Health insurance covers the costs associated with illness and injury. It often also covers the cost of preventing illness, such as annual physical exams and vaccinations.

Until you obtain health insurance coverage, you are known as an "uninsured" person. There are approximately 47 million uninsured Americans. An uninsured person pays for the cost of medical expenses with their own funds, an overwhelming burden to the uninsured, because health care costs are extremely expensive. Currently, there are two major government sponsored programs to assist the uninsured, Medicare and Medicaid. Both programs are burdened with these overwhelming costs of illness and injury. Current debate about health care centers on providing the 47 million uninsured Americans with health insurance coverage to alleviate the expenses associated with paying the costs of their medical expenses.

For people who are insured, their insurance coverage comes from being part of a group, mainly their work, or by purchasing insurance individually. The types of health insurance policies available today are many, but they generally fall into the following categories: Fee-For-Service (Indemnity), HMO (Health Maintenance Organization), POS (Point Of Service) and PPO (Preferred Provider Organization) plans. Consumer Directed Plans (High Deductible Plans) combine one of these plans with a high deductible (you pay a considerable amount of money per year before the insurance takes over), and generally a tax advantaged savings account.

The following is a Q&A relating to the main items of interest surrounding the insurance process:

What is the major difference between group and individual insurance?
The major difference between group and individual health insurance involves evidence of insurability. To purchase individual insurance, a person must generally answer a health questionnaire and undergo a medical examination to provide evidence of insurability to the insurance company. An insurer may decline coverage on the basis of the applicant's personal habits, health, medical history, age, income or any other factors that bear on risk acceptance. Or the insurer may issue a policy with limitations on coverage. Most group insurance, however, is issued without medical examination or other evidence of individual insurability because the insurer knows that it can cover enough individuals to balance those in poor health against those in good health. The risk of an insurer failing to achieve this balance is diminished as the size of the group increases, or as the insurer underwrites additional group policies and increases the total number of individuals covered. This is known as the "law of large numbers."

What are the various ways that individuals receive health insurance protection?
Besides participating in group insurance plans, individuals may also be covered under federal and state government-sponsored programs such as Medicare and Medicaid, service-type plans such as Blue Cross/Blue Shield or so-called alternative health care systems such as health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Insurance may also be purchased privately on an individual basis, or through mass purchasing groups such as credit unions and professional or trade associations.

How does the current Health Care Reform Act underway by the Obama administration aim to make insurance more available to individuals ?
The proposed legislation plans to eliminate the requirements for individuals to pass medical examinations and be denied or limited coverage based on pre-existing conditions. This means that every American will be able to purchase health care coverage regardless of their employment status.

What are the advantages of individual insurance over group insurance?
The advantages of individual insurance coverage are that a person can pick their own plan, based on their personal health and life style. An individual can choose the type of plan, the cost of the plan, the amount of coverage necessary, generally form their own health care coverage based on their unique needs. An individual covered under a group plan can only take the plan that is chosen for them. An individual that owns his own health insurance plan also owns it forever. It is not lost with job termination.

What types of health care plans are typically available?
Although there are many variations of each, the major types of insurance coverage available are life, accidental death and dismemberment (A D & D), disability and health or medical, vision and dental care.

Each of these plans can be catagorized as consumer-directed, fee for service (often known as "traditional" or "indemnity" plans) and managed care. These types of plans cover medical, surgical and hospital expenses and depending on the plan, may cover prescription drugs, dental and behavioral/mental health coverage.

Fee for service plans mean the doctor or other health care professional will be paid a fee for each health care service provided to the patient. Patients can see the doctor of their choice and the claim is filed by either the health care professional or the patient.

Managed care plans provide coverage for comprehensive health services to their members and offer financial incentives in the form of lower out-of-pocket costs to patients who use doctors participating in a network. More than half of all Americans have some kind of managed care plan - the three types include health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans.

What is an HMO?
An HMO is a type of managed care health insurance plan that allows you to receive care through a network of participating doctors and hospitals. Generally, you select a primary care physician who coordinates your care and refers you to specialists when needed. Out-of-network care is generally not covered under an HMO plan, unless the member requires care that is not available in the existing network.

What is a PPO?
A PPO is a type of managed care health insurance plan that combines features of a fee-for-service plan and an HMO. In a PPO, members who seek care within the network of participating doctors and hospitals pay lower out-of-pocket costs. Members can also seek care from nonparticipating doctors and hospitals, but pay a higher portion of the cost of care.

What is a consumer-directed health insurance plan?
Also referred to as "consumer-driven," or "consumer choice," this type of health plan gives members more choice and flexibility in making health benefits decisions and more control over their health benefits dollars. These plans often include a health fund or account for covered medical expenses. Depending on the type of fund or account, unused dollars may be rolled over annually to cover medical expenses in subsequent years for the duration of the members' enrollment in the plan. There are several types of consumer-directed plans, including Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs) and Flexible Spending Accounts (FSAs).

