Trying to make sense of today’s complex health insurance marketplace? We’ve developed this useful glossary to help you navigate the terminology associated with purchasing employer-sponsored health plan solutions.
Administrative Services Only (ASO) Agreement
A structure in which an organization funds its own employee benefits plan but hires an outside party to perform specific administrative services, such as processing claims.
Occurs after you’ve paid your deductible and/or copayment and your insurance company has paid what it will cover. If the provider bills for charges that exceed your out-of-pocket obligation as noted in your plan’s Explanation of Benefits (EOB), it is called a balance bill.
The year in which a health plan operates. Some benefit year plans follow the calendar year, whereas others renew in the summer or fall depending on the organization.
A chargemaster is a comprehensive list of all the services and items that are billed to the patient by the hospital. The charges are used to bill the patient and create a claim for payers (health insurance).
Chronic medical conditions are defined broadly as diseases that last one year or more and require ongoing medical attention and management. Examples include heart disease and diabetes.
A service philosophy that provides comprehensive, proactive support for members across the healthcare journey. It is delivered by a multidisciplinary team that advocates for its members with assistance in finding the right providers for their needs, clinical guidance to help members navigate complex medical diagnoses and to help with general healthcare questions. At Imagine360, that support also includes the miBenefits online portal, where members can view and track their plan usage and claims.
The amount an individual is required to pay for covered medical services after copays and deductibles have been taken into account.
A specific charge a health plan may require members to pay after a medical service or for a medical supply.
COB (Coordination of Benefits)
A methodology to figure out who pays first when two or more health plans are responsible for covering the same claim.
Charges a patient is responsible for, including deductibles, coinsurance and copayments.
A particular amount that the health insurance company may require plan participants to pay out-of-pocket each year before their health plan starts in order to make payments for claims.
In this model, the health plan contracts directly with a local health system, which provides cost-competitive contracted rates when members use the health system’s hospitals and providers.
Expenses defined by the health insurance plan as eligible for coverage.
An area in a hospital that is staffed and equipped for receiving and treating people who require immediate medical care.
The Employee Retirement Income Security Act (ERISA) of 1974 is a federal law that establishes minimum standards for employer-sponsored health insurance coverage and other benefit plans offered to employers by private employers. ERISA does not require employers to offer plans; instead, it sets the rules for the plans and benefits which employers choose to cover. ERISA is administered by the US Department of Labor, and other federal agencies. Among other things, ERISA imposes minimum standards for employer-sponsored health insurance, including documentation, reporting, and fiduciary requirements.
Explanation of Benefits (EOB)
A statement from a health insurance company to its members that lists the charges from the healthcare provider and explains how those charges were processed and paid by the health plan as well as the total amount of patient responsibility.
Fully Insured Plan
In this traditional model for structuring an employer-sponsored health plan, the employer pays a premium to the insurance carrier. The premium rates are fixed for a year and are based on the number of employees (or members) enrolled in the plan each month. The insurance carrier collects the premiums and pays the claims based on the coverage benefits outlined in the policy.
Group Health Insurance
A health insurance plan that provides benefits to employees of a business or members of an organization as opposed to individual and family health insurance.
Health Care Financing Administration (HCFA)
Also known as the Centers for Medicare and Medicaid Services (CMS), it is a part of the federal government’s Department of Health and Human Services and is responsible for running the Medicare and Medicaid programs. CMS establishes standards for healthcare providers that must be complied with to meet requirements.
High Deductible Health Plan (HDHP)
A type of health insurance plan that requires typically larger out-of-pocket costs, although premiums may be lower.
The Health Insurance Portability and Accountability Act of 1996 is a federal law designed to prevent disclosure of sensitive patient information without that patient’s consent or knowledge.
This term applies to medical services provided by physicians and hospitals that are part of a health plan’s provider network. Claims from these providers are typically covered as part of a previously negotiated agreement.
A type of health insurance that has contracts with healthcare providers and medical facilities to care for members at reduced costs. The providers make up the network.
Maximum Out-of-Pocket (OOP) Costs
A predetermined amount that a person must pay before insurance will pay all of the individual’s healthcare expenses for the rest of the year.
A narrow-network health insurance plan works with a specific pool of physicians, specialists, hospitals and urgent care clinics compared to other plans. It is often utilized to help reduce costs for the health plan and its members.
