Below are definitions for some of the more commonly used health insurance terms. Click on a letter in the index below to go directly to a particular section in the glossary.
The ability to obtain needed medical care. Access to care is often affected by the availability of insurance, the cost of the care and the geographic location of providers.
The demonstration by an insurer that the premiums collected are reasonable, given the benefits provided under the plan or that the distribution of premiums among policyholders are proportional to the distribution of their expected costs, subject to limitations of state and federal law. PPACA requires insurers to publicly disclose the actuarial justifications behind unreasonable premium increases.
Network of health care providers that ban together to provide the full continuum of health care services for patients. The network would receive a payment for all care provided to a patient and would be held accountable for the quality and cost of care. Once the provider collects its fee, it may not balance bill the patient (see Balance Bill).
A health insurance plan that offers similar coverage to a standard benefit plan. Actuarially equivalent plans will not necessarily have the same premiums, cost sharing requirements or even benefits; however the expected spending by insurers for the different plans will be the same.
The demonstration by an insurer that the premiums collected are reasonable, given the benefits provided under the plan or that the distribution of premiums among policyholders are proportional to the distribution of their expected costs, subject to limitations of state and federal law.
Measure of the average value of benefits in a health insurance plan. It is calculated as the percentage of benefit costs a health insurance plan expects to pay for a standard population using standard assumptions and taking into account cost sharing provisions. Placing an average value on health plan benefits allows different health plans to be compared.
Person professionally trained in the mathematical and statistical aspects of the insurance industry. Actuaries frequently calculate premium rates, reserves and dividends and assist in estimating the costs and savings of benefit changes.
A way of pricing insurance where premiums are not based upon a policyholder's health status, but may be based upon other factors, such as age and geographic location. PPACA requires the use of adjusted community rating, with maximum variation for age of 3:1 and for tobacco use of 1.5:1.
People with a higher than average risk of needing health care are more likely than healthier people to seek health insurance. Insurance companies strive to maintain risk pools of people whose health on average is the same as that of the general population. Adverse selection results when the less healthy people disproportionately enroll in a health insurance plan.
Legislation (Public Law 111-148) signed by President Obama on March 23, 2010. Commonly referred to as the health reform law. ACA is aimed primarily at decreasing the number of uninsured Americans and reducing the costs of health care. It provides a number of mechanisms, including mandates, subsidies, and tax credits, to employers and individuals in order to increase the coverage rate.
Additional reforms are aimed at improving healthcare outcomes and streamlining the delivery of health care. ACA includes a number of insurance reform requirements, including requiring insurance companies to cover all applicants and offer the same rates regardless of pre-existing conditions or gender.
Person who represents an insurance company to solicit or sell the company's insurance products. Any agent must be licensed by the MID to legally sell insurance in the state.
Maximum amount on which payment is based for covered health care services. This may be called "eligible expense," "payment allowance" or "negotiated rate". If your provider charges more than the allowed amount, you may have to pay the difference. (See Balance Billing). Many provider contracts with insurers do not allow the provider to "balance bill" patients if it is in-network treatment.
Many health insurers place dollar limits upon the claims which the insurer will pay over the course of a plan year. ACA prohibits health insurers from placing restrictive dollar annual limits on Essential Health Benefits.
Contract sold by insurance companies that pays a monthly (or quarterly, semiannual, or annual) income benefit for the life of a person (annuitant), for the lives of two or more persons, or for a specified period of time.
A request for your health insurer or plan to review a decision or a grievance again.
When you receive services from a health care provider that does not participate in your insurer's network, the health care provider is not obligated to accept the insurer's payment as payment in full and may bill you for unpaid amount. This is known as “balance billing.”
The person or party named by the owner of an insurance policy to receive the policy benefit.
The set of services, such as physician visits, hospitalization, prescription drugs, that are covered by an insurance policy or health plan. The benefit package will specify any cost-sharing requirements for services, limits on particular services and annual or lifetime spending limits.
