motorists to have enough money to compensate those whom they injure; this is done through liability insurance requirements, set out by law.

First Party Benefits (PIP)
Coverage present in no-fault states which pays medical, loss of income, death and/or disability, and loss of services incurred as a result of an automobile accident.

Flat Cancellation
The cancellation of a policy as of it's effective date, without any premium charge.

Flexible Benefit Plan
A program that can be modified according to the needs of employees.

Flexible Benefits Plan (IRS 125 Plan)
A benefit program under Section 125 of the Internal Revenue Code that offers employees a choice between permissible taxable benefits, including cash, and nontaxable benefits such as life and health insurance, vacations, retirement plans and child care.

Flexible Spending Accounts or Arrangements
Accounts offered and administered by employers that provide a way for employees to set aside, out of their paycheck, pretax dollars to pay for the employee's share of insurance premiums or medical expenses not covered by the employer's health plan.

Fraternal Insurance
Insurance for a specific group of people who are members of a lodge or fraternal order.

Free Look
The right of the owner of the policy to examine the policy, and return it for a full refund if necessary; this usually lasts for at least ten days.

FSA (Flexible Spending Accounts or Arrangements)
Accounts offered and administered by employers that provide a way for employees to set aside, out of their paycheck, pretax dollars to pay for the employee's share of insurance premiums or medical expenses not covered by the employer's health plan.

Fully Insured Plan
A plan where the employer contracts with another organization to assume financial responsibility for the enrollees' medical claims and for all incurred administrative costs.

Funding Methods
The method with which an employer pays for health insurance.

G

Gap Insurance
Optional coverage making up for the difference between the market value of a vehicle and it's outstanding payments.

Gatekeeper
Under some health insurance arrangements, a gatekeeper is responsible for the administration of the patient's treatment; the gatekeeper coordinates and authorizes all medical services, laboratory studies, specialty referrals and hospitalizations.

Generic Drug
A drug produced after an identical brand name product's patent has expired.

Good Student Discount
A discount for students who achieve high academic standing.

Grace Period
Allows a policyholder to be in good standing without paying the premium by it's due date, usually for up to a month.

Grievance Procedure
Enables an insured to make complaints regarding his or her coverage.

Group Certificate
Official document showing that it's holder is a member of a group contract.

Group Model HMO
An HMO that contracts with a single multi-specialty medical group to provide care to the HMO's membership. The group practice may work exclusively with the HMO, or it may provide services to non-HMO patients as well. The HMO pays the medical group a negot.

Group Purchasing Arrangement
Any of a wide array of arrangements in which two or more small employers purchase health insurance collectively, often through a common intermediary who acts on their collective behalf.

Group
Coverage of several individuals under a single contract, usually provided for a workplace.

Guaranteed Insurability
An option that allows addition al coverage to be purchased at certain points in the future, without having to provide evidence of insurability.

Guaranteed Renewable
A contract that gives the policyholder the right to continue a policy at the same premium level for a specified period, without any change to the contract.

H

Health Care Financing Administration (HCFA)
Part of the Department of Health and Human Services that administers Medicare and Medicaid.

Health Maintenance Organization (HMO)
A health care system that assumes both the financial risks associated with providing comprehensive medical services (insurance and service risk) and the responsibility for health care delivery in a particular geographic area to HMO members.

Health Service Agreement (HSA)
An agreement outlining benefits, enrollment procedures, and eligibility standards.

Health Services
Benefits of a health contract.

Hit-and-Run
Describes an accident from which the perpetrator flees, without providing information or assistance.

Home Health Care
Health care received in the home.

Hospice
An organization to provide pain relief and support services for the terminally ill.

Hospital Affiliation
A contract for certain hospitals to provide care for members of a certain health plan.

Hospital Alliances
A group of hospitals that share services and thus reduce their costs.

Hospital Income Insurance
Provides a weekly or monthly income payment to the insured while he or she is in hospital.

Hospital Indemnity
Coverage that provides daily, weekly, or monthly limits, without considering the actual cost of care while in hospital.

Hospitalization Insurance
Provides reimbursement within the limits of the contract for expenses incurred from hospitalization.