What is a health insurance premium?
A premium is the fee you and/or your employer pay to your insurance company to purchase a health insurance plan. This can be paid on a monthly, quarterly or annual basis.

How does a health insurance deductible work?
A deductible is the amount that you must pay for covered services in a specified time period in accordance with your plan before the plan will pay benefits. A member of a high-deductible health plan, for example, might be required to pay for the first $1,000 of medical care prior to receiving coverage under the terms of his/her benefits plan.

What is a co-payment?
A co-payment is the specified dollar amount or percentage required to be paid by you or on your behalf in connection with benefits. For example, most HMO plans have co-payments in place for certain services such as doctor's visits, prescription drugs, hospital stays, etc.

What are out-of-pocket costs?
Out-of-pocket costs include premiums, co-payments, deductibles, co-insurance or other fees that you are required to pay outside of your health benefits plan.

How do I pick a health insurance plan?
If you have a choice of plans through your employer or you are purchasing your own coverage, it's important to understand your choices and pick the plan that is right for you and your family. There are several questions to ask yourself when reviewing health insurance plan options:

• How affordable is the cost of care?
• How much are monthly premiums?
• How much are the deductibles?
• Are the co-payments or co-insurance flat fees or percentages of service fees?
• What out-of-pocket expenses have to be paid before the plan begins reimbursement?
• How does the reimbursement process work?
• What is the cost of out-of-network care?

Does the plan cover the services that I may use? For example:

• Doctors, hospitals, laboratories and other health care professionals in the network
• Out-of-network care
• Treatments for pre-existing medical conditions or chronic conditions
• Prescription drugs

What is the quality of the health insurance plan? Research factors of the plan such as:

Ratings of the plan by independent government and non-government organizations

Accreditation from groups like the National Committee for Quality Assurance (NCQA) or the Joint Commission on Accreditation of Healthcare Organizations (JCAHO)

• Patient complaints
• Member drop-out rates for the plan
• Other patient experiences with the plan
• Doctor experiences with the plan

Useful Definitions

Accreditation
A term typically applied to hospitals and other health care facilities, as well as certain health benefits plans, indicating that the facility or plan has met operating, quality and other standards established by a third party review agency.

Adjudication
The process used by health plans to determine the amount of benefit payment for a covered health care service. The term usually refers to the processing of a health care claim. The process includes a review of whether the service is covered by the health plan and whether deductibles, co-insurance, co-payments or other benefit limits apply.

Advanced (Advance) Directives
Sometimes called a "living will." An Advance Directive is a legal document that tells your physician what kind of care you want (and what kind of care you don't want) if you become ill and can't make medical decisions or communicate your decisions (for example, if you are in a coma). Hospital staff will routinely ask you if you have an Advance Directive when you are admitted to the hospital. Laws about Advance Directives vary in each state. You should be aware of the laws in your state. If you have an Advance Directive, be sure both your family and your physician have copies and are aware of your wishes.

Allowable Expense(s)
Also a "covered expense." Refers to amount of a charge for medically necessary health care that is "covered," or eligible to be paid by a health benefits plan.

Appeals process
A process maintained by an employer or health plan that allows an individual to appeal an adverse benefit decision. If all or part of your claim is denied and you believe this decision is in error, you may use the appeals process to initiate an additional review of the claim. In some cases, your plan may not have had enough information to make a decision, and the appeals process gives you the opportunity to provide that information. To find out about your plan's appeals process, visit the health plan's website or call the toll-free number on your ID card.

Authorization
A health plan's process for approving payment for medical services covered by an individual's benefits plan. Depending on the plan, such authorization may be required before services are rendered (see Pre-authorization/Precertification).

Benefit
The term "benefit" may refer in general to a health plan (your "benefits"), specifically define the medical services covered under any particular health plan (a surgery "benefit") or refer to the payment received for services covered under the terms of the policy.

Benefit Period
The period during which benefits will be paid under a health benefits plan. This period is specified in your Certificate of Coverage or other plan document.

Brand-name prescription drug
A medication protected by patent which cannot be dispensed without a prescription from a health care professional. In health insurance policies that include prescription drug coverage, there may be differences in the level of coverage for brand-name drugs versus generic drugs. Check your plan documents to know if brand-name drugs are covered under your policy, and, if so, whether they require a higher copayment or coinsurance.

Capitation
In some kinds of managed care plans, the health insurer pays physicians that participate in the network a fee called capitation. Generally, this is a fixed, prepaid amount that the provider receives as compensation for all services provided to a plan member.

