Group Health Insurance Terms

Health insurance is an increasingly complicated and technical subject. DFBenefits Inc is committed to simplifying and de-mystifying medical insurance and the process of purchasing it. The following definitions are provided to help you better understand some of the most common terms and acronyms used in insurance generally and in health or medical insurance in particular. 

The source of the terms marked “(H)” is the Health Insurance Association of America's (HIAA) Consumer Information web page. Those with a (D) have been created by our company DFBenefits Inc.

Accidental Death & Dismemberment (AD&D) (D). Insurance policy usually sold in tandem with life insurance and pays an additional amount to beneficiary when person dies in accident or if a person has a major limb or eye etc removed in an accident.

Accident Insurance (H). Provides first-dollar coverage (no deductible or co-payments) when an injury is due to an accident. Another type of accident plan pays a fixed dollar amount, $5,000 or $10,000 for example, if a serious accidental injury occurs.

Agent of Record Letter (AOR) (D).  A letter signed by an officer of a company which assigns an Insurance Agent or Agency to represent their insurance coverage.

Ambulatory Care (H). Reimbursement for medical, surgical, or diagnostic services provided in a non-hospital setting that does not require an overnight stay. Also known as outpatient care. 

Annual Cost (D). The maximum amount a patient is responsible to pay annually for approved benefits.

Approved Transplant Services (T). Services and supplies which are related to a transplant procedure, approved in writing by the Insurance Carrier, which include, but are not limited to pre-transplant evaluation for the medical necessity of the transplant, hospital charges, physician charges, and tissue typing and ancillary services. 

BAAG Benefit Summary (D) BAAG stands for Benefits at a Glance (BCBSM term) this is basically a benefit summary of a policy.  It is a quick overview of how a policy works.  It is not as in depth as a Certificate of Coverage.

Balance Billing (D). When patient use out-of-network services, the carrier will only pay a certain fee for each service.  If the amount the provider bills is more then approved amount paid by the carrier, patient will be responsible for the balance dollar figure provider charges.

COBRA (D) This is the federal law that allows employees that have been terminated from a company to continue their health, dental, or vision coverage.  The employer must have 20 or more part or full time employees to be eligible to offer COBRA to the terminated employee.  The employer who terminates the employee and is COBRA eligible needs to notify the ex-employee in writing within 14 days that he/she is eligible for extension of their benefits at their own cost.  (See DFB LANCOBRA FOLDER for extensive detail of this letter and law).

Carrier (D). The Insurance Company offering the insurance policy.

Case Management (H). Process of directing an ongoing course of treatment to assure that it occurs in the most appropriate setting and that the best form of service is selected. Often produces alternatives to institutional care that result in better patient outcomes as well as lower costs. 

Census (D). The Private Healthcare Information (PHI) from the employer which is necessary for sending policies out for the bidding process.  This information may include employee names, dates of birth, gender, dependent status, job occupations and salaries.

Centers of Excellence (H). Hospitals that specialize in treating particular illnesses, or performing particular treatments, such as cancer or organ transplants. 

Certificate of Coverage (D) This is the actual insurance policy terms and conditions.  The certificate of coverage will outline how the policy works. For example if the policy is a health insurance policy it will explain the office visit copay amounts, if there is a deductible or not, what is excluded, like auto injury accidents and many other useful things.  Use the certificate of coverage when looking for hard to answer questions about how the policy works.  The certificate of coverage will give more detail then a BAAG or Benefit summary.

Claim (D). Process of directing an ongoing course of treatment to assure that it occurs in the most appropriate setting and that the best form of service is selected. Often produces alternatives to institutional care that result in better patient outcomes as well as lower costs. 

Co-insurance (H). Arrangement by which the insurer and the insured share, in a specified ratio, payment for losses covered by the policy after the deductible is met. Sometimes referred to as co-payment. 

Co-payment (H). See co-insurance. 

Coordination of Benefits (D). Combining one patient’s insurance policy with another insurance policy he/she is also covered under.  For example: An employee may be covered under ABC company’s policy as well as the XYZ company’s policy his/her spouse works at, both husband and wife are dual covered.