House Confinement
A provision in some contracts that mandates confinement in the home in order to receive benefits; it is often part of loss of income benefit policies.

I

ID Card
Provides evidence of liability insurance; this is required in most states.

Identification Card
A card given to each member of an insurance plan, with which he or she may use to provide identification.

Impaired Risk
High risk(s) that put someone below a minimum standard to obtain coverage.

In-Area Services
Services specific to a certain area.

Inception Date (Effective Date)
The date on which an insurance policy coverage starts.

Incontestable Clause
A clause mandating that the insurer may not contest the statements made in an application beyond a certain period during which a policy has been in effect.

Indemnity Plan
A type of medical plan that reimburses the patient and/or provider as expenses are incurred.

Individual Contract
A contract for an individual, and sometimes the members of his or her family.

Individual Practice Association HMO
A type of health care provider organization composed of a group of independent practicing physicians who maintain their own offices and band together for the purpose of contracting their services to HMO's.

Inflation Protection
Provisions to increase benefit levels along with inflation of the cost to deliver services.

Initial Eligibility Period
The length of time throughout which applicants may apply for coverage without evidence of insurability.

Inside Limits
Modifications to hospital expense benefit maximums, as well as the number of days through which benefits will be paid.

Insurance In Force
The annual premium for existing insurance contracts.

Intentional Injury
Injury inflicted on purpose. Most intentional injury is covered, except in the case of self-inflicted intentional injury, for example.

Intermediate Care
An intermediate level of care that, while under the supervision of a doctor or registered nurse, is inferior to that described as skilled nursing care.

Intermediate Report
A claim report resulting from an ongoing disability.

Invalidity
Sickness.

IRS 125 Plan
A benefit program under Section 125 of the Internal Revenue Code that offers employees a choice between permissible taxable benefits, including cash, and nontaxable benefits such as life and health insurance, vacations, retirement plans and child care.

L

Lapse in Coverage (Policy Lapse)
A period during which a policy has been canceled or terminated by the insurance company for a variety of causes.

Large Claim Pooling
A system with which to help stabilize fluctuations in premiums, by charging large claims to a pool of many smaller claims.

Legend Drug
A drug that cannot be dispensed without a prescription.

Length of Stay (LOS)
The number of days that a patient stays in a health care facility.

Living Benefits Rider
A rider that provides benefits for the terminally ill.

Living Need Benefits
Life insurance combined with long-term care insurance. A certain portion of the life insurance death benefit can help offset nursing home or medical expenses; this reduces the face amount of the life policy.

Long Term Care Facility
A licensed facility that provides nursing and custodial care.

Long Term Care (LTC)
Care for those with chronic disease or disability. Includes many medical services.

Long-Term Disability Insurance
Group or individual coverage for long periods of time.

LOS (Length of Stay)
The number of days that a patient stays in a health care facility.

Loss-Of-Income Benefits
Benefits issued to compensate for lost income due to one's inability to work due to injury or sickness.

LTC (Long Term Care)
Care for those with chronic disease or disability. Includes many medical services.

M

Maintenance of Effort
Requires employers to provide eligible employees with benefits equivalent to those duplicated by the Medicare Catastrophic Coverage Act.

Major Hospitalization Policy
Covers only those expenses resulting from hospitalization.

Major Medical Insurance
A type of insurance with a high limit for benefits, but with a large deductible; they sometimes have a coinsurance clause, and cover in hospital expenses or out of hospital expenses.

Managed Care Plan
Generally provides comprehensive health services to their members, and offer financial incentives for patients to use the providers who belong to the plan.

Managed Care Provisions
Features within health plans that provide insurers with a way to manage the cost, use and quality of health care services received by group members.

Managed Care
Health care with the goal of providing cost effective, good quality care.

Mandated Benefits
Benefits that must, by law, be paid

Manual Rates
Rates based on the average claim data for many different group, and then readjusted for a particular group.

MAP (Maximum Assistance Plan)
Assists buyers to find insurance of limited availability.

Mathematician
A professional trained in the mathematics of insurance and risk management. Known as an actuary in the United States.