Certificate of Coverage (Certificate of Insurance)
A description of the benefits, limitations and exclusions included in a health benefits plan. A copy of the Certificate of Coverage is generally provided when you enroll in a plan. Replacement copies can be obtained by contacting your plan directly, or in many cases through your employer.

Claim
Information submitted to a health plan to request payment for medical services provided to a person covered under that health plan.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986)
A law that permits individuals to continue coverage temporarily under most employer health insurance plans when they would otherwise lose eligibility due to a loss of employment or a change in family status (such as divorce). The cost of this continued coverage is paid by the employee or dependent who elects it. Small employers, those with less than 20 employees, are generally not subject to COBRA.

Co-insurance
The portion of the cost of covered medical services paid by the patient under a health plan, after first meeting any applicable plan deductible. Co-insurance amounts, which are typically a percentage of the cost, may vary by type of service. Co-insurance requirements are specified in the plan documents.

Consumer-directed health plan
Also referred to as "consumer-driven" or "consumer choice" health plans. A relatively new type of health plan designed to give consumers more control over a portion of their health benefit dollars, typically through a health fund or account that can be used to pay for covered medical expenses. Most health funds allow unused dollars to be rolled over from year to year, for as long as an individual is in the plan, and some plans allow the funds to go with you, even if you change jobs.

Contract Holder
An employer or individual who purchases a health benefits plan from a health insurer.

Covered Expense/Covered Services
See Allowable Expense

Conversion Option
An option that allows an individual who is leaving an employee health benefits plan to purchase individual coverage at a pre-determined rate. This is often an option to COBRA continuation. Conversion is only available under certain plans.

Coordination of Benefits (COB)
When an individual is covered under more than one health benefits plan, coverage is "coordinated" to avoid duplicate payments. Rules establish which plan will pay benefits first and allow for sharing of claims information between plans.

Co-payment
A specified dollar amount or percentage a patient is required to contribute toward the cost of covered medical services under a health plan. Like co-insurance, co-payments generally are applied after the patient has met any applicable plan deductible. Co-payments may vary by type of service. Co-payment requirements are specified in the plan documents.

Credentialing
A system for assessing the professional/clinical qualifications and record of a physician, health professional or health facility. This includes a review of relevant training, academic background, experience, licensure, board certification and/or accreditation to provide certain types of medical services. Most health plans credential physicians and facilities before adding them to their list of participating providers and periodically re-credential these providers while they remain in the network.

Custodial Care
Services provided to attend to an individual's daily living activities, which does not require trained medical personnel. Examples include assistance in walking, bathing, dressing, and feeding. Coverage for custodial care is not included in most basic health benefits plans, including Medicare; check your plan documents to see if it is covered under your plan. Custodial services typically ARE covered under long term care insurance, making this a valuable supplement to traditional health coverage.

Deductible
A fixed amount that an individual must pay for covered medical services before the health plan will pay benefits.

Dependent Care Reimbursement Account
These accounts let you set aside pre-tax dollars to pay for eligible childcare expenses. Because the reimbursement account contributions are not taxed, you decrease your taxable income while increasing your available cash. Funds do not roll over from year to year, are not portable and do not accrue interest.

Dependent
A child or spouse who gets health insurance coverage through your plan. Often times there are limits for enrolling a new dependent in a health plan, so check with your health plan provider if you are getting married, having a new baby or adopting a child. Also keep in mind that your child may no longer be covered under your health plan when he or she reaches a certain age.

Direct Access
Also called "open access." A term used to describe certain health benefits plans under which an individual may go directly to any participating provider in the health plan's network without a referral from a primary care physician.

Disease Management
A program for identifying individuals with a specific illness or disease (usually chronic in nature) and using an integrated health care approach to help prevent recurrence of symptoms, maintain a high quality of life and prevent future need for medical care. Individuals enrolled in a disease management program may receive educational information, supplies and follow-up contact with medical professionals to help them manage their illness.

Drug Formulary
See Formulary

Effective date
The date on which the coverage under a person's health plan goes into effect. Typically, the effective date of your coverage can be found on your ID card.

Emergency
A serious medical condition resulting from injury or illness that arises suddenly and requires immediate medical attention.

Enrollee
A subscriber or dependent covered under a health plan, sometimes also referred to as a "member."

Exclusion
Specific conditions or circumstances that are not covered for benefits under a health plan. These are listed in detail in the plan's Certificate of Coverage (COC) or other plan document and sometimes described more generally in marketing or other plan materials. Check exclusions carefully before enrolling in a plan.

Experimental Services or Procedures
Also called "investigational." Health care services, supplies, treatments or drug therapies that have yet been determined to be effective and safe in treating the illness or injury for which their use is proposed.