Temporary insurance contract providing coverage until a permanent policy is issued.
A method of paying for health care services under which providers receive a set payment for each person or "covered life" instead of receiving payment based on the number of services provided or the costs of the services rendered. The payments can be adjusted based on the demographic characteristics such as age and gender or the expected costs of the members.
The process of coordinating medical care provided to patients with specific diagnosis or those with high health care needs. These functions are performed by case managers who can be physicians, nurses or social workers.
The Children's Health Insurance Program (CHIP) provides coverage to low- and moderate-income children. Like Medicaid, it is jointly funded and administered by the states and the federal government. It was originally called the State Children’s Health Insurance Program (SCHIP).
A formal request for payment related to an event or situation that is covered under an in-force insurance policy.
Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. COBRA provides certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. The law generally covers health plans maintained by private-sector employers with 20 or more employees, employee organizations, or state or local governments. Many states have “mini-COBRA” laws that apply to the employees of employers with less than 20 employees.
A percentage of a health care provider's charge for which the patient is financially responsible under the terms of the policy.
The Commissioner is an elected official who oversees every aspect of the Mississippi Insurance Department. In terms of rate review, the Commissioner has the final say as to whether a rate may be implemented and he or she may approve a rate, disapprove a rate, request more information, or approve a rate at a reduced amount in compliance with state and federal laws. However, in many instances the Commissioner must approve what would appear to be a substantial rate increase if it complies with all state and federal laws.
A way of pricing insurance, where every policyholder pays the same premium, regardless of health status, age or other factors.
A fixed amount (for example, $20) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.
An order issued by the Commissioner specifying corrective actions that the Commissioner has determined are required of a licensed individual or company.
A flat-dollar amount which a patient must pay when visiting a health care provider.
Health care provider charges for which a patient is responsible under the terms of a health plan. Common forms of cost-sharing include deductibles, coinsurance and co-payments. Balance-billed charges from out-of-network physicians are not considered cost-sharing. PPACA prohibits total cost-sharing exceed $5,950 for an individual and $11,900 for a family. These amounts will be adjusted annually to reflect the growth of premiums.
A general term referring to any service (such as an office visit, laboratory test, surgical procedure, etc.) or supply (such as prescription drugs, durable medical equipment, etc.) covered by a health insurance plan in the normal course of a patient's healthcare.
A dollar amount that a patient must pay for health care services each year before the insurer will begin paying claims under a policy. PPACA limits annual deductibles for small group policies to $2,000 for policies that cover an individual, and $4,000 for other policies. These amounts will be adjusted annually to reflect the growth of premiums.
A broad approach to appropriate coordination of the entire disease treatment process that often involves shifting away from more expensive inpatient and acute care to areas such as preventive medicine, patient counseling and education, and outpatient care. The process is intended to reduce health care costs and improve the quality of life for individuals by preventing or minimizing the effects of a disease, usually a chronic condition.
A term used to describe an individual who is eligible for Medicare and some level of Medicaid benefits. Most dual eligibles qualify for full Medicaid benefits including nursing home services and Medicaid pays their Medicare premiums and cost sharing. For other dual eligibles Medicaid provides the "Medicare Saving Program" through which enrollees receive assistance with Medicare premiums, deductibles and other cost sharing requirements.
One of the services that states are required to include in their basic benefits package for all Medicaid eligible children under 21. EPSDT services include periodic screenings to identify physical and mental conditions, as well as vision, hearing and dental problems. Services also include follow up diagnostic and treatment services to correct conditions identified during a screening, without reference to whether the State Medicaid plan covers those services for adult beneficiaries.
The Employee Retirement Income Security Act of 1974 (ERISA) is a comprehensive and complex statute that federalizes the law of employee benefits. ERISA applies to most kinds of employee benefit plans, including plans covering health care benefits, which are called employee welfare benefit plans.
