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Accelerated Benefits: Riders on life insurance contracts which allow the life insurance policy's death benefits to be used to offset expenses incurred in a convalescent or nursing home facility.
Access: The availability of medical care to a patient which is determined by the location, transportation, and type of medical services in the area.
Accident Insurance: A type of insurance against loss by accidental bodily injury to the insured.
Accidental death and dismemberment rider: A supplementary benefit rider or endorsement that provides for an amount of money in addition to the basic death benefit of a life insurance policy. This additional amount is payable only if the insured dies or loses any two limbs or the sight of both eyes as the result of an accident. Some riders pay one half of the benefit amount if the insured loses one limb or the sight in one eye.
Accidental Death Benefit: An optional policy benefit that increases the proceeds when the insured's death is caused by an accident. Also referred to as Double Indemnity.
Accidental Death Insurance: A form that provides payment if the death of the insured results from an accident. It is often combined with Dismemberment Insurance in a form called Accidental Death and Dismemberment.
Accrete: A Medicare term which means the process of adding new members to a health plan.
Activities of Daily Living Standards: Used to assess the ability of an individual to live independently, measured by the ability to perform unaided activities such as eating, bathing, toiletry, dressing, and walking. ADL standards are sometimes discussed as a way to measure or define eligibility for long term care.
Actual Charge: The actual amount charged by a physician for medical services rendered.
Acute Care: Medically necessary skilled care provided by medical and nursing personnel in order to restore a person to good health.
Additional Drug Benefit List: Prescription drugs listed as commonly prescribed by physicians for patients' long-term use. Subject to review and change by the health plan involved.
Additional Monthly Benefit: Riders added to disability income contracts that provide additional benefits during the first year of a claim while the insured is waiting for Social Security benefits to begin.
Admissions/1,000: The number of hospital admissions for each 1,000 members of the health plan.
Admits: The number of admissions to a hospital including outpatient and inpatient facilities.
Admitting privileges: The right granted to a doctor to admit patients to a particular hospital.
Adverse selection: The tendency of people with a greater-than-average likelihood of loss to apply for or continue insurance to a greater extent than do other people.
Aftercare: Individualized patient services required after hospitalization or rehabilitation.
Age Change Date: The date on which the insurance company considers a person's age has changed. Depending on the contract, this may be the date midway between the insured's natural birth dates. Moreover, depending on the rating structure in the contract, on the date of age change, a person's age may change to that of the last birth date, the nearer birth date, or the next birth date.
Age/Sex Factor: Compares the age and sex risk of medical costs of one group relative to another. An age/sex factor above 1.00 indicates higher than average risk of medical costs due to that factor. Conversely, a factor below 1.00 indicates a lower than average risk. This measurement is used in underwriting.
Age/Sex Rates (ASR): Separate rates are established for each grouping of age and sex categories. Preferred over single and family rating because the rates and premiums automatically reflect changes in the age and sex content of the group. Also sometimes called table rates.
Agency: The legal relationship between an agent and a principal. The legal relationship between two parties by which one party, the agent, is authorized to perform certain acts on behalf of the other party, the principal.
Agent: A party who is authorized by another party, the principal, to act on the principal's behalf in contractual dealings with third parties.
Agent of record: The agent or broker who is recognized by the insurer as the person acting on behalf of the insured and to whom the commission is to be paid.
Age of majority: The age at which a person has the legal capacity to enter into and be bound by a contract.
Aggregate Indemnity: A maximum dollar amount that may be collected by the claimant for any disability, for any period of disability, or under the policy as a whole.
Allied Health Personnel: Health personnel who perform duties which would otherwise have to be performed by physicians, optometrists, dentists, podiatrists, nurses, and chiropractors. Also called paramedical personnel.
Allocated Benefits: Payments authorized for specific purposes with a maximum specified for each. In hospital policies, for instance, there may be scheduled benefits for X-rays, drugs, dressings, and other specified expenses.
Allowable Charge: The lesser of the actual charge, the customary charge and the prevailing charge. It is the amount on which Medicare will base its Part B payment.
Allowable Costs: Charges which qualify as covered expenses.