Explanation of Benefits (EOB)
Under some health insurance plans, an Explanation of Benefits form is provided directly to the enrollee to explain how a health benefits claim was paid. In addition to claims payment information, the EOB often includes information on the appeals process. EOBs are sometimes mailed and are often now available through the Internet.

Family and Medical Leave Act
A law that requires your employer to give you up to 12 work weeks of unpaid leave per year for the following reasons:

• Birth and care of a newborn baby
• Adoption or foster care placement
• Care for an immediate family member (spouse, child, or parent) with a serious health condition
• Medical leave when you are unable to work because of a serious health condition

Only companies with 50 or more staff members are required to comply with this law, so check with your human resource department about their medical leave policy if you work for a smaller company. Also, to qualify you must have worked at your company for at least 1,250 hours in the last 12 months before you begin your leave.

Fee for Service
A reimbursement system that pays physicians or other providers a fee for each service they perform, often based on a schedule of fees.

First Dollar Plan
This term is applied generically to a health benefits plan that does not have a deductible. More recently, it is also used to describe a plan that does have a deductible but also incorporates a benefits "fund" or account that can be used to pay for medical services before the deductible is met. Unlike an HRA or HSA, the fund benefit incorporated in these first dollar plans generally does not roll over from one year to the next.

Flexible Spending Account (FSA)
A FSA is a tax-advantaged account established in connection with an employer-sponsored benefits plan that can be used to pay for medical expenses. Contributions to the FSA are typically made by the employee. The contributions are free of federal, Social Security and most state taxes. Funds must be used in the year they are accrued; unused funds revert to the employer. Funds are not portable and do not accrue interest.

Formulary
A list of covered prescription drugs established by a health plan with the assistance of their Pharmacy and Therapeutics Committee. Generally includes both brand-name and generic prescription drugs. Most health benefits plans that cover prescription drugs use a formulary and, within each category of covered drugs, may provide different levels of coverage based on the drug's cost, efficacy or other considerations. Formularies are subject to periodic review and modification by a health plan.

Fully Insured
An employer who pays a premium to a health plan provider to provide and administer benefits plans for its employees is said to be "fully insured." This means the insurer, not the employer, is liable for the cost of medical claims.

Generic Prescription Drugs
A chemically equivalent version of a brand-name drug for which the patent has expired. Typically generic drugs are less expensive and are sold under the common name for the drug, not the brand name.

Group Coverage
Plans supported by an employer or employee organization that provide health coverage to employees as well as former employees and their families in many cases. Professional and alumni associations, such as local Chambers of Commerce, may also offer group health plans.

Health Benefits Plan
A plan purchased by an individual or provided through an employer that provides payment for health care services. Some plans are limited to particular types of services such as hospitalization or dental care; others provide comprehensive benefits subject to certain exclusions and limitations. The terms of a health benefits plan are described in a plan document, and this document should be reviewed carefully when choosing a health benefits plan.

Health Care Consumerism
Health care consumerism is a movement that encourages individuals to become more involved in and take more responsibility for making smart health care decisions, managing their health benefits dollars and maintaining their overall health status.

Health Fund
A term applied to both Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) to describe a benefits account that can be used to pay for health care expenses.

Health Insurance Portability and Accountability Act (HIPAA)
HIPAA is a federal law enacted in 1996, designed to improve availability, portability and efficiency of health coverage by:

• Limiting exclusions for pre-existing conditions
• Providing credit for prior health coverage
• Allowing transmission of coverage information (i.e., covered family members and coverage period) to a new insurer
• Providing new rights to allow an individual to enroll for health coverage when he or she loses coverage or has a new dependent
• Prohibiting discrimination in enrollment/premiums
• Guaranteeing availability of health insurance coverage for small employers

HIPAA's Administrative Simplification and Privacy (AS&P) rules seek to improve the efficiency of the health care system by standardizing the electronic exchange of health information and protecting the security and privacy of consumer-identifiable health information.

Health Maintenance Organization (HMO)
A form of health benefits plan that provides or arranges for health services required by its members. In a traditional HMO plan non-emergency services must be received from a network of health care providers, although certain HMO plans may offer reduced benefits for care received outside of the network. In most HMO plans, members are required to select a primary care physician (PCP) from the network to provide routine care and make referrals for specialty and hospital services when appropriate.

Health Reimbursement Arrangement (HRA)
An HRA is an employer-paid benefit account offered to employees or retirees. HRA funds are generally available to pay for deductible and co-insurance amounts required under the health benefits plan provided by the employer, although some employers permit HRA dollars to be used for any qualified medical expenses. Unused funds in an HRA may be carried over from year to year, in accordance with rules defined by the employer.