Maximum Allowable Costs List (MAC List)
Prescription benefits based on the cost of the generic drug.

Maximum Disability Policy
A type of disability income insurance that may not be canceled, limiting the insurer's liability for one single claim.

Maximum Out-of-Pocket Costs
The maximum amount for which one will pay, including co-payments, deductibles and coinsurance.

Maximum Out-of-Pocket Expense
The maximum dollar amount a group member is required to pay out of pocket during a year. Until this maximum is met, the plan and group member shares in the cost of covered expenses. After the maximum is reached, the insurance carrier pays all covered expenses.

Maximum Plan Dollar Limit
The maximum amount payable by the insurer for covered expenses for the insured and each covered dependent while covered under the health plan.

Medicaid
A medical benefits program, subsidized by the federal government, administered by the states.

Medical Expense Insurance
Health coverage for hospital, surgical, and other medical benefits.

Medical Payments
Covers medical and funeral expenses, as well as passenger injuries, resulting from an auto accident, regardless of who is at fault. It also covers other people's vehicles that you are driving with permission, and injuries sustained as pedestrians.

Medical Savings Accounts (MSA)
Savings accounts designated for out-of-pocket medical expenses. In an MSA, employers and individuals are allowed to contribute to a savings account on a pre-tax basis and carry over the unused funds at the end of the year.

Medical Supplies
Items needed to carry out proper treatment.

Medically Necessary
A treatment or service necessary to a patient.

Medicare Supplement Insurance
Insurance sold to supplement that provided by Medicare.

Medicare
A plan sponsored by the federal government to pay certain expenses for those who qualify, most of whom are at least 65 years of age.

MEWA (Multiple Employer Welfare Arrangement)
MEWA is a technical term under federal law that encompasses essentially any arrangement not maintained pursuant to a collective bargaining agreement (other than a State-licensed insurance company or HMO) that provides health insurance benefits to the employees of two or more private employers.

Minimum Premium Plan
A plan where the employer and the insurer agree that the employer will be responsible for paying all claims up to an agreed-upon aggregate level, with the insurer responsible for the excess. The insurer usually is also responsible for processing claims and administrative services.

Minimum Premium
An arrangement to have one's employer pay part of the insurance premium used to cover administration costs, while the insurer may use the remainder to play claims.

Miscellaneous Expenses
Ancillary expenses, aside from room and board; many of these fees are not covered by many policies.

Misquote
An incorrect estimate of the insurance premium.

Modified Fee-For-Service
Reimbursement provided up to a maximum on actual fees.

Mortgage Insurance
A policy to cover the mortgagor in case the mortgagee should die before having paid off the mortgage.

Motor Vehicle Record (MVR)
A record containing information gathered from a driver's application and abstracts of convictions and accidents. Also known as a DL printout.

MSA (Medical Savings Accounts)
Savings accounts designated for out-of-pocket medical expenses. In an MSA, employers and individuals are allowed to contribute to a savings account on a pre-tax basis and carry over the unused funds at the end of the year. One major difference between a Flexible Spending Account (FSA) and a Medical Savings Account (MSA) is the ability under an MSA to carry over the unused funds for use in a future year, instead of losing unused funds at the end of the year. Most MSAs allow unused balances and earnings to accumulate. Unlike FSAs, most MSAs are combined with a high deductible or catastrophic health insurance plan.

Multi-Car Discounts
A discount offered to those who have two or more vehicles listed on the same policy. Some companies may grant multi-car discounts to those who drive company vehicles.

Multi-Employer Health Plan
Generally, an employee health benefit plan maintained pursuant to a collective bargaining agreement that includes employees of two or more employers. These plans are also known as Taft-Hartley plans or jointly-administered plans. They are subject to federal but not State law (although States may regulate any insurance policies that they buy). They often self-insure.

Multiple Employer Trust (MET)
A trust for many small employers in the same industry; this allows them to purchase group health insurance for less than it would cost them individually.

Multiple Option Plan
Allows employees to choose from an HMO and a PPO.

