Glossary of Terms
Below is a list of
terms and definitions commonly referenced in Consumer-Driven Healthcare (CDH)
Adjudication
Processing claims according to plan rules
Advocacy
Activities done to help a person or group get something the person or
group needs or wants.
Annual Enrollment Period
A period of time prior to the beginning of the plan year during which
eligible employees may change their benefit elections.
Beneficiary
The person(s) designated to inherit any proceeds of income from your
account after your death.
Benefit
Amount payable by the health plan to a claimant, assignee, or
beneficiary when the insured suffers a loss.
Cafeteria
A benefits plan that allows employees to select from a pool of choices,
some or all of which may be tax-advantaged. Potential choices include
cash, retirement plan contributions, vacation days, and insurance.
Calendar Year
January 1 through December 31 of the same year.
Capitation
A set dollar limit that you or your employer pays regardless of the
level or type of care provided.
Catch-up
Contributions
Additional contributions, above those listed as the maximum annual
contribution limits, available to the HSA owner in the year they reach
55.
Claim
A request by an individual (or his or her provider) to the health plan
for payment or reimbursement for service obtained from a health-care
professional.
Coinsurance
The money that an individual is required to pay for a service, after a
deductible has been paid. Coinsurance is often specified by a
percentage.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
A Federal legislation requiring employers to offer continued health
insurance coverage to employees who have had their health insurance
coverage terminated.
Consumer-Driven Healthcare (CDH)
A term that refers to health plans in which employees have a personal
health account, such as a health saving account (HSA) and/or a health
reimbursement arrangement (HRA), from which they medical expenses
directly.
Consumer-Driven Health Plans (CDHP)
Consumer-directed health plans typically offer reduced premium costs, in
exchange for a higher deductible. In addition, many provide incentives
and tools to manage both healthcare decisions and the costs associated
with them.
Coordination of Benefits (COB)
A system to eliminate duplication of benefits when a person is covered under
more than one health plan; benefits under both plans are usually limited to no
more than 100% of the claim.
Co-pay
The flat fee dollar amount of a charge that a covered person must pay for certain
covered services.
Covered Services
Those medical procedures the health plan agrees to pay for.
Custodian
An agent, bank, trust company or other organization that holds and
safeguards an individual’s assets for them.
Date of Service
The day the services are received by a patient.
Deductible
The amount of covered expenses an individual (or family) must pay before
benefits become payable by the health plan; often determined on a
calendar year or plan year basis.
Denial of Claim
Refusal by the health plan to pay or reimburse a claim.
Effective Date
The date coverage begins for a covered person under the contract.
EFT
Electronic funds transfer; also referred to as direct deposit.
Eligibility
A generic term applying to enrollment benefits, service reimbursement,
(etc.), most commonly defined as the determination of whether a member
qualifies for coverage.
Exclusions
Medical services that are not covered by the health plan.
Explanation of
Benefits (EOB)
A formalized statement to a subscriber and/or provider showing action
taken on a claim.
Family Coverage
Any coverage specified for more than one individual (individual
coverage).
Flexible Spending
Account (FSA)
An employee benefit that allows you to have pre-tax dollars withheld
from your paycheck to pay for un-reimbursed medical, dental, or
dependent care expenses. You choose how much money you want to
contribute to an FSA at the beginning of each plan year. FSA’s cannot be
used in conjunction with an HSA account.
First-dollar
Coverage
Immediate reimbursement or no payment required for specific covered
expenses, without meeting a deductible. Some preventative services may
have first-dollar coverage under the terms of your health plan.
Generic Drug
The identical or bio-equivalent medicine to a brand name drug in dosage
form, safety, strength, route of administration, quality, performance
characteristics and intended use; although generic drugs are chemically
identical to their branded counterparts, they are typically sole at
substantial discounts from the branded price.
Health Maintenance
Organization (HMO)
An organization set up and operated to provide health services under a
pre-paid or Capitated arrangement (pre-structured fees); monthly fees to
the HMO remain the same regardless of the types or levels of service
provided.
High Deductible
Health Plan (HDHP)
An HDHP is a health benefit plan that typically offers lower premiums in
exchange for higher annual deductibles when compared to traditional
health plans.
To be an HSA compatible or “qualified” HDHP, the plan must meet the requirements
of the Medicare Prescription Drug, Improvement, and Modernization Act of
2003 for minimum deductibles and out-of-pocket maximums. High deductible
plans may offer first-dollar coverage of preventive care and still emain qualified.
HIPAA
Legislation that has several national, administrative, and financial
provisions. Enacted in 1996, it addresses subjects including healthcare
reform, medical savings accounts, COBRA revisions, and fraud and abuse.
Health reform rules include rules pertaining to pre-existing conditions,
crediting of prior coverage, and guaranteed renewability. The HIPAA
Administrative Simplification section mandates specified electronic
formats for claims and other transactions in addition to mandates for
national identifiers, security and privacy.
Health
Reimbursement Arrangement (HRA)
A tax-favored savings account employees can use to pay for healthcare
expenses. It is employer-funded and let employees build up savings for
future needs. An HRA can a coupled with a standard or high deductible
health plan (HDHP), or can be offered on its own.
Health Savings
Account (HSA)
A tax-favored savings account you can use to pay for healthcare
expenses. It is owned by you, is 100% vested, and lets you build up
savings for future needs. A requirement for opening an HSA is that it be
coupled with a qualified high deductible health plan (HDHP) that covers
catastrophic medical expenses after the deductible. Specifically, for
2007 the plan must have a deductible of at least $1,100 for individual
coverage and $2,200 for family coverage.