Health Risk Assessment
A form or online tool that is filled out by an individual and used to assess the individual's current health status, as well as risk factors for future illness. It is a good idea to take a health risk assessment to understand your current health risks and ways in which you can reduce your risk for the future.

Health Savings Account (HSA)
An HSA is a tax-advantaged savings account that allows individuals to pay current health care costs or save for anticipated future expenses. To be eligible, an individual must be covered by a high-deductible health plan and not be eligible for coverage under any other health plan. Contributions to the HSA can be made by the employer, the employee or both. Contributions are tax deductible and earn interest tax free. The accounts are portable, meaning you can take them with you when you leave your employer. And balances accumulate from year to year. HSA funds can be used to pay for qualified medical expenses or withdrawn in cash, although cash withdrawals become taxable and may be subject to an additional withdrawal penalty.

High-Deductible Health Plan
A health benefits plan that meets the deductible and other benefit requirements to permit a covered individual to contribute to a Health Savings Account. Benefit requirements for a high-deductible health plan are established by Federal law. For 2007, the required annual deductible was at least $1,100 for individual coverage or $2,200 for family coverage; these minimums are adjusted annually for the cost of living. Premiums for high-deductible health plans are often lower than for other health plans, and the ability to fund a Health Savings Account is an attractive feature for many individuals. Before selecting one of these plans, however, you should check the total benefits and costs against your own experience and anticipated health needs.

HIPAA
See Health Insurance Portability and Accountability Act

Home Health Care
Skilled nursing or other therapeutic services provided in a home setting. Often home health care is covered as an alternative or follow-up to hospitalization or nursing home care. Check with your health plan on what services may be covered when provided in your home.

Hospice
A facility that provides supportive care at the end of life for individuals with terminal illnesses (such as cancer or AIDS).

Hospital pre-certification or pre-registration
Under some health plans, you need advance authorization before the plan will pay for certain medical services, such as going to the hospital. Check out your plan documents to see if there are any services that require preauthorization and whether you or your doctor needs to file the request.

ID Card
The identification card carried by a subscriber or dependent that provides important information relating to health coverage, such as the plan effective date, co-payments, etc. The card usually lists a toll-free number where patients or health care professionals may call for assistance with benefits. You should copy this phone number in another location in case you misplace your ID card.

Indemnity Plan
Often called "traditional plans." Individuals with an indemnity plan receive the same level of benefits for any provider from whom they seek care (the plan has no network). Indemnity plans often incorporate deductibles and co-insurance, and certain benefit maximums, including lifetime maximums, may also apply to the plan.

Independent Practice Associations (IPA)
A group of physicians or other providers that contract with a health benefits plan to provide services. Often you select a physician in an independent practice association as your primary care physician (PCP). You will be referred to specialists and hospitals affiliated with the IPA, unless your medical needs extend beyond the capability of these providers.

Individual Policy
Health coverage for individuals, and their families, who are either self-employed, or who are not offered health coverage through an employer or other group plan.

In Network
Refers to care received from providers who participate in a health benefit plan's provider network, or network of participating physicians, hospitals and health care professionals. It's important to know if your physician is in network, since many health plans provide a higher level of coverage for doctors in their network. Some plans provide coverage only for emergency services received from providers not in their network. Plan materials on the plan website would probably provide a list of providers in their network.

Inpatient care
Health care service provided after a patient is admitted to the hospital.

Investigational Services
See Experimental Services

Length of Stay
The number of consecutive days a patient is hospitalized.

Lifetime Maximum
Some health benefits plans limit the total amount of benefits an individual may receive or limit the number of particular services an individual may receive over the term of the policy (for example, a plan may limit the total number of days of occupational therapy an individual may receive to 60, or have a maximum dollar amount of coverage over a lifetime). When enrolling in a plan, check your plan documents carefully to understand what, if any, lifetime maximum limits will be placed on your benefits.

Long Term Care
A variety of personal care services designed to help people with prolonged or chronic physical illnesses, disabilities or cognitive impairment (such as Alzheimer's disease). Long term care services help people overcome limitations that keep them from being independent by providing ongoing assistance with day-to-day activities like bathing, dressing, eating or when supervision is necessary because of a cognitive impairment. Long term care services include care provided at home or in the community, including home health care and adult day care, as well as through assisted living facilities, nursing homes or other types of facilities. Long term care services can be expensive and are not covered to any substantial degree by medical plans, disability insurance or Medicare. Long term care insurance can help cover the cost of long term care services.

Mail-Order Pharmacy (Mail-Order Drugs)
Health benefits plans often offer distribution of prescribed medication directly to the patient through the mail. Since mail-order distributors can purchase drugs in larger volumes than retail outlets, the cost charged to patients is often lower. Your health plan may have lower pharmacy copayments if you use mail-order drug delivery. Check with your health plan to see if mail order is available to you.

