California health insurance guide

Consumers: Glossary of California Health Insurance Terms Guide provided by http://www.insurance.ca.gov/ Link here

Below is a glossary of some common terms used in the health care insurance industry. We have tried to provide consumers with some simple definitions to better understand their policies and other terminology used in the industry.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Acute Care Facility
One step below a hospital, an acute care facility gives advanced medical and nursing services to bring you back to health.

Agent
In the insurance industry, a California health insurance agent is appointed by an insurance company to sell insurance policies. The agent represents the insurance company, not the insured.

Assignment
Your signed authorization to your doctor or hospital (medical provider) assigning payment to be made directly to them for your medical treatment.

Assisted Living
(See �board and care facility.�)

Banding
Organizing people together by age groups to calculate California health insurance premiums.

Board and Care Facility (Long Term)
A board and care facility offers no nursing services. It is designed for people who are unable to take care of their day-to-day feeding, hygiene, and/or ambulatory needs. Sometimes called an �assisted living facility,� their orientation is for provision of service over the "long term."

Broker
A person licensed by the State to sell California insurance coverage with multiple health plans or insurers. The broker represents you and not the insurance companies. The broker helps you shop for the best policy. Note that no license is necessary to sell HMO products in California.

Business Day
Every day that insurance companies are open for business, which excludes Saturday, Sunday, and state and federal holidays.

Calendar Day
Every day of the calendar month, which includes Saturday, Sunday, and state and federal holidays. However, if any action tied to a time frame in an insurance policy or CDI regulation or code falls on a Saturday, Sunday, or state or federal holiday, then the action is postponed to the next calendar day that does not fall on a Saturday, Sunday, or state or federal holiday.

Capitation
A flat per patient fee paid to providers no matter how many services they have provided.

Certificate of Coverage
A document issued to a member of a California group health insurance plan showing evidence of participation in the insurance.

Certificate of Creditable Coverage
A written statement from your prior health insurance company or health plan documenting the length of time you were covered.

Chronic Condition
A medical condition or disease that goes on for a long period of time. Examples are diabetes and cystic fibrosis.

Claim
A notification to your insurance company that payment is due under the policy provisions.

Coinsurance
Once you have met your deductible, you pay coinsurance for additional medical care. It is a percentage of the billed charge. For example, your insurance company might pay 80%, and then you would pay 20%. It is similar to a co-pay, but is a percentage instead of a dollar amount.

Co-payment
The portion of charges you pay to your provider for covered health care services in addition to any deductible. For example, $20 for an office visit or $15 for a prescription drug. It is similar to coinsurance, but it is a dollar amount instead of a percentage of the charges.

Coverage
The scope of protection provided by an insurance contract which includes any of the listed benefits in an insurance policy.

Creditable Coverage or Prior Qualifying Coverage
The number of months you had health insurance in place before your current or new policy became effective. Creditable coverage must be counted towards any pre-existing condition exclusion in either an individual or group California policy.

Deductible
The amount you must pay for medical services each year before your insurance begins paying.

Denial
An insurance company decision to withhold a claim payment or preauthorization. A denial may be made because the medical service is not covered, not medically necessary, or experimental or investigational.

Drug Formulary
A list of drugs that an insurer will pay for. Drugs that are not on the formulary (�off-formulary�) are sometimes covered but are more expensive (see �excluded drugs�). To you, the cheapest drugs are generic drugs that are on the formulary, and the most expensive drugs are name-brand drugs that are off-formulary.

Elimination Period
(see �pre-existing condition�) A period of time before benefits are payable.

Evidence-Based Medicine
In evidence-based medicine, treatment success is measured by a careful study of the outcome, using both the clinical expertise of the provider, as well as the most up-to-date research available.

Excluded Drugs
Drugs not covered by the insurance policy.

Exclusions and/or Limitations
Conditions or circumstances spelled out in an insurance policy which limit or exclude coverage benefits. It is important to read all exclusion, limitation, and reduction clauses in your California health insurance policy or certificate of coverage to determine which expenses are not covered.

Experimental and/or Investigational Medical Services
A drug, device, procedure, treatment plan, or other therapy which is currently not within the accepted standards of medical care.

Fee-for-Service
A system in which you pay the provider for each single service or procedure.

Formulary
(see �drug formulary�)

Generic Drug
A drug that is similar to a name-brand drug but not covered by original patents and therefore cheaper. For example, the generic for the name-brand �Vicodin�� is �hydrocodone.� If you buy a generic drug, you usually pay less co-pay (see �name-brand drugs�).

Grace Period
A specified period immediately following the premium due date during which a payment can be made to continue a policy in force without interruption. This applies only to Life and Health policies. Check your policy to be sure that a grace period is offered and how many days, if any, are allowed.

California Group Health Plan
When groups of individuals are covered under one insurance contract. Usually people are offered group health plans by their employers (see �California individual health plan�).

Guaranteed Issue
A California health insurance policy that must be issued regardless of any pre-existing medical condition.

Home Health Care
Health care provided in your home.

Hospice Care
Care given to someone expected to live less than six months due to a terminal disease or condition. Hospice care can be given at home or in a hospice center or a board and care facility.

Independent Medical Review (IMR)
A process where expert medical professionals, who have no relationship to your California health insurance company or health plan, review specific medical decisions made by the insurance company. California law provides for an Independent Medical Review (IMR) program, which is administered by the CDI or the DMHC depending upon what type of coverage you have (indemnity or HMO).

