One of the biggest issues with health insurance today is that it’s nearly impossible to figure out what is covered due to the overly complicated language being used. Unless you are working on interpreting these plans every day, it can be difficult to understand what your plan summary or SBC means and that’s if you know what those are! Many of our Filice clients benefit from our benefit booklets, which include a list of key terms. However, booklets can be lost and many companies are now opting for the eco-friendly option and choosing not to have booklets. Google is a fantastic tool, but they often don’t have the insurance-specific definition for many terms common to health insurance.
When interpreting your insurance, trying to understand your bills, and working to communicate effectively with the insurance carrier, use the list below as a reference. Understanding the terminology is the first step in taking control of your health insurance and these are some of the most important terms to know.
- Benefit Summary – the document provided by the insurance carrier that lists out the coverage you can expect for various procedures. These typically list the coinsurance/copay, out of pocket max, and deductible. This document is typically shorter and less detailed than the SBC (summary of benefits and coverage).
- Broker – the person or company that works on the behalf of the customer to shop for benefit plans. Essentially your broker is the one that works as the middleman between the insurance company and your company. Services vary but the basics are this: your broker works with the carriers to provide you or your company with rates and information on your plans or potential plans. Filice Insurance is a group of brokers and we go above and beyond those services. Our brokers also answer employee questions, assist with resolving claims, process paperwork, and more. *Note: brokers do not receive bills or communication from your doctor unless you specifically request it. Brokers do have some access to information with the carriers but it is not regularly sent over unless requested.
- Bill – In the insurance sense of the word, the bill typically refers to the request for payment sent to you by the doctor. The doctor submits a claim to the carrier and bills you based on the response to the claim.
- Carrier – the insurance company that provides your benefits. They work with your doctor’s office to reduce costs and help to pay your claims. Examples of carriers include Kaiser, Anthem, Aetna, Cigna, Blue Shield, etc. The carrier is also known as the insurer.
- Certificate of Coverage – a document provided to your and/or your employer by the insurance carrier showing evidence of you or your group’s coverage by the plan.
- Certificate of Creditable Coverage – a document provided to your and/or your employer by your prior insurance carrier documenting the length of time you were covered.
- Claim – a formal request to the insurance company to cover a payment. You can submit a claim directly, but usually your doctor’s office will submit the claim on your behalf. Once the claim is received by the carrier, they either deny the claim and refuse payment or pay the amount outlined in your plan summary or SBC. After they pay their portion of your claim, the doctor’s office will bill you the remaining amount. If your claim is denied you are able to appeal their decision if you believe it should have been covered.
- Coinsurance – once you’ve met your deductible, this is the amount that you pay for your medical care. Coinsurance is usually listed as a percentage. For example, if you’re coinsurance is 20%, you pay 20% and the carrier pays 80% of the claim.
- Copay – once you’ve met your deductible, this is the amount that you pay for your medical care. A copay is usually listed as a flat dollar amount. For example, if you’re coinsurance is $20, you pay $20 for that service.
- Deductible – the amount that you must pay for medical care before the coinsurance or copay kick in. In other words, you have to pay this amount out of your pocket before the insurance carrier will begin to pay anything. Some services are covered before you reach the deductible. These services are indicated on your benefit summary or SBC by the phrase “deductible waived.”
- Aggregate Deductible – if you have a family of 2 or more, the family deductible applies to the entire family. Once the family has been met (by one person or a combination), the copay or coinsurance kicks in. For example, let’s say you have a family deductible of $1000 and the coinsurance for an appointment is 20%. If you have paid $600 and your spouse has paid $400, your deductible has been met. Then, if you or your spouse have to have an appointment, you will only pay 20%.
- Embedded Deductible – if you have a family of 2 or more, you have a family deductible applies to the entire family, but you also have an individual deductible. Once you’ve met your deductible, your copay or coinsurance kicks in. Once your family has hit the family deductible, other members of the family also gain access to the copay or coinsurance costs. For example, let’s say you have a family deductible of $1000, an individual deductible of $500 and the coinsurance for an appointment is 20%. If you have paid $500, your deductible has been met even though you haven’t reached the family deductible so if you have an appointment, you only pay 20%. However, if your spouse has only paid $200, he/she will have to continue to pay the next $300 before the 20% kicks in. Let’s say you and your spouse have paid $1000 out of pocket and your child goes to the doctor. They would not have to meet another $500 deductible since you’ve already met the family amount. Your child would go straight to the 20% coinsurance.
- Denial – an insurance carrier’s decision not to cover a procedure/service or to refuse a pre-authorization. If a claim or pre-auth is “denied” it means that the carrier will not cover (pay) for that procedure/service. There are various reasons for a denial. Some of the main reasons are: the service is an exclusion, not medically necessary, or experimental. If you believe the denial is an error, you can file an appeal to have the claim reconsidered.
- Drug Formulary – a list of drugs that the carrier will pay for. The level of coverage is often divided into various categories. For example: generic drugs are often listed as “Tier 1” and are the least expensive to you.
- Exclusions and/or Limitations – conditions or circumstances spelled out in an insurance policy which limit or exclude coverage benefits. It is important to read the fine print to determine what these may be to determine which expenses aren’t covered. For example, on most plans you’ll find an exclusion for cosmetic treatments. Therefore, a not medically necessary nose job would not be covered.