Managed Care
Any form of health benefits plan that actively monitors health care services received by covered individuals for effectiveness, cost efficiency and/or quality. Typical managed care plans provide a higher level of benefits for a select network of contracted providers and may require preauthorization of certain services.

Mandated Benefits
Benefits that health care plans are required to provide by state or federal law.

Medical Savings Account (MSA or Archer MSA)
MSAs were tax-advantaged health savings accounts for individuals who are either employed by a small employer (fewer than 50 employees) or are self-employed. The MSA program was discontinued in 2003 with the authorization of Health Savings Accounts, which operate in a similar manner.

Medicaid
A State government program that provides health care insurance for low income individuals, including families and children.

Medically Necessary
See Necessary

Medicare
A Federal government program that provides health care insurance to people aged 65 years or older, as well as certain disabled individuals. Medicare Part A provides benefits for hospital services and is provided to all eligible individuals without a required contribution. Medicare Part B covers physician and other outpatient services and is voluntary; eligible individuals are required to contribute to Part B coverage. See also Medicare Advantage and Medicare Prescription Drug Coverage.

Medicare Advantage
Medicare Advantage is a health benefits plan provided by a carrier as an alternative to traditional Medicare Part A and Part B coverage. Medicare Advantage plans may provide additional benefits and/or different levels of coverage and may have different required contributions compared to traditional Medicare coverage.

Medicare Advantage Plan (also called Medicare Part C)
A Medicare program that gives you more choices among health plans and extends benefits beyond the Original Medicare Plan. It includes private Medicare Advantage plans (such as HMOs and PPOs) that provide Part A and B benefits to enrollees, as well as Medicare prescription drug benefits beginning in 2006. Nearly everyone with Medicare Parts A and B is eligible for a Medicare Advantage plan. Medicare Advantage plans previously were called Medicare+Choice plans.

Medicare Part A
A government supported health insurance plan that helps cover inpatient hospital care, care in nursing homes, hospice care and some home health care for qualified Americans age 65 and older and certain younger individuals with disabilities. Most people pay for Part A coverage through taxes while working and, therefore, do not pay a deductible or monthly premium.

Medicare Part B
A government supported health insurance plan that covers doctors' services, outpatient hospital care, medical equipment, physical and occupational therapy and some home health care for qualified Americans age 65 and older and certain younger individuals with disabilities. Most people pay an annual deductible and a monthly premium for this health plan.

Medicare Part C (also called Medicare Advantage Plan)
A Medicare program that gives you more choices among health plans and extends benefits beyond the Original Medicare Plan. It includes private Medicare Advantage plans (such as HMOs and PPOs) that provide Part A and B benefits to enrollees, as well as Medicare prescription drug benefits beginning in 2006. Nearly everyone with Medicare Parts A and B is eligible for a Medicare Advantage plan. Medicare Advantage plans previously were called Medicare+Choice plans.

Medicare Part D
A government supported health insurance plan that helps cover prescription drug costs for qualified individuals who are entitled to Medicare Part A and/or B. Beginning January 1, 2006, private health insurance companies have offered these plans to Medicare recipients.

Medicare Prescription Drug Coverage
Sometimes called Medicare Part D coverage, a plan of benefits provided under the Medicare program that contributes to the cost of prescription drugs.

Medigap
Insurance that supplements the reimbursement provided by Medicare for medical services. Medigap plans often pay for certain classes of services not covered by traditional Medicare coverage, and may also pay for co-insurance or other amounts seniors are required to contribute to their Medicare coverage.

Necessary, Medically Necessary, Medically Necessary Services or Medical Necessity
Medical services or supplies that are appropriate and effective for the treatment of an illness or injury in accordance with clinical research findings or accepted medical standards, as described in the covered benefits section of individual plan documents. Health benefits plans typically pay only for services and supplies that are medically necessary.

Network
Also called "provider network." A panel of physicians, hospitals and other health care professionals who contract with a health benefits plan to provide services, typically at a negotiated rate of payment. With certain plans, an individual must access care from a network provider in order to receive the maximum level of benefits.

Non-participating Provider
This term is generally used to mean physicians, hospitals and other health care professionals who have not contracted with a health plan to provide services. Also called "non-preferred provider."

Open Access
See Direct Access

Open Enrollment
A period of time, often in the fall, when employees may make choices regarding their benefits for the following year. You should read enrollment materials carefully, since there are often substantial differences between health benefits plans.

Original Medicare Plan
See Medicare Part A and Medicare Part B.