PPACA requires all health insurance plans sold after 2014 to include a basic package of benefits including hospitalization, outpatient services, maternity care, prescription drugs, emergency care and preventive services among other benefits. It also places restrictions on the amount of cost-sharing that patients must pay for these services.
PPACA creates new “American Health Benefit Exchanges” in each state to assist individuals and small businesses in comparing and purchasing qualified health insurance plans. Exchanges will also determine who qualifies for subsidies and make subsidy payments to insurers on behalf of individuals receiving them. They will also accept applications for other health coverage programs such as Medicaid and CHIP.
A method of setting premiums for health insurance policies based on the claims history of an individual or group.
The review of a health plan’s determination that a requested or provided health care service or treatment is not or was not medically necessary by a person or entity with no affiliation or connection to the health plan. PPACA requires all health plans to provide an external review process that meets minimum standards.
A program that provides health insurance to employees of the U.S. Federal Government. Federal employees choose from a menu of plans that include fee for service plans, plans with a point of service option, and health maintenance organization plans. There are more than 170 plans offered; a combination of national plans, agency-specific plans, and more than 150 HMO's serving only specific geographic regions. The various plans compete for enrollment as employees can compare the costs, benefits and features of different plans. The State of Mississippi has no jurisdiction or oversight over FEHBP.
A traditional method of paying for medical services under which doctors and other providers are paid for each service they provide. Bills are either paid by the patient who then submits them to the insurance company, or submitted by the provider to the patient's insurance company for reimbursement.
The list of drugs covered fully or in part by a health plan.
A Flexible Spending Account is a financial account set up by an employer. FSAs let employees put aside part of their earnings to pay for certain qualified health care and dependent care expenses that are not paid for by their insurance companies. This money is not subject to payroll taxes.
A health plan that an individual was enrolled in prior to March 23, 2010. Grandfathered plans are exempted from most changes required by PPACA. New employees may be added to group plans that are grandfathered, and new family members may be added to all grandfathered plans.
The required appeal process a health insurer provides for you to protest a decision regarding medical necessity or claim payment.
An employee welfare benefit plan that is established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement or otherwise.
A requirement that health insurers sell a health insurance policy to any person who requests coverage. PPACA requires that all health insurance be sold on a guaranteed-issue basis beginning in 2014.
A requirement that health insurers renew coverage under a health plan except for failure to pay premium or fraud. HIPAA requires that all health insurance be guaranteed renewable.
A nonprofit, member run health insurance organization, governed by a board of directors elected by its members. Co-op's provide insurance coverage to individuals and small businesses and can operate at state, regional and national levels.
In addition to the Exchanges created as a result of ACA, there are other public and private health insurance exchanges. These are purchasing arrangements through which insurers offer and small employers and individuals purchase health insurance. State, regional or national exchanges could be established to set standards for what benefits would be covered, how much insurers could charge, and the rules insurers must follow in order to participate in the insurance market. Individuals and small employers would select their coverage within this organized arrangement.
The federal law enacted in 1996 which eased the “job lock” problem by making it easier for individuals to move from job to job without the risk of being unable to obtain health insurance or having to wait for coverage due to pre-existing medical conditions.
A type of managed care organization (health plan) that provides health care coverage through a network of hospitals, doctors and other health care providers. Typically, the HMO only pays for care that is provided from an in-network provider. Depending on the type of coverage you have, state and federal rules govern disputes between enrolled individuals and the plan.
A tax exempt account that can be used to pay for current of qualified health expenses. HRA's are established benefit plans funded solely by employer contributions with no limits on the amount an employer can contribute. HRA's are often paired with a high deductible health plan, but are not required to do so.
The Medicare bill signed by President Bush on Dec. 8, 2003 created HSAs. Individuals covered by a qualified high deductible health plan (HDHP) (and have no other first dollar coverage) are able to open an HSA on a tax preferred basis to save for future qualified medical and retiree health expenses. Additional information about HSAs can be found on the U.S. Treasury Web site: http://www.treas.gov/offices/public-affairs/hsa/.