Concurrent Review (H). The review of continued-stay hospital cases and discharge-planning efforts to ensure proper and efficient placement of the hospital patient. 

Deductible (H). The amount of covered expenses that must be incurred and paid by the insured before benefits become payable by the insurer. 

Dental Care (H). Reimbursement for dental services and supplies, including preventive care. Benefits may be provided through a plan integrated with other medical insurance coverage, or a plan may be written separately from other coverage (non-integrated).

Designated Facility (T). A facility which has an agreement with a Carrier to render approved transplant services. The facility may be outside a covered person’s geographic area. 

Diagnostic X-Ray and Laboratory Examinations (H). Reimbursement for outpatient diagnostic and laboratory examinations. 

Disability DI STD or LTD (D). Disability insurance can be sold to a group or an individual and can be short term STD or Long Term LTD.

Elimination Period (D). A DI policy has an amount of days or months a member must wait before the policy begins to pay out on the disability claim.  For example most LTD contracts have a 60, 90 or 180 wait before the policy pays the insured 60% of their monthly salary.

EE/ER (D). EE stands for Employee and ER stands for Employer.

Explanation of Benefits (EOB) (D). The statement from your insurance company explaining how your claim was processed.

Effective Date (D). The date when your insurance coverage begins.

FMLA (D) Family Medical Act this is a federal law that states employers who employ 50 or more employees must hold the employees job and allow them to pay for their benefits during a 12 week medical leave.  The medical leave can be because of their own medical problems, or a close family members, medical problem.  The employee is responsible for notifying the employer of their leave request, with date of leave and medical information stated by law .  (See our Human Resources site for extensive language of this law).
Formulary:  A specific list of brand-name prescription drugs that your insurance carrier has selected for a lower brand-name  copay (check with your pharmacy or insurance carrier).

Fee-for-Service (H). A method of charging whereby a physician or other practitioner bills for each visit or service. Premium costs for fee-for-service agreements can increase if physicians or other providers increase their fees, increase the number of visits, or substitute more costly services for less expensive ones (note: this was the traditional form of health insurance in the United States before managed care). 

Formulary (D) A specific list of brand-name prescription drugs that your insurance carrier has selected for a lower brand-name  copay (check with your pharmacy or insurance carrier).

GBS (D). DFBenefits Account management Database used for tracking of all calls, claims, prospecting, quoting, commissions and any other management of data used at our company.

HIPAA Certificate (D) Health Insurance Personal Portability Act Certificate.  HIPPA covers a lot of laws.  One import part of the law states that NO group insurance in any state can discriminate against a sick person if that person has been insured by a health insurance policy within the last 61 days of a new policy being effective.  This certificate is provided by an insurance company or by the person’s prior employer.  This Certificate verifies that the person has been insured by a carrier within the last 61 days and also states who the carrier was, how long the person was insured by them and who else might have been listed under the person’s policy.  This is crucial information because if the person can prove that they have been insured by an insurance policy for the last 12 to 18 months, a new carrier can not deny them coverage for a pre-existing condition as long as coverage has not been lapse for more than 61 days.

H.S.A Accounts (D) Health Savings Accounts. This account allows you or your employer to put money into an account on a pre-tax basis.  This money can be used without penalty for any medical expense listed under the IRS Section 125 code 213 d.  This money can accumulate from year to year and grow interest.  You and your family members can use it to reimburse deductibles, copays and many other medical expenses even if they may not be covered under your insurance program.  See the H.S.A. account page for additional details.

Health Maintenance Organization (HMO) (H). An organization that provides for a wide range of comprehensive health care services for a specified group at a fixed periodic prepayment.

Home Health Care (H). Services given at home to aged, disabled, sick, or convalescent individuals not needing institutional care. The most common types of home care are visiting nurse services and speech, physical, occupational, and rehabilitation therapy. These services are provided by home health agencies, hospitals, or other community organizations.

Hospice Care (H). Care for the terminally ill and their families, in the home or a non-hospital setting, which emphasizes alleviating pain rather than a medical cure. 