Out-of-Pocket
Amounts such as copayments and deductibles that an individual is required to contribute toward the cost of health services covered by his or her health benefits plan. In some instances this term also includes amounts the individual pays for health services not covered by the plan. There are substantial differences between plans in the amount of out-of-pocket costs you may incur. If your benefits plan has high out-of-pocket costs, you might consider participating in a Flexible Spending Account or Health Savings Account, if one is available to you.

Out-of-Pocket Maximum
The limit on the amount an individual is required to pay for health care services covered by his or her benefits plan. Look for this information in insurance plan documents such as your Certificate of Coverage.

Outpatient Care
Care provided without overnight admission to a hospital or other medical facility.

Outpatient Surgery
Surgical procedures that do not require an overnight stay in a hospital or other medical facility. Such surgery can be performed in the hospital, a surgery center or physician's office.

Over-the-Counter (OTC) Drug
Medication that may be obtained without a prescription from a medical professional.

Participating Provider
A physician, hospital, nursing facility or other health care provider that has contracted with a health plan to provide covered services for a negotiated charge. Also called "preferred care provider."

Personal Health Record
A Personal Health Record (PHR) stores health-related information in a password-protected online record. In many cases information such as claims submitted to your health insurer, the location of your last doctors' visit and prescribed treatment is automatically added by your insurer. Depending upon the PHR, individuals may have the opportunity to input personal information like family history of disease, blood type, diet and exercise regimens and allergies. The Privacy Rule, part of the Health Insurance Portability and Accountability Act (HIPAA), regulates how health information that can be linked to an individual may be used.

Pharmacy and Therapeutics (P&T) Committee
A group of physicians, pharmacists and other health care professionals who advise a health plan regarding prescription drug formularies and the safe and effective use of medications.

Plan Documents
Plan documents describe the details of a health plan - what services are covered, what services are not covered, and what charges the patient will be required to pay (copayments, deductibles, coinsurance). "Plan documents" may include a group agreement, group policy, Certificate of Coverage, Certificate of Insurance or Evidence of Coverage. You should read the plan documents before deciding which health plan is right for you. You may obtain a copy of the plan documents through your employer or health plan.

Point-of-Service (POS)
A health benefits plan that provides coverage for care received from both participating providers and non-participating providers. In many POS plans, patients whose care is directed through referrals from their primary care physician (PCP) receive a higher level of benefits, while patients who go directly to other physicians or facilities receive a lower level of benefits.

Practice Guidelines
Also called "clinical practice guidelines," "practice parameters" or "medical protocols." These guidelines describe optimal approaches to diagnosis and treatment of specified illnesses or injuries based on current medical research.

Preauthorization/Precertification
Under some health plans, individuals are required to receive advance authorization of particular medical services. Such advance authorization is called “preauthorization” or “precertification.” Depending on the type of plan you have, your physician may request this authorization or you may be required to do so. Check your plan documents to see if there are any services that require preauthorization under your plan and, if so, who is responsible for requesting it.

Pre-existing Condition
A health condition (other than a pregnancy) or medical problem that was diagnosed or treated prior to enrollment in a new health plan. Some pre-existing conditions may be excluded from coverage during a specified timeframe after the effective date of coverage in the new health plan. Before enrolling in a health plan, check the plan documents to see if there are any pre-existing condition exclusions.

Preferred Care Provider
See Participating Provider

Preferred Provider Organization (PPO)
A health benefits plan that allows an individual to choose any provider without designating a primary care physician (PCP), but offers higher levels of coverage to those who choose participating or preferred physicians or hospitals.

Premium
The amount charged, often in installments, for an insurance policy. If you have health benefits through your employer, the cost of the premium is often shared between you and your employer. You should know what your employer is paying for your health premium, as this is part of your total compensation.

Prescription Drug
A medication that cannot be dispensed without an order from a medical professional. The term is used to distinguish from over-the-counter drugs, which can be obtained without a prescription.

Preventive Care
Programs or services that can help maintain good health (such as annual physical exams or immunizations) or are meant to detect early signs of disease (such as mammograms and colon cancer screenings). Check to see that these are covered under your health plan.

Primary Care Physician/Primary Care Provider (PCP)
A physician who is part of a health plan's network and serves as a patient's main point of contact for medical care. A PCP typically provides basic medical and coordinates and supervises other care received by the patient. A PCP is usually a general or family care practitioner, or in some cases, an internist, pediatrician or OB/GYN. PCPs provide patients with referrals for specialist care or other medical services. In some health plans, you must choose a PCP to coordinate your care.

Private Fee-for-Service Plan
A type of Medicare Advantage Plan through a private insurance company that charges a premium to let Medicare recipients go to any Medicare-approved doctor or hospital that accepts the plan's payment. The private company, rather than the Medicare program, decides how much it will pay and how much you pay for the services you get. This type of plan may offer extra benefits the Original Medicare Plan doesn't cover.