A type of health insurance plan that, compared to traditional health insurance plans, requires greater out-of-pocket spending, although premiums may be lower. In 2010, an HSA-qualifying HDHP must have a deductible of at least $1,200 for single coverage and $2,400 for family coverage. The plan must also limit the total amount of out-of-pocket cost-sharing for covered benefits each year to $5,950 for single coverage and $11,900 for families.
A state-subsidized health plan that provides coverage for individuals with pre-existing health care conditions who cannot purchase it in the private market. PPACA creates a temporary federal high risk pool program, which may be administered by the states, to provide coverage to individuals with pre-existing conditions who have been uninsured for at least 6 months.
A health plan that allows you to go to any physician or provider you choose, but requires that you pay for the services yourself and file claims for reimbursement.
A health care provider (such as a hospital or doctor) that is contracted to be part of the network for a managed care organization (such as an HMO or PPO). The provider agrees to the managed care organization’s rules and fee schedules in order to be part of the network and agrees not to balance bill patients for amounts beyond the agreed upon fee.
A requirement that everyone maintain health insurance coverage. PPACA requires that everyone who can purchase health insurance for less than 8% of their household income do so or pay a tax penalty.
The market for health insurance coverage offered to individuals other than in connection with a group health plan. PPACA makes numerous changes to the rules governing insurers in the individual market.
The review of the health plan’s determination that a requested or provided health care service or treatment health care service is not or was not medically necessary by an individual(s) associated with the health plan. PPACA requires all plans to conduct an internal review upon request of the patient or the patient’s representative.
An agreement between two or more states. PPACA provides guidelines for states to enter into interstate compacts to allow health insurance policies to be sold in multiple states.
The situation where individuals remain in their current job because they have an illness or condition that may make them unable to obtain health insurance coverage if they leave that job. PPACA would eliminate job lock by prohibiting insurers from refusing to cover individuals due to health status.
Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another property.
Many health insurance plans place dollar limits upon the claims that the insurer will pay over the course of an individual’s life. PPACA prohibits lifetime limits on benefits beginning with on Sept. 23, 2010.
A type of health plan that provides coverage for only certain specified health care services or treatments or provides coverage for health care services or treatments for a certain amount during a specified period.
Services that include those needed by people to live independently in the community such as home health and personal care as well as services provided in institutional settings such as nursing homes. Medicaid is the primary payer for long-term care; many of these services are not covered by Medicare or private insurance.
A health delivery system that seeks to control access to and utilization of health care services both to limit health care costs and to improve the quality of the care provided. Managed care arrangements typically rely on primary care physicians to act as "gatekeepers" and manage the care their patients receive.
A requirement in state or federal law that all health insurance policies provide coverage for a specific health care service.
A joint state and federal program that provides health care coverage to eligible categories of low-income individuals. Rules for eligible categories (such as children, pregnant women, people with disabilities, etc), and for income and asset requirements, vary by state. Coverage is generally available to all individuals who meet these state eligibility requirements. Medicaid often pays for long-term care (such as nursing home care). PPACA extends eligibility for Medicaid to all individuals earning up to $29,326 for a family of four.
The maximum amount someone covered under a health plan must pay during a certain period for expenses covered by the plan. Until the maximum is reached, the person covered is required to pay a copayment or a percentage on each claim.
The percentage of health insurance premiums that are spent by the insurance company on health care services. PPACA requires that large group plans spend 85% of premiums on clinical services and other activities for the quality of care for enrollees. Small group and individual market plans must devote 80% of premiums to these purposes.
If your health insurance company fails to meet the MLR minimum standards, they must provide you or your employer with a rebate. In the case of an employer rebate, the employer must allocate the rebate appropriately amongst the health plan participants.