MVR (Motor Vehicle Record)
A record containing information gathered from a driver's application and abstracts of convictions and accidents. Also known as a DL printout.

N

Named Insured
A corporation or individual designated on a policy. Others, such as those operating the vehicle with consent of the insured, may also be protected.

Named Non-Owner Policy
A policy endorsement for those who operate a vehicle that they do not own, such as someone who drives a company vehicle regularly.

National Health Insurance
Socialized medical insurance that covers nearly every citizen of a country, administered by the government.

Network Model HMO
An HMO model that contracts with multiple physician groups to provide services to HMO members; may involve large single and multispecialty groups. The physician groups may provide services to both HMO and non-HMO plan participants.

No Fault Insurance
A system in which each driver's auto insurance coverage pays for injuries and damage, no matter who caused the accident (used in some states and provinces). Most jurisdictions still allow one to sue the party responsible for the accident, up to a given threshold.

Non-Occupational Policy
Excludes coverage for workplace accidents covered by workers compensation.

Noncancellable
Health insurance that prevents the insurer from canceling or changing the contract, for a certain period.

Noncontributory
An insurance program for which an employer pays the entire premium for an employee.

Nonduplication of Benefits
A provision that allows the insurer to avoid paying for expenses already reimbursed by another company.

Nonforfeiture
Certain values in a life insurance policy that the policyholder cannot forfeit.

Nonmedical
A contract issued on the basis of it's applican't's health statement, with no medical examination required.

Nonparticipating Provider
A provider not certified to participate in Medicare.

O

Occupational Disease
Injury or disease caused by conditions in the workplace.

Open Panel (OP)
Enables a member to go to another participating provider without a referral.

Optionally Renewable
Allows the insurer to terminate coverage at any anniversary or premium due date.

Out-of-Area
Treatment given to someone outside of his or her area.

Out-of-Pocket Costs
The amount the insured must pay out of his or her own pocket.

Outcomes Measurement
A way of tracking a patient's treatment.

Overage Insurance
Insurance for those at or above the usual age limits (often 65).

P

Paid Business
New insurance that has come into effect, as the application has been signed and the first premium has been paid.

Partial Disability
A condition that allows someone to perform some, but not all, of his or her duties in the workplace.

Participant
An employee or former employee who is eligible for benefits under an employee plan.

Partnership Insurance
Life insurance sold to business partners in order to secure stability in the business should one partner die.

Per Occurrence Limit
The cap amount for which an insurance company will pay claims resulting from a single incident. It generally covers bodily injuries of everyone involved; determined for each occurrence.

Per Person Limit
The cap amount for which an insurance company will pay claims resulting from a single incident. It generally covers bodily injuries of everyone involved; determined for each person.

Personal Auto Policy (PAP)
The most common auto insurance policy being sold, written in simple language, providing coverage for liability, medical payments, uninsured motorist coverage, and physical damage.

Personal Injury Protection (PIP)
Coverage present in no-fault states which pays medical, loss of income, death and/or disability, and loss of services incurred as a result of an automobile accident.

Physical Damage Insurance
Property damage coverage for a vehicle under the 'collision insurance' and 'comprehensive insurance' sections of the policy.

Physical Damage
Any damage to an insured vehicle resulting from a collision, fire, vandalism, or theft.

Physician Contingency Reserve (PCR)
A portion of a claim that is withheld by the insurer before payment is made to the physician; this functions as incentive to ensure that proper care is received.

Physician-Hospital Association (PHO)
Alliances between physicians and hospitals to help providers attain market share, improve bargaining power and reduce administrative costs. These entities sell their services to managed care organizations or directly to employers.

PIP (Personal Injury Protection)
Coverage present in no-fault states which pays medical, loss of income, death and/or disability, and loss of services incurred as a result of an automobile accident.

Point-of-Service Plan (PHO)
An "HMO/PPO" hybrid; sometimes referred to as an "open-ended" HMO when offered by an HMO. POS plans resemble HMO's for in-network services. Services received outside of the network are usually reimbursed in a manner similar to conventional indemnity plans .

Policy Lapse (Lapse in Coverage)
A period during which a policy has been canceled or terminated by the insurance company for a variety of causes.