- Explanation of Benefits (EOB) – a statement sent by the carrier to you that explains what services/procedures are going to be covered (paid for) by the carrier. This document arrives after your doctor submits a claim to the carrier. You should always compare your EOB to your bill to make sure that you are being billed the correct amount.
- Generic Drug – a drug that is similar to a name-brand drug, but not covered by original patents. This makes these drugs less expensive. For example, the generic for the name-brand “Vicodin®” is “hydrocodone.” If you buy the generic alternative, you usually pay a lower copay.
- Independent Medical Review (IMR) – a process where expert medical professionals, who have no relationship with the carrier or health plan, review specific medical decisions made by the insurance carrier. This is sometimes referred to as a “peer review” and can be used to appeal a denial for a claim, especially in situations where a procedure/service was deemed not medically necessary.
- Insurer – please see “Carrier”
- Inpatient – a procedure that requires you to spend the night in the hospital or surgery center. If you have to stay, it is considered inpatient. For example, if you have spinal fusion surgery and stay in the hospital for multiple days, it would be inpatient surgery.
- 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, Zyrtec is a brand-name whereas you can find many generic alternative antihistamines with Cetirizine Hydrochloride. Name-brand are typically more expensive than the generic alternatives. See “generic drug” for more information
- Network – the group of doctors or facilities that are contracted with your insurance carrier to charge a certain amount for specific procedures. Typically the cost negotiated by the carrier is lower than it would be if you visited that doctor without insurance so you save in two ways. This group of doctors and facilities are considered “in-network”
- Open Enrollment – most plans offer an open enrollment period when your plan renews. This can be any month of the year but typically occurs during the 4th quarter. This is the time each year when you can make changes to your health plans under your employer’s group plan. Changes during this time can include changing carriers, changing plans within the same carrier, adding or removing a dependent, or waiving coverage entirely. These changes cannot be made during the rest of the year unless you have a qualifying event.
- Outpatient Surgery – a procedure that does not require you to spend the night in the hospital or surgery center. For example, if you go in for knee surgery at 9 am and leave at 2pm, it would be considered outpatient since you came and left within the same day.
- Over-the-Counter Drug – a drug that you don’t need a prescription to obtain from the drugstore. These drugs are not typically covered by your insurance.For example: Aleve, Motrin, Tylenol, Dayquil.
- Out-of-Pocket Maximum/Limit – the most that you will have to pay out of your pocket in a year for deductibles and coinsurance for covered benefits. After you pay that amount, all covered medical services within that calendar year are paid 100% by your insurance. For example: if your out of pocket max is $6,000 and your hospital bill in June is $15,000, you will only pay $6,000. For the rest of that year, until December 31, you will pay $0 out of pocket for things like doctor visits, x-rays, etc.
- Pediatric Dental – under the ACA, all plans must cover pediatric dental. This refers to dental care for children under the age of 19. However, this coverage under your medical policy is extremely limited so it is highly recommended that if there is a separate dental policy offered, that you enroll your young dependents in that plan as well.
- Portability – the ability to continue your current plan after termination from the company, regardless of pre-existing conditions. This is usually available in the form of COBRA.
- Pre-Authorization – Some carriers require authorization from them before they will pay for certain medical services. These services often include but are not limited to: physical therapy, sleep studies, MRI, medical equipment, procedures, surgery, etc. Your doctor (provider) should obtain the pre-authorization and request medical bulletins (policies) on the subject to ensure coverage. If you have a procedure coming up, check with your carrier to make sure you don’t need pre-authorization before you go through the procedure and a claim is submitted.
- Pre-Existing Condition – a condition you had prior to enrolling in the plan that can restrict your eligibility for insurance. Many pre-existing conditions are covered due to the ACA, but some are still excluded. For example, pregnancy used to be a pre-existing condition and if you were already pregnant and tried to buy insurance, you could be denied coverage. Under the ACA, many of these pre-existing conditions are now covered. However, conditions and ailments like cancer would still be considered a pre-existing condition.
- Premium – the amount that you pay in order to have insurance. This amount does not go towards your deductible or out of pocket max. With a group policy through your company, the company will pay a portion of your premium and the rest will be deducted from your paycheck.
- Prescription Drug – you must have a doctor’s prescription to receive a prescription drug. These must be picked up and paid for at a pharmacy.
- Preventative 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 (PCP) – your 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 – a person or place that provides health care or prescription drugs. Providers can be doctors, hospitals, pharmacies, chiropractors, etc.
- Qualifying Event – a change in your situation — marriage, newborn, or loss of health coverage — that can make you eligible for a Special Enrollment Period, allowing you to enroll in health insurance outside the yearly Open Enrollment Period.
- Summary of Benefits & Coverage – aka SBC, a document provided by the insurance carrier that lists out the coverage you can expect for various procedures in language that is deemed “easy to understand.” These typically list the coinsurance/copay, out of pocket max, and deductible. This document is typically longer and more detailed than the benefit summary.
- Specialist – a doctor that provides specialty care other than your primary care physician. For example, an Ear, Nose and Throat (ENT) doctor or a dermatologist would be considered specialists.
- Urgent Care – a walk-in clinic. Unlike the emergency room, urgent care centers primarily treat less serious injuries or illnesses. They typically have less of a wait time since they accept patients by order of arrival rather than by severity of condition. They also typically cost less than an ER visit.