A federal government program that provides health care coverage for all eligible individuals age 65 or older or under age 65 with a disability, regardless of income or assets. Eligible individuals can receive coverage for hospital services (Medicare Part A), medical services (Medicare Part B), and prescription drugs (Medicare Part D). Together, Medicare Part A and B are known as Original Medicare. Benefits can also be provided through a Medicare Advantage plan (Medicare Part C).
An option Medicare beneficiaries can choose to receive most or all of their Medicare benefits through a private insurance company. Also known as Medicare Part C. Plans contract with the federal government and are required to offer at least the same benefits as original Medicare, but may follow different rules and may offer additional benefits. Unlike original Medicare, enrollees may not be covered at any health care provider that accepts Medicare, and may be required to pay higher costs if they choose an out-of-network provider or one outside of the plan’s service area.
Private insurance policies that can be purchased to “fill-in the gaps” and pay for certain out-of-pocket expenses (like deductibles and coinsurance) not covered by original Medicare (Part A and Part B).
A plan, created by PPACA and overseen by the U.S. Office of Personnel Management (OPM), that will be available in every state through Exchanges beginning in 2014.
The minimum level of benefits that must be included in a health insurance plan in order for an individual to be considered insured. Minimum creditable coverage standards have been established as part of the Affordable Care Act (ACA).
The MID enforces all laws and regulations governing insurance and all insurance companies, corporations, associations, or orders. The MID works hard to create an environment encouraging a competitive marketplace for the sale of insurance products and services while providing the State's citizens with the maximum amount of consumer protection. As part of its duties, the MID oversees health insurance rate increases in the State, pursuant to applicable state and federal laws, and protects consumers from unreasonable rate increases.
The NAIC is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.
All physicians, specialists, hospitals, and other providers who have agreed to provide medical care to HMO or other managed care plans members under terms of the contract with the plan. Insurance contracts with preferred provider benefits also use networks.
A specified period during which individuals may enroll in a health insurance plan each year. In certain situations, such as if one has had a birth, death or divorce in their family, individuals may be allowed to enroll in a plan outside of the open enrollment period.
A health care provider (such as a hospital or doctor) that is not contracted to be part of a managed care organization’s network (such as an HMO or PPO). Depending on the managed care organization’s rules, an individual may not be covered at all or may be required to pay a higher portion of the total costs when he/she seeks care from an out-of-network provider.
An annual limitation on all cost-sharing for which patients are responsible under a health insurance plan. This limit does not apply to premiums, balance-billed charges from out of network health care providers or services that are not covered by the plan. PPACA requires out-of-pocket limits of $5,950 per individual and $11,900 per family, beginning in 2014. These amounts will be adjusted annually to account for the growth of health insurance premiums.
Legislation (Public Law 111-148) signed by President Obama on March 23, 2010. Commonly referred to as the health reform law.
A health care payment system in which providers receive financial rewards for meeting or exceeding quality and sometimes cost benchmarks. Some systems also penalize providers who do not meet established benchmarks. The goal of pay for performance programs is to improve the quality of care over time.
The period of time that an individual receives no benefits under a health benefit plan for an illness or medical condition for which an individual received medical advice, diagnosis, care or treatment within a specified period of time prior to the date of enrollment in the health benefit plan. PPACA prohibits pre-existing condition exclusions for all plans beginning January 2014.
A type of managed care organization (health plan) that provides health care coverage through a network of providers. Typically the PPO requires the policyholder to pay higher costs when they seek care from an out-of-network provider. Depending on the type of coverage you have, state and federal rules govern disputes between enrolled individuals and the plan.
A proposed insured who presents a significantly less than average likelihood of using health care services and who is charged a lower than standard premium rate as a result.
The periodic payment required to keep a policy in force.
A fixed amount of money or a designated percentage of the premium cost that is provided to help people purchase health coverage. Premium subsidies are usually provided on a sliding scale based on an individual's or families income. The ACA provides for such subsidies starting in 2014.