Hospital Care (H). Reimbursement for both inpatient and outpatient medical care expenses incurred in a hospital.

  • Inpatient Benefits include: 

- Charges for room and board. 
- Charges for necessary services and supplies sometimes referred to as 'hospital extras,' 'other hospital extras,' 'miscellaneous charges,' and 'ancillary charges.'

  • Outpatient Benefits include: 

- Surgical procedures. 
- Rehabilitation therapy. 
- Physical therapy. 

Indemnity (H). A benefit paid by an insurance policy for an insured loss. 

Injury (T). Accidental bodily injury independent of disease, bodily infirmity or other cause. 

Limited Policy (H). A policy that covers only specified accidents or sicknesses (e.g. a cancer policy). 

Managing Agent (MA) or General Agent (GA) (D). This is our local sales office for a carrier which DFBenefits uses for rates, underwriting and the processing of paperwork to quote/bid policies for our clients/prospects.  BCBSM/BCN has 7 MA/GA who we choose to use most carriers only have one or two offices locally we can work with for sales and marketing issues.

Mail Order Drugs (D).  A prescription program where you can receive more than one month’s supply of your medication for a discounted rate.

Maintenance Drugs:  Prescription drugs that need to be taken on an ongoing basis (I.e. thyroid, insulin, high blood pressure medication, etc.)

Major Medical Expense Insurance (H). A form of health insurance that provides benefits for most medical expenses up to a high maximum benefit (usually $1 million or more). Such contracts may contain internal limits and are usually subject to deductibles and co-insurance. 

Managed Care Organization (MCO). An aggregate term used to refer generically to any and all variants of managed care.

Master Medical Services (D) Coverage’s for which you must submit a claim form to receive reimbursement.

Maximum Out-of-Pocket (H). The amount of money an insured will pay in a benefit period in addition to regular premium payments. Non-covered expenses are the insured's responsibility in addition to out-of-pocket amounts.

Medically Necessary (D)A service, drug or supply that is necessary and appropriate for the diagnosis or treatment of a sickness or injury in accordance with generally accepted standards of medical practice in the United States at the time it is provided. When specifically applied to a (hospital) confinement, the diagnosis or treatment of symptoms or a condition which cannot safely be provided on an outpatient basis. 

Motor Vehicle Exclusion (D)  Your policy may not pay for motor related accidents.  Check with the carrier you have your benefits with or read your group plan certificate carefully for your liability regarding a motor related injury.

Network (D)  A group of providers that have agreed to accept a certain fee schedule offered by the insurance company (network providers cannot balance bill).

Non-Formulary (D) Brand-name prescription drugs that your insurance carrier has not selected as a formulary, and will be covered at a higher brand-name copay (check with your pharmacy or insurance carrier).

National Association of Insurance Commissioners (NAIC) (H). A national organization of state officials charged with regulating insurance. Formed to promote national uniformity in insurance regulations. 

Out-of-Network (D)  These providers are not listed in your insurance carrier’s directory, and services provided by them will cost more!

Participating Provider (PAR) (D)A doctor, hospital or lab who is a member of the insurance carrier network which the member is enrolled in. 

Physician Visits (H). Reimbursement for physician's fees for visits in cases of injury or sickness. Of the two types of plans most commonly offered, one covers in-hospital visits only and the other covers in-hospital visits and doctor visits out of the hospital setting. 

Point Of Service Plan (POS). A hybrid of managed care and traditional indemnity under which the insured can choose, for each doctor visit, hospitalization or other medical expense, whether to use a network or non-network provider.

Pre-admission Certification (H). Determines whether a hospital should admit a patient and whether services can be provided on an outpatient basis; its goal is to eliminate unnecessary non-emergency procedures. 

Pre-admission Testing (H). Tests taken prior to hospital admission. 

Pre-existing Condition (H). Any physical and/or mental condition(s) of an insured that existed prior to the effective date of coverage. 

Preferred Provider Organization (PPO) (H). A mode of health care delivery through which a sponsoring group negotiates price discounts with providers in exchange for more patients. The sponsor may be an insurer, employer, or third-party administrator. 