The time period for eligible members to sign up for a new health insurance plan, adjust their current plan or cancel coverage. It’s usually limited to a few weeks.
When a doctor or facility has no contract with your health plan, they’re considered out-of-network and can charge you full price for their services. Charges from out-of-network providers are typically much higher as compared to in-network charges.
Out-of-Pocket (OOP) Costs
Medical care expenses that aren’t reimbursed by insurance, including deductibles, coinsurance and copayments for covered services as well as costs that aren’t covered.
Pharmacy Benefits Manager (PBM)
As the third-party administrator of prescription drug programs for self-insured and commercial health plans, PBMs process and pay for prescription drug claims based on the terms of the pharmacy benefit within a health plan.
This formal, written, legal statement lists the provisions of the insurance plan. It sets forth what benefits are available, who is eligible, how benefits are funded, who is the named fiduciary, how the plan can be amended and the procedures for allocating plan responsibilities. All health plans subject to ERISA must establish and maintain a plan document.
Point of Service (POS)
A type of managed care plan in which individuals have a primary care physician (PCP) who must refer them to a specialist. In a PPO, patients may go outside the network but will have to pay more of the costs unless referred by the PCP.
PPO (Preferred Provider Organization)
With a PPO, the health plan contracts with doctors and hospitals to create a network of providers for the members to use. Those going outside that network for care pay more.
A decision by a health insurer that a treatment plan, test, prescription drug or other service is medically necessary to ensure a member’s health. Sometimes called prior authorization, it may be required before certain services are delivered. It is not a promise that the insurer will cover the cost.
Preventive Care/Preventive Screenings
Preventive care includes routine physical exams and screening tests that help prevent more serious medical problems in the future. Most health plans offer preventive care free or at a nominal cost.
Primary Care Provider
A person’s main healthcare provider in non-emergency situations, most often in an outpatient setting. A primary care practitioner focuses on common medical problems, but can make referrals to medical specialists when necessary.
A list of physicians, hospitals and other health providers that an insurance plan contracts with to provide medical care to its members.
Reference-Based Pricing (RBP)
Reference-based pricing is a method that uses a reference point, such as Medicare or the cost of service, to determine the amount a health plan will pay for certain medical services. Unlike traditional health plans that start with the facility’s chargemaster price, reference-based pricing looks at Medicare allowable and actual cost to determine a fair reimbursement. With reference-base pricing added onto a self-funded health plan, companies and its employees save money on healthcare.
An annual process to continue insurance coverage or to allow for the selection of new policies, plans and coverage details.
Self-Funded Insurance or Self-Insured Plan
With a self-funded plan (also known as a self-insured plan), the employer assumes the financial risk for providing healthcare benefits to its employees. In practical terms, self-insured employers pay for claims out-of-pocket as they are presented, instead of paying a pre-determined premium to an insurance carrier for a fully insured plan. Typically, a self-insured employer will establish a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims. Self-insured employers can either administer the claims in-house, or subcontract this service to a third-party administrator (TPA).
Stop Loss Insurance
Stop loss insurance (also known as excess insurance) is a product that provides protection against catastrophic or unpredictable losses. It is purchased by employers who have decided to self-fund their employee benefit plans, but do not want to assume 100% of the liability for losses arising from the plan. Stop loss insurance comes in two forms: aggregate and specific. Aggregate stop loss insurance provides a ceiling on the dollar amount of eligible expenses that an employer would pay, in total, during a contract period. The carrier reimburses the employer after the end of the contract period for aggregate claims. Specific stop loss insurance (also known as individual stop loss) provides protection for the employer against a high claim on any one individual. This is protection against abnormal severity of a single claim rather than abnormal frequency of claims in total.
The practice in which healthcare providers use telecommunications technology – such as phones, mobile apps and video – to consult with, diagnose and treat patients in real time without an in-person office visit.
Third-Party Administrator (TPA)
A third-party administrator (TPA) is an administrative services provider that offers support for self-insured health plans. A typical TPA manages a variety of services and health plan tasks, including collecting premiums, processing medical claims, and supporting plan members. The TPA also makes sure that a health plan complies with federal law.
Medical care provided for illness or injuries that require prompt attention, but are not typically serious enough to require the services of an emergency room.
Usual, Customary and Reasonable (UCR) Charge
UCR refers to the amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar service.