Covered services that are intended to prevent disease or to identify disease while it is more easily treatable. PPACA requires insurers to provide coverage for preventive benefits without deductibles, co-payments or coinsurance.
Rules allowing people to obtain coverage as they move from job to job or in and out of employment. Portability allows individuals changing jobs guaranteed coverage with the new employer without a waiting period. In addition, insurers must waive any pre-existing condition exclusions for individuals who were previously covered within a specified time period. Portable coverage can also be health coverage that is not connected to an employer, allowing individuals to keep their coverage when they have a change in employment.
A hospital, pharmacist, registered nurse, organization, institution, or person licensed to provide health care services in Mississippi.
A health insurance policy that is sold through an Exchange. PPACA requires Exchanges to certify that qualified health plans meet minimum standards contained in the law.
Review by insurance regulators of proposed premiums and premium increases. During the rate review process, regulators will examine proposed premiums to ensure that they are sufficient to pay all claims, that they are not unreasonably high in relation to the benefits being provided, and that they are not unfairly discriminatory to any individual or group of individuals.
Insurance purchased by insurers from other insurers to limit the total loss an insurer would experience in case of a disaster or unexpectedly high claims. PPACA directs states to create temporary reinsurance programs to stabilize their individual markets during the implementation of health reform.
The process of voiding a health plan from its inception usually based on the grounds of material misrepresentation or omission on the application for insurance coverage that would have resulted in a different decision by the health insurer with respect to issuing coverage. PPACA prohibits rescissions except in cases of fraud or intentional misrepresentation of a relevant fact.
A process through which insurance plans that enroll a disproportionate number of sick individuals are reimbursed for that risk by other plans who enroll a disproportionate number of healthy individuals. PPACA requires states to conduct risk adjustment for all non-grandfathered health insurance plans.
A temporary provision in PPACA that requires plans whose costs are lower than anticipated to make payments into a fund that reimburses plans whose costs are higher than expected.
A section 125 plan allows employees to receive specified benefits, including health benefits on a pre-tax basis. Section 125 plans enable employees to pay for health insurance premiums on a pre-tax basis whether the insurance is provided by the employer or purchased directly in the individual market.
A plan where the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employer sponsored self-insured plans typically contract with a third party administrator or insurer to provide administrative services for the plan. The State of Mississippi does not have authority over self-insured plans.
Program created by the ACA where health insurance exchanges will be open to small businesses up to 100 employees, allowing them to buy qualified health benefits for employees.
The ability of a health insurance plan to meet all of its financial obligations. State insurance regulators carefully monitor the solvency of all health insurance plans and require corrective action if a plan’s financial situation becomes hazardous. In extreme circumstances, a state may seize control of a plan that is in danger of insolvency.
A tax credit is an amount that a person/family can subtract from the amount of income tax that they owe. If a tax credit is refundable, the taxpayer can receive a payment from the government to the extent that the credit is greater than the amount of the tax they would otherwise owe.
A deduction is an amount that a person/family can subtract from their adjusted gross income when calculating the amount of the tax that they owe. Generally, people who itemize their deductions can deduct the portion of their medical expenses, including health insurance premiums that exceed 7.5% of their adjusted gross income. As a result of the ACA, the threshold will increase from 7.5% AGI to 10% of AGI for tax years beginning after December 2012.
A measure of the costs of health care services that are provided, but not paid for by the patients or by insurance. Health care providers incur some of this cost along with the federal government.
The cost associated with a health care service that is consistent with the going rate for identical or similar services within a particular geographic area. Reimbursement for out-of-network providers is often set at a percentage of the usual, customary and reasonable charge, which may differ from what the provider actually charges for a service.
A period of time that an individual must wait either after becoming employed or submitting an application for a health insurance plan before coverage becomes effective and claims may be paid. Premiums are not collected during this period.