Individual Health Plan
A form of health insurance designed to cover just one person (and often immediate family members), as opposed to someone covered by a group plan (see �group health plan California�).

Insurance Company
A California insurance company must be licensed by the Department of Insurance to sell California health insurance. The insurer issues policies which outline coverage. An insurance policy is a contract between the insured and the insurance company. You pay your premiums to an insurance company. They then pay some or all of your medical provider�s bills when you need treatment (see �provider�).

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Lifetime Limit
A dollar limit on how much the insurance company will pay in your lifetime. An insurer may, for example, cover up to $1 million over your lifetime. Above this they will pay nothing.

Long-term Care
Long Term Care is the assistance or supervision you may need when you are not able to do some of the basic "activities of daily living" (ADL) like bathing, dressing or moving from a bed to a chair. Examples of conditions in which you might need assistance with ADLs are: injury, illness, advanced age, or mental deterioration.

Managed Care
Managed care generally emphasizes cost control and may provide coverage for preventive medicine. There are restrictions on the types of procedures that can be used for each medical condition. The amounts that can be charged for the procedures are described by the terms and conditions of the plan.

Major Medical Plan
A high-limit, high deductible California plan to cover catastrophic illness or injury. Major medical used to be called �catastrophic insurance.�

Medically Necessary
A drug, device, procedure, treatment plan, or other therapy that is covered under your health insurance policy and that your doctor, hospital, or provider has determined essential for your medical well-being, specific illness, or underlying condition.

Name-brand Drug
A drug sold under a name-brand, and covered by original patents (for example, the name brand for hydrocodone is �Vicodin��). Name-brand drugs are more expensive than generic drugs, and you usually have a higher co-pay for them than generics (see �generic drugs�).

Open Enrollment
The time (usually a preset two-week or one-month period annually) when you can change health plans under your employer's group plan in California.

Over-the-Counter Drug
You don't need a prescription to obtain over-the-counter drugs.

Out-of-Pocket
The amount of money you pay for medical services after insurance has paid its contribution.

Out-of-Pocket Maximum
The most you will have to pay in a year for deductibles and coinsurance for covered benefits.

Policy
The written contract between an individual or group policyholder and an insurance company. The policy outlines the duties, obligations, and responsibilities of both the policyholder and the insurance company. A policy may include any application, endorsement, certificate, or any other document that can describe, limit, or exclude coverage benefits under the policy.

Portability
The ability to purchase California individual health insurance without being denied of coverage because of a pre-existing condition.

Pre-authorization
Some insurance companies require authorization from them before they will pay for medical services like hospitalization or surgery.

Pre-existing Condition
Any illness or health condition for which you have received medical advice or treatment during the six months prior to obtaining health insurance. Group healthcare policies cover pre-existing conditions after you have been insured for six months, and individual policies cover pre-existing conditions after you have been insured for one year. Reference CIC Section 10198.7. Creditable coverage must be counted towards any pre-existing condition exclusion in either an individual or group policy.

Premium
The money you pay for health insurance (see �rating factors�).

Prescription Drug
You must have a doctor's prescription to receive a prescription drug.

Preventive Medicine
Health care designed to prevent disease or discover and treat disease in the early stage. Examples: Annual physical exam, PAP Smear, cholesterol screening, mammography, infant vaccination, etc.

Primary Care Physician
Your Primary Care Physician (�PCP�) is the doctor you choose to provide basic health care. In an HMO, your PCP must refer you to a specialist if you need to see one.

Provider
Any person or place that provides health care or prescription drugs. Providers can be doctors, hospitals, pharmacies, chiropractors, etc. (see �insurance company�).

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Rating Factors
California health insurance premiums are calculated using many rating factors. Rating factors have much more influence on individual policy premiums than on group polices. Rating factors can include:

� Age: the older you are, the more you might pay.
� Health: the poorer your health, the more you might pay.
� Chronic conditions: having one or more chronic or existing conditions can increase your premium.
� Smoking/alcohol use: some companies charge more if you use tobacco or alcohol.
� Gender: some insurance plans charge more depending upon your gender.
� Geographic region: companies break-down coverage areas into 6-8 regions. Which region you live in can affect your premium.

Skilled Nursing Facility (SNF)
Often called a �SNF.� A SNF provides medical care under the supervision of a medical professional or technician, and dispenses medications, performs diagnostics, and can do minor surgery.

Small Employer
In California's insurance code, a small employer is anyone who employs from 2-50 people. The employer(s) can be included in this number.

Stop-Loss
An insurer may pay 100% of covered benefit charges after you have met your deductible and coinsurance requirements, and your out-of-pocket maximum.

Third-Party Payer
Anyone who pays for health care other than you. Usually your insurance company. When an insurer contracts with an entity to pay on their behalf.

Usual and Customary Charges (UCC)
The amount that your insurance company determines is the normal payment range for a specific medical procedure performed within a given geographic area. If the charges you submit to your health insurance company are higher than what is considered normal for the covered health care services, then your health insurance company may not allow the full amount charged to you.

Utilization Review
Insurance companies and hospitals watch their costs and quality by having medical personnel review selected medical cases. They look at the types and frequency of medical services given and the charges associated with them.

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