glossary of health insurance terms
Attained Age Rating: Your rate is dependent on your age each year. For example, if you buy insurance when you're 45, you'll pay the same rate as all the other 45-year olds that are in your same general state of health in the same area. As you get older, your rate rises because of your age. In addition, rates raise if medical costs raise.
COBRA (Consolidated Omnibus Budge Reconciliation Act of 1985): Some employers (in the state of Ohio with 20 or more employees) are mandated by law to offer employees who've been let go the option to continue their health coverage for up to 18 months. The employee will pay the full premium, up to 102% of the employer's cost (the extra 2% is the administration fee). You have 63 days to enroll and, when you do, coverage is retroactive. Remember, COBRA covers ALL members of your family from the date of termination ... so if your spouse has a pre-existing condition that a new, cheaper policy might not cover, you can elect to keep COBRA. If you're considering COBRA, be sure to get more information from your employer -- and remember, coverage only lasts 18 months. If within that 18 month period you aren't hired elsewhere, leave yourself two months (2) to seek coverage elsewhere.
Deductible: The amount you have to pay for medical services before your insurance company begins paying benefits. Typically, the higher your deductible, the lower your monthly premium.
Coinsurance: These are costs you pay after you've met your deductible. Coinsurance is usually a percentage of medical expenses ... i.e., many insurance companies pay 80% of medical costs and ask you to pay the remaining 20% -- that 20% is your coinsurance.
Copays: Copays are usually a fixed dollar amount you pay for a product or service, like a $25 copay for office visits or prescription drugs. Often, copays are unlimited ... i.e., even if you've met your deductible, you'll still have a $25 office copay.
Entry Age Rating: Your rate is always based on the age you were when you enrolled -- in other words, if you enrolled at 35, you'll pay the 35-year-0ld rate for as long as you keep the policy. However, your rates rise if medical costs rise.
HMO (Health Maintenance Organization): Typically, this is the least expensive health insurance option, but you may be restricted to using doctors in the HMO network, or the HMO won't pay. In addition, you must choose a primary care physician (PCP) and you may need that physician's permission first (a referral) to see a specialist.
HSA (Health Savings Account): This is a tax-deferred savings account (like an IRA) that lets you save money now for future medical costs.
"Look Back" Period: When ;you apply for health insurance, you must report any medical conditions for which you have been diagnosed or treated during the "look back" period. For example, if a company has a three-year look back period, you have to report conditions that you had treated in the last three years. Based on your answers, you'll either be accepted, denied or accepted with a pre-existing condition "waiting period" -- the time you must wait before your pre-existing conditions can be covered, or you'll be 'rated' for the conditions and covered fully.
Medical Trends: The rate at which medical costs are increasing due to services being used more frequently; an increase in the costs for these services; and/or more expensive services being used.
Out-of-Pocket Maximums: After you meet your deductible, this is the most in coinsurance you can pay in a single year. Out-of-pocket (OOP) maximums usually don't apply to small copay amounts, and typically IF you should meet the OOP max, the plan pays 100% of your medical costs.
Pre-existing Conditions: Any physical or mental conditions that you've been diagnosed or treated for prior to the effective date of health insurance coverage (the day your coverage begins).
Premium: The amount you pay for coverage, usually paid in monthly installments.
Primary Care Physician (PCP): A primary care physician provides, coordinates or arranges for care to patients, and takes continuing responsibility for providing a patient's care.
PPO (Preferred Provider Organization): This option allows you to use in-network and out-of-network doctors, though you'll pay more if you use non-network doctors and other facilities. You do not have to get a referral before seeing a specialist. There is typically a deductible, and you will also probably be responsible for a portion of provider bills (plans often pay 80%; you are responsible for 20%). PPO's have bargained with providers for costs of all medical care procedures, equipment and services.
Referrals: The recommendation by a physician and/or health plan for a covered person to receive care from a different physician, specialist or facility.
Specialist: A physician who has completed an approved residency, passed an examination given by a medical specialty board, and has been certified as a specialist in a medical area.
Traditional Fee-For-Service Health Plans: The most flexible -- and usually the most expensive -- health plans. You may use any provider you want. There is typically a deductible and coinsurance (plans often pay 80%; you are responsible for 20%). In addition, these plans usually only pay for "reasonable and customary" medical expenses. If your doctor charges more, you will have to pay the difference.
Underwriting: This is a process insurance companies use to evaluate the costs of insuring you and determining if you're eligible for coverage. It can involve asking medical questions or requiring health exams. If you are eligible for coverage and multiple rate levels exist, your rate level will be assigned based on this medical underwriting.