Important Note: If
you own a HSA and later become ineligible to make deposits, you can
still receive distributions from your HSA. All that is limited is your
ability to put additional contributions into an HSA.
Indemnity Health
Plan
Individuals pay the deductible plus a pre-determined percentage of the
cost of healthcare services, and the health plan pays the remaining
portion; fees for services are defined by the providers and vary from
physician to physician.
Individual
Coverage
Coverage for only one individual.
Lifetime Maximum
When benefits to the covered individual total this amount, no more
benefits will be paid for the person under the contract.
Line of Credit
An approved extension of credit used for payment of qualified medical
expenses. An application for credit is submitted and approved or
declined based on the member’s qualifications.
Managed Care
Medical delivery system that attempts to manage the quality and cost of
medical services that individuals receive; HMOs and PPOs are managed
care plans.
Maximum Annual
Contribution
The total amount the government allows an HSA holder to add to their
account in a given calendar year.
Member
Often used to refer to the contract holder, policyholder, or subscriber
in a health plan; also known as employee, covered person, enrollee, or
insured.
Minimum Available
Balance
Balance required in the HSA account before an initial or subsequent
investment trades can be made.
Mutual Fund
A pool of securities (stock, bonds, money market assets, or trusts)
managed by an investment adviser.
Network
A group of doctors, hospital and other healthcare providers contracted
to provide services to insurance company customers for less than their
usual fees.
Open Enrollment
The period of time during which a person if first eligible to enroll
under the contract, starting on the date of the person’s initial date of
eligibility and ending several weeks later, also used to refer to the
annual enrollment period.
Out-of-Pocket
Maximum
The total amount of the calendar year deductible plus the amount of any
coinsurance and/or co-pays a covered person must pay each calendar year
for covered services before benefits will be paid at 100%; some services
may not apply to the out-of-pocket maximum.
Overdraft
When the HSA has insufficient funds required for payment, the difference
is paid out of a third party line of credit (subject to credit
approval).
Plan Year
Twelve-month period between health plan renewals.
Preferred Provider
Organizations (PPO)
Type of health insurance program where a limited group of physicians and
hospitals provide a broad range of medical care for a predetermined fee;
individuals who do not use the preferred providers for care usually have
to pay a higher portion of their medical expenses.
Premiums
The amount paid by the customer on a periodic basis for coverage under
the health plan.
Prescription Drug
List
A list of drugs covered by the health plan often listed as 1st tier
(generic), 2nd tier (brand name preferred), or 3rd tier (brand name
non-preferred).
Preventive Care
Healthcare services intended to prevent a medical condition from
occurring, or to detect the onset of a condition early so that it can be
more effectively treated. Preventive care includes regular medical
check-ups, screening tests, vaccination, and the encouragement of a
healthy lifestyle.
Pre-existing
Condition
A health problem that existed before the date a person’s health plan
became effective.
Primary Care
Doctor (PCP)
Usually the first contact for healthcare, often a family physician or
internist; the PCP monitors an individual’s health and treats minor
health problems, and refers out to specialists if further care is
needed.
Provider
Any person (doctor, nurse, dentist, therapist) or institution (hospital,
clinic) that provides medical care.
Qualified Medical
Expense (QME)
Internal Revenue Code Section 213(d) defines qualified expenses, in
part, as “medical care’ amounts paid for insurance or ‘for the
diagnosis, cure, mitigation, treatment, or prevention of disease, or for
the purpose of affecting any structure or function of the body…” To be
eligible, these expenses must be to alleviate or prevent a physical
defect of illness. Expenses solely for cosmetic reasons generally are
not considered expenses for medial care. Examples include facelifts,
hair transplants and hair removal (electrolysis). Expenses that are
merely beneficial to your general health (e.g., vacations) are not
expenses for medical care. One fact or circumstance that often, but not
always, indicates that medical care involves the treatment or prevention
of disease is whether the care is prescribed by a physician. A mere
suggestion by a physician probably is not enough. In addition, there
should be a doctor-patient relationship between you and the physician
prescribing the care.
Referral
A form provided by a member’s doctor authorizing services from other
network providers if the attention of a specialist is required.
HSA Saver
A term used to describe an HSA holder who chooses to save money in their
HSA and use a line of credit to pay for health expenses. The member has
the option to “save” money in the HSA and use a line of credit as the
primary account for payment of qualified medical expenses.
HSA Spender
A term used to describe an HSA holder who chooses to spend money in the
HSA rather than saving it. The member has the options to “spend” money
from the HSA first and a line of credit can be used as overdraft
protection.
Tax-Free
Contributions
When enrollees participate in a payroll deduction program through their
employer, deductions may be taken from payroll before calculating the
member’s taxable Federal Income, social security and (for most states)
taxable state income.
Trades
Buying and selling of mutual funds.
Usual, Customer
and Reasonable (UCR)
The amount customarily charged for a service or supply; most plans will
only cover services up to UCR and individuals may be required to pay the
full cost of the difference.
Utilization Review
A set of formal techniques designed to monitor the use of, or evaluate
the clinical necessity, appropriateness, efficacy, or efficiency of
healthcare services, procedure or settings.
Waiting Period
The waiting period is the length of time an employee must continuously
work for the employer before he is eligible to enroll for coverage under
the contract.
|