Alternative Delivery Systems: Systems which cover health care costs, other than on the usual fee-for-service basis. Could include HMOs, IPAs, PPOs, etc.
Alzheimer's Disease: A progressive, irreversible disease characterized by degeneration of the brain cells and severe loss of memory causing the individual to become dysfunctional and dependent upon others for basic living needs.
Ambulatory Care: Similar to outpatient treatment in that it is care which does not require hospitalization.
Ambulatory Setting: Institutions such as surgery centers, clinics, or other outpatient facilities which provide health care on an outpatient basis.
Ancillary: Additional services (other than room and board charges) such as X-rays, anesthesia, lab work, etc. Fees charged for ancillary care such as X-rays, anesthesia, and lab work. This term may also be used to describe the charge made by a pharmacy for prescriptions which exceed the health insurance plan's maximum allowable cost (MAC).
Ancillary Benefits: Benefits for miscellaneous hospital charges.
Applicant: The party applying for an insurance policy.
Application: A form that must be completed by an individual or other party who is seeking insurance coverage. This form provides the insurance company with much of the information it will need to decide whether to accept or reject the risk.
Approved Charge: Amounts paid under Medicare as the maximum fee for a covered service.
Approved Health Care Facility or Program: A facility or program which has been approved by a health care plan as described in the contract.
Assignment: An authorization to pay Medicare benefits directly to the provider. Medicare payments may be assigned to participating providers only.
Assignment of Benefits: A method where the person receiving the medical benefits assigns the payment of those benefits to a physician or hospital.
Association: An organization of persons having common interests, purposes, etc.; society; league.
Average Cost Per Claim: The total cost of administrative and/or medical services divided by the number of units of exposure such as costs divided by number of admissions, or cost divided by number of outpatient claims, etc.
Average Length of Stay: The total number of patient days divided by the number of admissions and discharges during a specified period of time. This gives the average number of days in the hospital for each person admitted.
Average Wholesale Price: Under the Medicare catastrophic coverage act, payment for prescription drugs is limited to the lowest of the pharmacy's actual charge, the sum of the AWP for the drug plus an administrative allowance, or effective 1992, the 90th percentile of pharmacy charges.
Base Capitation: The total amount which covers the cost of health care per person, minus any mental health or substance abuse services, pharmacy, and administrative charges.
Basic Hospital Expense Insurance: Hospital coverage providing benefits for room and board and miscellaneous hospital expenses for a specified number of days during hospital confinement.
Basic services: Under dental insurance, dental services, such as fillings, periodontics, and oral surgery, which are often covered at 80 percent of their reasonable and customary charges.
Beneficiary: The person or persons designated by the policy owner to receive the proceeds of an insurance policy upon the death of the insured. The policy owner may name both a primary and secondary beneficiary, and may change the beneficiary through a written request to the home office.
Benefit Levels: The maximum amount a person is entitled to receive for a particular service or services as stated in the contract with a health plan or insurer.
Benefit Package: A description of what services the insurer or health plan offers to those covered under the terms of a health insurance contract.
Benefit Period: Defines the period during which a Medicare beneficiary is eligible for Part A benefits. A benefit period is 90 days which begins the day the patient is admitted to a hospital and ends when the individual has not been hospitalized for a period of 60 consecutive days.
Billed Claims: The amounts submitted by a health care provider for services provided to a covered individual.
Blanket Insurance: A contract of Health Insurance that covers all of a class of persons not individually identified in the contract.
Blanket Medical Expense: A policy or provision in a Health Insurance contract that pays all medical costs, including hospitalization, drugs, and treatments, without limitation on any item except possibly for a maximum aggregate benefit under the policy. It is generally written with an initial deductible amount.
Blue Cross: Nonprofit hospital expense prepayment plans designed primarily to provide benefits for hospitalization coverage with certain restrictions on the type of accommodations to be used.
Blue Plan: A generic designation for those companies, usually writing a service rather than a reimbursement contract, who are authorized to use the designation Blue Cross or Blue Shield and the insignia of either.
Blue Shield: Blue Shield plans are prepayment plans offered by voluntary nonprofit organizations covering medical and surgical expenses.