Pregnancy Care (H). Federal maternity legislation, enacted in 1978, requires that employers engaged in interstate commerce who have 15 or more employees provide the same benefits for pregnancy, childbirth, and related medical conditions as for any other sickness or injury. This includes all employers who are, or become, subject to Title VII of the Civil Rights Act of 1964.

Prescription Drug Plan (H). Some prescription drug expense insurance plans are subject to the same deductibles and co-payments as are other covered medical expenses. Other plans use a prescription drug card and cover these expenses with very little, if any, cost to the insured.

Primary Care Physician (PCP (D) The main doctor who handles your care in an HMO plan.  Your PCP will refer you to specialists within their network, should you need additional care.

Reasonable and/or Customary Charges (H). Amounts charged by health care providers that are consistent with charges from similar providers for identical or similar services in a given locale.

Rehabilitation Care (H). A program that provides physical and mental restoration of disabled insured ndividuals to maximum independence and productivity. 

Renewal Date (D). The date the insurance carrier policy renews the group or individual contract to review the plan rates and typically increase the cost of the policy.

Retrospective Review (H). A follow-up analysis that ensures medical care services were necessary and appropriate in order to detect and reduce the incidence of fraud and unnecessary services. 

SIC/NAICS (D). The 4 or 6 digit number that is assigned to the Employer by Dunn and Bradstreet an independent third party company who rates the financial status and stability of all companies in the United States.

Second Surgical Opinion (H). A process that requires patients to obtain a second doctor's opinion before certain elective surgeries in an effort to eliminate unnecessary surgical procedures.

Sickness (T). Illness, disease, complications of pregnancy and the congenital defect, birth abnormality or prematurity of a covered newborn child which occur after the effective date of coverage.

Skilled Nursing Facility (H).A licensed institution that provides regular medical care and treatment to sick and injured persons. Daily medical records are kept and patients are under the care of a licensed physician. 

Special Benefit Networks (H).Provider networks for particular services, such as mental health, substance abuse, or prescription drugs.

State Insurance Department (H). An administrative agency that implements state insurance laws and supervises (within the scope of these laws) the activities of insurers operating within the state.

State-Mandated Benefits (H). Benefits for a variety of medical conditions that a given state requires of insurance policies sold in that state. 

Suffix (D). The numbers or letter which proceed the beginning of a group number usually separated by a dash.

Summary Plan Descriptions (SPD) (D)  Specific Plan Document: This is a document that the employer is responsible for providing their employees.  This should included all the policy certificate of coverage information about the policies the employees can enroll in, as well as provide how to enroll, when to enroll, how to change enrollment, the costs in premiums of the program an many other important things that the employee needs to know about the programs being offered by the employer.

Third-Party Administrator (TPA). A service firm, not an insurance company, which maintains records regarding the persons covered on behalf of an insurer. TPAs can perform any or all of the following functions: underwriting, policy issue, premium billing and collecting, general customer service and claims payment.

Traditional (D) A plan that enables you to visit any doctor or hospital, however, no preventative care coverage is available.

Underwriting (H). The process by which an insurer assesses the health of an applicant and determines whether or not and on what basis it will issue an insurance policy. 

Usual and Customary Charge (T). The lesser of: 1. the actual charge 2. The fee most often charged by the provider for the same service or supply, or 3. The fee most often charged in the same are by providers with similar training and experience for a comparable service or supply. An area is defined as the metropolitan area, a county or a greater area if needed to find a cross-section of providers of a comparable service or supply.

Utilization Review (UR) (H). The process of assessing the delivery of medical services to determine if the care provided is appropriate, medically necessary, and of high quality. UR may include review of appropriateness of admissions, services ordered and provided, length of stay, and discharge practices, both on a concurrent and retrospective basis.

Voluntary (D) A benefit program provided by your employer but paid for by you, the employee.  Participation in these plans is optional and you may not qualify for the policy’s coverage if you do not elect the coverage when initial offer the benefit. See HR for more details on the guarantee issuing of these polices.

Wellness Office Visit (T). A visit to a physician’s office which is not prompted by sickness or injury.

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