Policy Limit
The maximum amount a policy will pay, either overall or under a particular coverage.

Policy Period
The time in which a policy is in effect.

Policy
A written insurance contract; can include forms, riders, endorsements, and attachments.

Policyholder
Literally, the person who has possession of the policy; can refer to the policy owner and those covered under the policy. Thus the term is non-functional as commonly used.

POS Plan (Point-of-Service Plan)
An "HMO/PPO" hybrid; sometimes referred to as an "open-ended" HMO when offered by an HMO. POS plans resemble HMO's for in-network services. Services received outside of the network are usually reimbursed in a manner similar to conventional indemnity plans

PPO (Preferred Provider Organization Plan)
An indemnity plan where coverage is provided to participants through a network of selected health care providers (such as hospitals and physicians). The enrollees may go outside the network, but would incur larger costs in the form of higher deductibles,

Pre-Admission Authorization
Requires the insured to contact the insurer prior to hospitalization to receive authorization.

Preexisting Condition
A physical condition that existed before a policy came into effect; most policies do not cover such conditions.

Preferred Risk
A risk considered better than that on which a premium was calculated.

Premium Equivalent
For self-insured plans, the cost per covered employee, or the amount the firm would expect to reflect the cost of claims paid, administrative costs, and stop-loss premiums.

Premium Financing
When a policyholder contracts with a lender to pay the insurance premium on his/her behalf. The policyholder agrees to repay the lender for the cost of the premium, plus interest and fees.

Premium
Agreed upon fees paid for coverage of medical benefits for a defined benefit period. Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor.

Primary Care Network (PCN)
A group of primary care physicians for members of a certain health plan.

Primary Care Physician
A physician who serves as a group member's primary contact within the health plan. In a managed care plan, the primary care physician provides basic medical services, coordinates and, if required by the plan, authorizes referrals to specialists and hospitals.

Primary Care
Basic health care, provided by physicians.

Primary Coverage
Coverage that pays expenses before any other type of coverage.

Principal Sum
The amount paid in a single sum in case of accidental death or dismemberment.

Prior Authorization
Provides full benefits only to those who have secured prior approval for treatment.

Private Passenger Automobile
A vehicle that requires registration for personal use.

Probationary Period
A period between the date on which a health policy comes into effect, and the date that coverage begins for some or all physical conditions.

Property Damage Liability Insurance
Protection from liability to someone else's property, including loss of use. Bodily Injury and Property Damage Liability are usually included as part of the same policy.

Q

Quote
An estimate of the cost of insurance, based on information supplied to the insurance company by the applican't.

R

Reasonable and Customary Charges
Charges for services approved by Medicare; they are often specific to different areas.

Rebate
A reduction of a premium.

Recurrent Disability
Disability that results from a prior disability.

Red Book (Blue Book)
A publication used for the determination of values for used automobiles and trucks.

Referral
When a patient is referred to another physician or hospital.

Rehabilitation Clause
Assists a disabled policyholder in finding a new vocation.

Reinstatement
The restoring of a cancelled policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.

Reinsurance
The acceptance by one or more insurers, called reinsurers or assuming companies, of a portion of the risk underwritten by another insurer that has contracted with an employer for the entire coverage.

Renewal
The process by which someone can keep an existing policy in effect.

Rental Reimbursement
Optional coverage that will reimburse the costs of a rental car while your vehicle is in repair.

Replacement Cost
The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one once the repairs or purchases have been made.

Replacement Value
The full cost to repair or replace the damaged property with no deduction for depreciation, subject to policy limits and contract provisions.

Residual Disability
The period in which one returns to work with a partial disability, immediately following a full disability

Residual Income
Benefits paid when the insured can perform some, but not all, of his or her normal tasks.

Restoration of Benefits
A provision to raise one's maximum lifetime benefit, in small amounts each year.

Retention
The amount of a premium that the insurance company uses for administrative purposes.

Return of Premium
A provision to pay benefits equal to all premiums paid, minus claims, if total claims over a given period do not exceed a specified amount.

