Glossary

Insurance Terms Glossary

Accident Insurance
Coverage for accidental injury, accidental death and related health expenses.

Actuary
Insurance professional skilled in the analysis, evaluation, and management of statistical information. Evaluates insurance firms’ reserves, determines rates and rating methods, and determines other business and financial risks.

Ancillary Insurance
Additional health insurance products (such as vision or dental insurance) added to a medical insurance plan for an additional fee.

Broker
Works to match applicants with a health insurance company or plan and is paid a commission by the insurance company, but represents the applicant rather than the insurance company.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
Federal legislation allowing an employee or an employee's dependents to maintain group health insurance coverage through an employer's health insurance plan, at the individual's expense, for up to 18 months in certain circumstances. COBRA coverage may also be extended beyond 18 months in certain circumstances.

Coinsurance
The amount that you are obliged to pay for covered medical services after you've satisfied any co-payment or deductible required by your health insurance plan. Coinsurance is typically expressed as a percentage of the charge or allowable charge for a service rendered by a healthcare provider.

Co-Payment
Charge that a health insurance plan may require for a specific medical service or supply, also referred to as a "co-pay."

Deductible
A specific dollar amount that a health insurance company may require each year before the plan begins to make payments for claims. Not all health insurance plans require a deductible. As a general rule, HMO plans do not require a deductible, while most Indemnity and PPO plans do.

Dental Care Plan
Ancillary insurance plan typically offered in group plans which covers routine dental examinations; may also cover all or part of the costs associated with non-routine dental services.

Dependent Coverage
Health insurance coverage extended to the spouse and unmarried children of the primary insured member. Age restrictions on the coverage of children may apply.

Disability Insurance
Designed to replace lost income, based on a percentage of your gross on a tax-free basis, should a disability or illness prevent you from earning an income.

Effective Date
The date on which health insurance coverage comes into effect.

Eligibility Requirements
Conditions that must be met in order for an individual or group to be considered eligible for insurance coverage.

Enrollment Period
The period during which an eligible employee or eligible person may sign up for a group health insurance plan.

Indemnity Insurance
Often called a fee-for-service plan, a plan that allows you to use any medical provider (such as a doctor or hospital). The bills are sent to the insurance company, which pays part of it. There is usually a deductible to pay each year before the insurer starts paying. Once you meet the deductible, most indemnity plans pay a percentage of what they consider the "usual and customary" charge for covered services.

Individual Retirement Account (IRA)
A retirement plan that provides tax advantages for retirement savings, offered in different formats (Roth IRA, SEP IRA, etc.) which may be an employer-provided plan or an individual-provided plan.

Gatekeeper
Term used to describe the role of the primary care physician in an HMO plan, since the physician serves  as the main point of contact for healthcare services and referrals to specialists.

Generic Drug
Drug which is exactly the same as a brand name prescription drug (but usually less expensive), and can be produced by other manufacturers after the brand name drug's patent has expired.

Grace Period
Time period after the payment due date, during which insurance coverage remains in force and the policyholder may make a payment without penalty.

Group Health Insurance
Health insurance plan that provides benefits for employees of a business or members of an organization, as opposed to individual and family health insurance.

Guaranteed Issue
Term used to describe insurance coverage that must be issued regardless of health status. In New Jersey for example, group health insurance plans are often described as guaranteed issue plans, because a health insurance company generally cannot refuse coverage to a qualifying business or organization based on the health status of their employees or members.

Health Savings Accounts (HSAs)
Created by the 2003 Medicare bill and designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis.

HIPAA (Health Insurance Portability and Accountability Act of 1996)
Legislation mandating specific privacy rules and practices for medical care providers and health insurance companies, designed to protect the privacy and identity of healthcare consumers.

Health Maintenance Organization (HMO)
A type of Managed Care that provides health insurance coverage fulfilled through contracted hospitals, doctors and other providers. Unlike indemnity insurance, care provided follows a set of guidelines provided through the HMO's network of providers who are contracted to receive more patients and in return agree to provide services at a discount.

Individual and Family Health Insurance
Health insurance purchased by an individual or family, independent of any employer group or organization.

Life Insurance
Type of insurance that creates a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured's death and the policy owner pays a premium at regular intervals.

Long Term Care
Care provided on a continuing basis for the chronically ill or disabled. Long-term care may be provided on an inpatient basis (at a long-term care facility) or in a home setting.

MSA (Medical Savings Account)
Tax-advantaged personal savings account used in conjunction with a high-deductible health insurance plan. MSAs are currently being phased out and replaced with HSAs.

Managed Care
Term used to describe a variety of healthcare and health insurance systems that attempt to guide a member's use of benefits, typically by requiring that a member coordinate his or her healthcare through a primary care physician, or by encouraging the use of a specific network of healthcare providers. The management of healthcare is intended to keep costs as low as possible. See HMO, PPO and POS.

Medicaid
State-funded healthcare program for low income and disabled persons.

Medicare
National, federally-administered health insurance program authorized in 1965 to cover the cost of hospitalization, medical care, and some related health services for people over age 65.

Network Provider
A healthcare provider that has a contractual relationship with a health insurance carrier which establishes standards of care, and allowable charges for specific services.

Participating Provider Option (PPO)
Sometimes referred to as Preferred Provider Option, a form of health insurance that extends higher levels of benefits when members choose to obtain services from participating (preferred) providers.

Point of Service Plan (POS)
A type of managed care health insurance system that combines characteristics of both the HMO and the PPO. Members of a POS plan do not make a choice about which system to use until the point at which the service is being used.

Pre-Existing Condition
Health problem that existed or was treated before the effective date of health insurance coverage.

Premium
Amount paid to the insurance company for health insurance coverage, typically a monthly charge.
 
Primary Care
Basic healthcare services, generally provided by family medicine, pediatrics or internal medicine practitioners.

Primary Care Physician (PCP)
Serves as a patient's main healthcare provider and first point of contact in most healthcare plans.

Primary Coverage
If a person is covered under more than one health insurance plan, primary coverage is the coverage provided by the plan that pays on claims first.

Renewal
When a member continues coverage under a health insurance plan beyond the original time frame of the contract.

Specialist
Doctor who does not serve as a primary care physician, but who provides secondary care, specializing in a specific medical field.

Term Life Insurance
A temporary type of life insurance, since it covers only a specific period of time and builds no cash value in contrast to permanent life insurance such as whole life and universal life.

Underwriting
Process by which an insurer determines whether it will accept an application for insurance based upon risks and projections, and through which a determination on monthly premium is made.

Universal Life Insurance
A more flexible, tax-advantaged permanent life insurance developed from whole life.

Vision Care Plan
Ancillary insurance typically offered in group plans which covers routine eye examinations; may also cover all or part of the costs associated with contact lenses or glasses.
 
Whole Life Insurance
Life insurance that requires a level premium for life, and guarantees a minimum cash value growth.