GPA understands that the U.S. healthcare system can be dauntingly complex, and we’re here to help. Below are the “nuts and bolts” of health insurance coverage, those unfamiliar terms you may have come across when looking at insurance documents or speaking with healthcare professionals. A better understanding of these concepts will help you more effectively analyze and utilize your coverage.
Allowable Charge
The maximum amount a health care plan will reimburse a doctor or hospital for a given service.
Benefits
The health care items or services covered by an insurance plan. Your insurance plan may sometimes be referred to as a "benefit package."
Broker
A broker matches their clients with a health insurance company or plan that best suits the client’s needs. The broker is paid a commission by the insurance company, but represents the interests of their client rather than the insurance company. In some cases, as with Garnett-Powers & Associates, a broker can also act as a third-party administrator, handling enrollment and billing, benefit and claims questions, etc.
Claim
A request by a plan member, or a plan member's health care provider, for the insurance company to pay for medical services.
Claim Form
A form you or your doctor fill out and submit to your health care plan for payment.
COBRA (Consolidated Omnibus Reconciliation Act)
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 (36 months in CA) after the loss of employment.
Coinsurance
The amount that you are required to pay for covered medical services after you've satisfied any copayment or deductible required by your health insurance plan. Coinsurance is typically a percentage of the charge for a service rendered by a healthcare provider. For example, if your insurance company covers 80% of the allowable charge for a specific service, you may be required to cover the remaining 20% as coinsurance.
Copayment
A flat charge that your health insurance plan may require you to pay for a specific medical service or supply, also referred to as a "copay." For example, your health insurance plan may require a $20 copayment for an office visit or brand-name prescription drug, after which the insurance company pays the remainder of the charges.
Deductible
A specific dollar amount that your health insurance company may require that you pay out-of-pocket each year before your health insurance plan begins to make payments for claims. Not all health insurance plans feature a deductible.
Drug Formulary
A list of preferred drugs chosen by a panel of doctors and pharmacists. Both brand and generic medications are included on the formulary.
Emergency Medical Care
Services provided for the initial outpatient treatment of an acute medical condition, usually in a hospital setting. Most health care plans have specific guidelines to define emergency medical care.
Exclusions
Specific medical conditions or circumstances that are not covered under a health care plan.
Explanation of Benefits
An Explanation of Benefits (EOB) is a notification provided to members when a health care benefits claim is processed by the health care plan. The EOB shows how the claim was processed and explains the actions taken on a claim such as the amount that will be paid, the benefit available, discounts, reasons for denying payment and the claims appeal process. The EOB is not a bill. Your provider may bill you separately.
Generic Drug
A prescription drug that is the generic equivalent of a brand name drug listed on your health plan's formulary and costs less than the brand name drug.
Health Maintenance Organization (HMO)
HMO plans offer a wide range of health care services through a network of providers that contract exclusively with the HMO, or who agree to provide services to members at a pre-negotiated rate. As a member of an HMO, you will need to choose a primary care physician ("PCP") who will act as your healthcare “gatekeeper” providing most of your health care and referring you to HMO specialists, within the same medical group, as needed. Some HMO plans require that you fulfill a deductible before services are covered, while others only require you to make a copayment when services are rendered. Health care services obtained outside of the HMO network are typically not covered, though there may be exceptions in the case of a life-threatening emergency.
Health Savings Account (HSA)
an HSA is an individually owned, tax-advantaged account that you can use to pay for current or future IRS-qualified medical expenses. An HSA is only available when you enroll in a High Deductible Health Plan (HDHP). Each year, the amount allowed can be changed by the IRS. As of 2018, the annual contribution limit is $3,450 individual and $6,900 family.
High Deductible Health Plan (HDHP)
This is a plan with a high deductible of at least $1,350 for an individual and $2,700 for a family. With the exception of annual wellness visits, the deductible must be satisfied before any co-insurance or co-pays become effective in the plan. The yearly out of pocket expenses (including deductibles, copayments and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family. The plan can be combined with a Health Savings Account (HSA) allowing you to pay for certain medical expenses with money free from federal taxes.
HIPAA
The Health Insurance Portability and Accountability Act (HIPPA) is a federal law that outlines the rules and requirements employer-sponsored group insurance plans, insurance companies and managed care organizations must follow to provide health care insurance coverage for individuals and groups.
In-Network Provider
A healthcare professional, hospital or pharmacy that has a contractual relationship with your health insurance company, establishing allowable charges for services. In return for contracting with an insurance company, a healthcare provider typically gains patients, and a primary care physician may receive a capitation fee for each patient assigned to his or her care. An Out-of-Network provider is a healthcare professional, hospital, or pharmacy that is not part of your health plan's network of contracted providers. You will generally pay more for services received from out-of-network providers, in part because you may be responsible for out-of-pocket costs that are considered above the “reasonable and customary” fees for your area.
Inpatient Services
Services provided when a member is registered as a "bed patient" and is treated as such in a health care facility such as a hospital.
Insurance Carrier
The company responsible for providing you with your health insurance plan by paying your claims, maintaining provider networks, coordinating billing, and offering member assistance services.
Medical Group
A licensed health care facility, program, agency, doctor and/or health professional that contracts with a health plan to coordinate and deliver health care services to plan members.
Member
The person to whom health care coverage has been offered by the policyholder (generally their employer) or any of their covered family members. Sometimes referred to as the insured or insured person.
Open Enrollment
An annual period of time where you are allowed to make alterations to your coverage that you are not permitted to make throughout the rest of the year, such as changing your plan(s), enrolling dependents, or enrolling yourself if you previously waived.
Out-of-Pocket Maximum
Out-of-pocket maximums apply to all medical plans. This is the maximum amount you will pay for health care costs in a calendar year. Once you have reached the out-of-pocket maximum, the plan will fully cover most eligible medical expenses for the rest of the plan year.
Outpatient Services
Treatment that is provided to a patient who is able to return home after care without an overnight stay in a hospital or other inpatient facility.
Preauthorization
The process by which members or their primary care physicians (PCP) notify the health plan in advance of treatment plans, such as a hospital admission or a complex diagnostic test, in order to confirm coverage for applicable services. Also called pre-notification.
Preferred Provider Organization (PPO)
With a PPO plan, like the name implies, it’s recommended you get your medical care from doctors or hospitals in the insurance company's network of preferred providers if you want your claims paid at the highest level. You will likely not be required to coordinate your care through a single primary care physician, as you would with an HMO, but you will want to make sure that the health care providers you visit participate in the PPO network. Services rendered by out-of-network providers may still be covered, but will likely be paid at a lower level.
Premium
The ongoing amount that must be paid for your continued coverage under a health insurance plan. You and/or your employer usually pay it monthly, quarterly or yearly. The premium may not be the only amount you pay for insurance coverage. Typically, you will also have a co-payment or deductible amount in addition to your premium.
Prescription drugs
Prescription drugs must be ordered by a doctor and obtained at a pharmacy. They are reviewed and approved through a formal process set by the U.S. Food and Drug Administration (FDA).
Preventive services
Routine health care that includes screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems.
Primary Care Physician (PCP)
A primary care physician usually serves as a patient's main healthcare provider, especially under an HMO plan. The PCP serves as a first point of contact for healthcare and may refer a patient to specialists for additional services.
Referral
A written authorization from a member's primary care physician (PCP) to receive care from a different contracted doctor, specialist or facility, typically within the same medical group.