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Health Insurance Terms / Glossary
Health Insurance Terms / Glossary used in the Health Insurance Industry
Adverse Selection: Disproportionate provision of health insurance coverage to people who have higher health risk compared to others. Legislation protects the companies against the insurance of those who are at high risk.
Agent: State-licensed individual who has the right to market insurance products.
Allocated Benefits: The money payed for any service included in the health insurance.
Broker: An “independent” agent who has the right to offer multiple health insurance plans from different insurers.
Coinsurance: The part of a health care bill that you have to pay for after the deductible has been settled.
Conversion Privileges: The possibility to choose a different type of health insurance coverage with the same insurer. Unless you're changing the company, you have the right to select any service the company offers for your policy.
Co-payment: A pre-set sum of money that you have to pay for any given service. Like a payment for office visit, co-payment is widespread with HMO and drug plans.
Deductible: A set yearly payment that you have to introduce in order to receive insurance payments. The deductible is calculated according to your personal out of pocket max.
Effective Date: The date when your health insurance coverage takes force. Your coverage isn't available prior to the effective date, regardless of the moment of your application.
Exclusions: The medical services that are not included in your health insurance plan. Vision and dental care often makes part of these services and require the purchase of an additional rider in order to be included in your plan. Certain conditions, like pregnancy, could also make part of exclusions.
Fee-For-Service: The healthcare provider is payed a pre-set amount of money for each service by the health insurance company. Any service has its own fee. And the health insurance company will pay that exact amount of money, regardless of how much the doctor has charged.
Grace Period: The period of time when you still can pay your premium before your health insurance policy is suspended. In some cases, your bill won't be settled unless you pay your premium, regardless of whether the policy is in grace period or not.
HIPPA: Health Insurance Portability and Accountability Act, a bill protecting client privacy and restricting financial advisors from giving recommendations concerning asset protection.
HMO: Health Maintenance Organization, which plans work with different doctors. There must be a primary healthcare provider, that will provide recommendations to other specialists. In other case the insurance coverage will not be available.
Indemnity: A specific insurance plan based on scheduled payments. Because indemnity is often regarded as something other than insurance, many clients choose to have both the traditional and indemnity insurance plans.
Joint: Health insurance coverage that includes two or more people in one health insurance policy. Usually seen in case of life insurance.
Kennedy-Kassebaum Act: A bill introduced by Senators Edward Kennedy and Nancy Kassebaum. Sometimes referred to as the HIPPA act.
Lifetime Limit: The maximum sum of money your health insurance policy can pay for health care.
Maximum Out of Pocket: Yearly sum of money you are able to pay for health care that you won't exceed. There are an an individual and a family maximum, that both do not include premiums.
Medicare: Healthcare insurance plans provided to person of age 65 or over, or qualifying for disabled, provided by the federal government.
Medicaid: Federal health insurance for people with an extreme economic situation. Medicaid can only be combined with Medicare insurance.
Nursing facility: A place where “skilled nursing” services can be provided. There's usually a certain number of days that most health insurance plans will pay for.
Pre-authorization: Most expensive tests or hospital admissions require that the health insurance carrier is notified prior provision of such services.
Preexisting Condition: Any injury or illness, which was present before the effective date of insurance coverage took force. Unlike private plans that can deal with preexisting conditions for any period of time before the plan's effective date, group plans refuse pre-existing clauses.
Premium: The sum of money you have to pay in order to receive the health insurance coverage included in your plan.
Renewable: Most health insurance policies won't be canceled regardless of the number of claims because they are “guaranteed renewable.” Still, the amount of premium will likely to be increased.
Rider: Additional insurance coverage, which is usually applied for conditions and health care services not included in standard plans (pregnancy, dental care, etc.). A rider will charge an additional premium.
Second Opinion: The opinion of a second doctor regarding a certain procedure recommended by thefirst, which many insurance companies will pay for.
Short Term Medical: Insurance coverage plans that are usually provided when traditional plans do not apply (job transition, change of residence, etc.) The time period of such health insurance plans is usually from 60 to 90 days.
Short Term Disability: The continuity of salary for a certain period of time provided by the employer in case the employee has an injury or illness. Not to be confused with disability insurance.
Traditional Plans: Common health insurance plans provided by insurers. In case of traditional plans the company pays the doctor according to the “reasonable and customary” principle, while the customer pays a deductible and a co-insurance.
Underwriting: The health insurance company will examine your medical history in order to determine whether you qualify for the type of insurance coverage you have opted for or not. This helps the company to avoid adverse selection.
Usual and Customary: The average amount of money charged by the doctor for certain services within a geographic area. This amount varies between locations, For example, in rural areas you can be charged less for the same services you receive in urban areas.
Waiting Period: The period of time before the coverage of services will be performed. This periodoften relates to conditions existing prior the effective date of an insurance policy.
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