Rider (Endorsement)
Amendment to the policy used to add or delete coverage.

Risk
A term used to designate an insured or a peril insured against.

S

Safe Driver Plan
A rating system to determine premium costs based on a driver's record of accidents and traffic convictions.

Second Surgical Opinion
A cost containment technique for patients and insurance companies determine the necessity of a certain procedure, by soliciting a second medical opinion.

Secondary Care
Medical care provided by professionals who have no direct contact with patients.

Self-Funded Plan
A plan in which the employer, not the insurance company, pays the claims.

Self-Insured Plan
A plan offered by employers who directly assume the major cost of health insurance for their employees. Some self-insured plans bear the entire risk. Other self-insured employers insure against large claims by purchasing stop-loss coverage. Some self-insured employers contract with insurance carriers or third party administrators for claims processing and other administrative services; other self-insured plans are self-administered. Minimum Premium Plans (MPP) are included in the self-insured health plan category. All types of plans (Conventional Indemnity, PPO, EPO, HMO, POS, and PHOs) can be financed on a self-insured basis. Employers may offer both self-insured and fully insured plans to their employees.

Service Benefits
Medical expenses expressed in days of coverage, not costs.

Short-Rate Cancellation
When the policy is terminated prior to the expiration date at the policyholder's request. Earned premium charged would be more than the pro-rata earned premium. Generally, the return premium would be approximately 90 percent of the pro-rata return premium. However, the company may also establish it's own short-rate schedule.

Short-Term Disability Income Policy
Provides short term benefits (usually for less than two years).

Short-Term Disability Insurance
A policy written to cover short term disabilities, usually for up to two years.

Single Carrier Replacement
Where one carrier replaces several carriers.

Special Equipment (Customized Equipment)
Items not covered under standard auto insurance plans, such as electronic equipment, aftermarket exterior pieces, or additional interior amenities.

Specified Disease Policy
Coverage issued for all medical expenses, up to a limit, resulting from specified diseases.

Split Dollar Coverage
Disability Income premiums paid by the employer and employee.

Split Limit
An insurance policy with limits for different types of insurance (such as bodily injury or property damage).

Staff Model HMO
A type of closed-panel HMO (where patients can receive services only through a limited number of providers) in which physicians are employees of the HMO. The physicians see patients in the HMO's own facilities.

Standard Provisions
Provisions that must, by law, appear in all policies. They will vary from jurisdiction to jurisdiction.

Step-Rate Premium
Premiums that rise at predetermined dates or ages of the insured.

Stop-Loss Coverage
A form of reinsurance for self-insured employers that limits the amount the employers will have to pay for each person's health care (individual limit) or for the total expenses of the employer (group limit).

Stop-Loss Insurance
Reinsurance that can cover losses over a certain amount either per incident or on a yearly basis.

Subscriber
(a) The person or organization that pays the premiums. (b) The person eligible for insurance through his or her employment.

Supplemental Medical Insurance (SMI)
Covers physician and outpatient services (Medicare Part B).

Surcharge
An extra charge applied by the insurer. For automobile insurance, a surcharge is usually for accidents or moving violations.

Surgical Insurance Benefits
Covers expenses resulting from surgery.

Surgical Schedule
A list of amounts payable for certain medical procedures.

Swap Maternity
A provision for maternity coverage to be provided at the end of coverage.

Switch Maternity
Provides coverage for female employees on maternity leave whose husbands are included in the plan as dependents.

T

Term
The period in which a policy is in effect.

Tertiary Care
Services provided by professional such as neurosurgeons, thoracic surgeons, or intensive care unit's.

Third-Party Administrator
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. The TPA is not the policyholder or the insurer.

Time Limit on Certain Defenses
A time limit that, by law, must appear on every policy, to protect policyholders against insurers using preexisting conditions as the basis for denying coverage.

Tort Feasor
Someone who commit's a tort.

Tort
An act of wrongdoing committed negligently or willfully, but not as a breach of contract, which results in legal liability; auto insurance plans cover unintentional torts.

Towing and Labor Costs
An endorsement that covers the cost of towing or on-site labor; it can be added to physical damage coverage.