Provider
A licensed health care facility, program, agency, physician or other health professional that delivers health care services.

Provider Network
See Network

Qualified Medical Expense(s)
Federal tax law defines a "qualified medical expense" is for purposes of FSA, HRA, HSA and MSA spending. Expenditures from an FSA or HRA must be a qualified medical expense under this definition. HSA funds may be withdrawn for other purposes, but such withdrawals are taxable and may be subject to an additional tax penalty. The Federal definition, which is contained in Section 213(d) of the Internal Revenue Code, is relatively broad, including all services covered under most health benefits plans as well as certain services and supplies (such as eyeglasses) that generally are not covered by health plans. Complete details can be found in IRS Publication 502.

Reasonable Charge
A limit set by a health plan on the amount it will pay for a medical service. This limit is often determined by reference to amounts typically charged for a particular health care service by other providers in the same geographic area, although some plans may refer to other payment standards (such as the amount paid by Medicare). Also called "usual, customary and reasonable (UCR)" or "customary and reasonable."

Referral
In some health plans, patients must receive a referral from their primary care physician (PCP) to receive covered services from a specialist or receive other health care services. A referral is a specific set of directions or instructions from a PCP, which direct an individual to a specialist or facility for medically necessary care. A referral may be written or electronic.

Reimbursement
Payment from a health benefits plan to reimburse an individual's covered medical expenses or directly to a health care professional in payment for services rendered to plan participants.

Retiree Reimbursement Account (RRA)
Retiree Reimbursement Accounts (RRA) are health reimbursement arrangements designed to be used in retirement to pay for insurance premiums and/or qualified medical expenses. Contributions to an RRA are made by an employer. Balances rollover from year to year in accordance with rules established by the employer. Funds in an RRA may be used to pay for unreimbursed medical expenses as well as health premiums, including Medicare Part B and Medigap policies. Reimbursements from an RRA are not considered taxable income to the retiree.

Rollover Feature
The ability to carry forward or "roll over" any remaining balance in a health fund to use for covered medical services in subsequent years.

Second Opinion
Visiting another physician or surgeon for an opinion regarding a diagnosis, course of treatment or specific types of elective surgery. Second opinions are generally voluntary, but may be required in certain instances under some health plans.

Section 213(d)
Section 213(d) of the Internal Revenue Code outlines what a "qualified medical expense" is for purposes of FSA, HRA, HSA and MSA spending. Expenditures from an FSA or HRA must be a qualified medical expense under this code section. HSA funds may be withdrawn for other purposes, but such withdrawals are taxable and may be subject to an additional tax penalty.

Self-Insured
Also called "self-funded." An employer who takes on the financial responsibility for paying the health benefits claims of its employees is said to be "self-insured" (versus a "fully insured" employer, who pays a health insurance company to take on financial responsibility for claims). Self-insured plans can be administered by the employer or an outside company.

Service Area
The geographic area in which a health plan is licensed to operate (where applicable) or, when licensing is not required, the geographic area where an adequate network is established to provide services covered under a benefits plan.

Social Security Retirement Benefits
A government supported retirement benefit program funded through a federal income tax and paid to Americans based on age, number of years worked and income earned over an individual's career. Higher lifetime earnings result in higher benefits, while time off and lower income years may result in lower benefit payments. Age 62 is the earliest possible retirement age for Social Security benefits, and full retirement age is determined by year of birth. Choosing to collect retirement benefits before you reach full retirement age results in permanently reduced benefits.

Specialist
A physician who provides medical care in a medical or surgical specialty or subspecialty (for example, dermatologist, oncologist, etc.).

Subscriber
The individual covered under an employer's group agreement or group insurance policy. If an employer makes family coverage available, the subscriber may enroll eligible dependents in the benefits plan.

Traditional Plan
See Fee for Service plan

Uncovered Services
Also "exclusions." Specific conditions or circumstances that are not covered for benefits under a health plan. These are listed in detail in the plan documents, and sometimes more generally in marketing or other plan materials. Check uncovered services/exclusions carefully before enrolling in a plan. Ask the plan or your employer for a copy of the plan document.

Urgent Care
Services received for an unexpected illness or injury that is not life threatening but requires immediate outpatient medical care that cannot be postponed. An urgent situation requires prompt medical attention to avoid complications and unnecessary suffering or severe pain.

Usual, Customary, Reasonable (UCR)
See Customary and Reasonable

Well Baby/Well Child Care
Routine care for generally healthy children up through age eight, including checkups, tests and immunizations.

Wellness Program
A health management program that incorporates disease prevention, medical self-care, and health promotion. Wellness programs focus on changing and/or reinforcing healthy lifestyle behaviors that can help prevent illness and disability.