COBRA – Federal legislation that requires employers with 20 or more employees to offer employees (and/or dependents) to continue coverage under the group plan for eighteen to 36 months. (More Info)
Co-Insurance – The percentage of covered expenses an insured individual shares with the carrier. (i.e., for an 80/20 plan, the health plan member’s co-insurance is 20%.) If applicable, co-insurance applies after the insured pays the deductible and is only required up to the plan’s stop loss amount. (see “stop loss.”)
Co-pay/Co-payment – The amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might require a $10 co-pay for each doctor’s office visit.
Deductible All About Deductibles
The plan deductible is the amount that you pay during a calendar year before the health plan “kicks in” to reimburse for medical expenses. Some plans may pay certain benefits before the deductible is satisfied, for example office visits may be covered with a copayment. Some plans may have additional deductible for certain expenses; a common example is an additional deductible for prescription drugs. In general, the subscriber must pay the deductible amount before the plan reimburses for covered medical expenses.
Below are various family deductible arrangements.
Embedded Deductible: Under this arrangement, the family deductible is stated as a dollar amount. If any family member reaches the individual deductible then the deductible is satisfied for that family member. If any combination of family members reach the family deductible, then the deductible is satisfied for the entire family.
Common Deductible: For persons who do not cover dependents, the single deductible applies. For persons who cover dependents, there is no single deductible involved. Expenses for all family members accrue toward the family deductible. The family as a whole must satisfy the deductible before medical expenses are reimbursed.
Per Person Deductible: Each family member must satisfy the deductible amount in full before coverage begins for that family member.
Deductibles per Family: Per family deductibles are described as “2 per family” or “3 per family”. Under this arrangement, if the designated number of family members meet the deductible in full then the deductible is deemed satisfied for all family members.
HIPAA – Federal legislation requiring all insurers who offer individual coverage to provide their two most popular plans on a guaranteed acceptance basis to all applicants whose group coverage (including COBRA) ended within 63 days prior to application for coverage. More info
Health Maintenance Organization (HMO) – An alternative to commercial insurance that stresses preventive care, early diagnosis and treatment on an outpatient basis. HMOs are licensed by the state to provide care for enrollees by contracting with specific health care providers to provide specified benefits. Many HMOs require enrollees to see a particular primary care physician (PCP) who will refer them to a specialist if deemed necessary.
Network – A group of doctors, hospitals and other providers contracted to provide services to insured individuals for less than their usual fees. Provider networks can cover large geographic markets and/or a wide range of health care services. If a health plan uses a preferred provider network, insured individuals typically pay less for using a network provider.
Out-of-Network – describes a provider or health care facility which is not part of a health plan’s network. Insured individuals usually pay more when using an out-of-network provider, if the plan uses a network.
Out of pocket maximum – The amount of expenses incurred by an individual at which the plan pays 100% of covered expenses. Amounts in excess of scheduled allowances and other non-covered expenses do not count toward the out of pocket maximum. Family out of pocket maximums can be aggregate (the total expenses by all family members added together) or separate (a certain number of family members must reach their individual out of pocket maximum to initiate the benefit). Quotes display family aggregate out of pocket maximums as a fixed dollar amount and separate out of pocket maximums as the number of out of pocket maximums required per family. Deductibles are included in the out of pocket maximum.
Preferred Provider Organization (PPO) – A network or panel of physicians and hospitals that agrees to discount its normal fees in exchange for a high volume of patients. The insured individual can choose from among the physicians on the panel.
Schedule of allowable charges – Pre-determined amount the carrier will pay for services provided by non-contracted provider. Generally carriers set the allowable fee schedule at the same level as the negotiated rate for contracting providers. Since there is no contractual obligation on the part of non-contracting providers to accept the fee schedule, the customer is responsible for all charges in excess of the schedule.
Short-term medical – Temporary health coverage for an individual for a short period of time, usually from 30 days to six months.
Stop-loss – The dollar amount of claims filed for eligible expenses at which the insurance begins to pay at 100% per insured individual. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.
UCR – Short for usual, reasonable and customary, which is a method that some carriers use to determine allowable charges for non-contracted providers. Usual means the charge that a given provider usually charges, reasonable takes into account extenuating circumstances, customary means what is generally charged in the geographic area. Different carriers have various methods of calculating UCR.