TPA (Third Party Administrator)
A firm that provides administrative services for group insurance policies; they serve as a liaison between the employer and the insurer.

Transportation Expenses
Part of physical damage coverage; covers transportation expenses in the event of vehicle theft, up to a maximum daily limit.

Travel Accident Insurance
Covers accidents that occur while the policyholder is traveling.

Triple Option
Gives patients the choice between different types of providers (such as an HMO or PPO).

U

UCR Charges (Usual, Customary, and Reasonable Charges)
Conventional indemnity plans operate based on usual, customary, and reasonable (UCR) charges. UCR charges mean that the charge is the provider's usual fee for a service that does not exceed the customary fee in that geographic area, and is reasonable base

Umbrella Liability Insurance
A liability policy that covers in excess of primary limits of the basic liability policy.

Unallocated Benefit
A benefit for expenses up to a maximum, but without a schedule of benefits.

Underwriting
The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of unacceptable risks.

Unearned Premium
The part of a premium left on a given policy term.

Unemployment Compensation Disability Insurance (UCD)
Health insurance for workplace sicknesses and accidents, but not for injuries covered by Workers Compensation Insurance.

Uniform Premium
A rating system used to determine premiums, with no distinctions based on race, sex, or occupation.

Uninsured Motorist Bodily Injury
Bodily injury coverage for uninsured motorists (required in most jurisdictions), which will cover injuries sustained due to a hit-and-run for which an uninsured motorist is responsible but cannot pay.

Uninsured Motorist Coverage
Endorsement to a personal automobile policy that covers an insured's claims for bodily injury involved in a collision with a driver who does not have liability insurance.

Uninsured Motorist Property Damage
Covers property damages caused by uninsured motorists.

Unsatisfied Judgment Fund
A fund, set up by some states, to reimburse people who have been injured in an auto accident but have been unable to collect from the person who caused the accident.

Usage
The primary purpose for which you intend to drive. Commuters' rates, therefore, will be different from business rates or pleasure rates.

Usual, Customary, and Reasonable Charges (UCR Charges)
Conventional indemnity plans operate based on usual, customary, and reasonable (UCR) charges. UCR charges mean that the charge is the provider's usual fee for a service that does not exceed the customary fee in that geographic area, and is reasonable based on the circumstances. Instead of UCR charges, PPO plans often operate based on a negotiated (fixed) schedule of fees that recognize charges for covered services up to a negotiated fixed dollar amount.

Utilization Management
A procedure followed by a review coordinator to evaluate given health services in each individual case.

V

VIN (Vehicle Identification Number)
An identification number that is unique to each vehicle, which provides it's serial number, make, model, options, etc. This number must appear on all auto insurance policies.

Vision Care Coverage
Covers routine eye examinations, as well as all or part of the cost of lenses and eyeglasses.

W

Waiting Period (Elimination Period)
The period between the beginning of a disability and the time at which disability benefits are started.

Waiver of Collision Deductible
Covers your collision deductible on a vehicle that is damaged by an at fault, uninsured or hit-and-run driver; applies only to physical contact.

Waiver
(a) A rider waiving (excluding) liability for a stated cause of accident or (especially) sickness. (b) Provision or rider agreeing to waive (forego) premium payment during a period of disability. (c) The giving up or surrender of a right or privilege that is known to exist. It may be effected by the agent, adjuster, or insurance company employee or official orally or in writing.

War Clause
A provision that shields the insurer from liability in the event of war.

Weekly Premium Insurance
(a) A form of debit or industrial life insurance. (b) A policy premium that is collected weekly by an agent who comes to the door of the insured.

Whole Dollar Premium
Premiums rounded up to the nearest dollar (any amount of 51 cents or more); lesser amounts are typically eliminated entirely.

Written Business
Insurance that has not yet been delivered or for which the first premium remains unsettled, even while an application has been taken out.

Y

Yearly Renewable Term (YRT)
Term life insurance that may be renewed on an annual basis, even without evidence of insurability. The policy may renewed for any number of years, often ten or more, or until the insured reaches a certain age.

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