Board Certified: A physician or other professional who has passed an examination which certifies the physician as a specialist in a particular medical area.
Business Life Insurance: Life insurance purchased for business purposes rather than for personal use. Examples are life insurance owned by a business organization on the life a key employee, and insurance owned by a business partner on the life of another partner.
Business Overhead Expense Insurance: Disability insurance to cover the lost profit and continuing fixed expenses of a business that would occur upon the disability of an owner or partner.
Buy-Sell Agreement: An agreement for transfer (sale) of business ownership to the remaining owners (partners/stockholders, etc.) at the death, disability or retirement of an owner. The transaction may be funded through life insurance and disability insurance policies, typically carried on the lives of each individual owner.
Buy-Out Agreement: Similar to the Buy-Sell Agreement but this term refers specifically to a plan used to buy the interest of a partner or stockholder who becomes disabled for a long period of time.
Buy Term and Invest the Difference: A phrase used to describe intentions of investing the money "saved" by purchasing term insurance rather than permanent whole life insurance.
Carry Over Provision: In major medical policies, allowing an insured who has submitted no claims during the year to apply any medical expenses incurred in the last three months of the year toward the new calendar year's deductible.
Case Management: The assessment of an insureds long term care needs and the appropriate recommendations for care, monitoring and follow-up as to the extent and quality of services to be provided.
Case Manager: A person, generally an experienced professional, who coordinates the services necessary under the case management approach.
COBRA: See Consolidated Omnibus Budget Reconciliation Act of 1986.
Certificate of Authority: Issued by the state, it licenses the operation of an Health Maintenance Organization (HMO).
Closed Access: A situation where covered insureds must select one primary care physician. That physician is the only one allowed to refer the patient to other health care providers within the plan.
Cognitive Impairment: A deficiency in the ability to think, perceive, reason or remember resulting in loss of the ability to take care of one's daily living needs.
Coinsurance Clause: A provision stating that the insured and the insurer will share all losses covered by the policy in a proportion agreed upon in advance, For example, 80-20 would mean that the insurer would pay 80% and the insured would pay 20% of all losses.
Community Rating: Under this rating system, the charge for insurance to all insureds depends on the medical and hospital costs in the community or area to be covered. Individual characteristics of the insureds are not considered at all.
Competitive Medical Plan: This refers to permission given by the federal government that allows an organization to write a Medicare risk contract.
Composite Rate: One rate for all members of the group regardless of their status as single or members of a family.
Comprehensive Major Medical: A plan of insurance which has a low deductible, high maximum benefits, and a coinsurance feature. It is a combination of basic coverage and major medical coverage which has virtually replaced separate hospital, surgical and medical policies with each having its own deductible requirements.
Concurrent Review: A case management technique which allows insurance companies to monitor an insured's hospital stay and to know in advance if there are any changes in the expected period of confinement and the planned release date.
Conditional Binding Receipt: Provides that if a premium accompanies an application, the coverage will be in force from the date of application or medical examination, if any, whichever is later, provided the insurer would have issued the coverage on the basis of the facts revealed on the application, medical examination and other usual sources of underwriting information. An insurance policy without a conditional binding receipt is not effective until it is delivered to the insured and the premium is paid.
Conditionally Renewable: A contract that provides that the insured may renew it to a stated date or an advanced age, subject to the right of the insurer to decline renewal only under conditions stated in the contract.
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986: Legislation providing for a continuation of group health care benefits under the group plan for a period of time when benefits would otherwise terminate. Continuation rights apply to enrolled persons and their dependents. Coverage may be continued for up to 18 months if the insured person terminates employment or is no longer eligible. Coverage may be continued for up to 36 months in nearly all other cases, such as loss of dependent eligibility because of death of the enrolled person, divorce, or attainment of the limiting age.
Continuation: Allows terminated employees to continue their group health insurance coverage under certain conditions.
Continuing Care Retirement Communities: Residential communities set up to provide residents with easy access to health care.
Contract Year: This period runs from the effective date to the expiration date of the contract.
Copay: This is an arrangement where the covered person pays a specified amount for various services and the health care provider pays the remainder. The covered person usually must pay his or her share when the service is rendered. Similar to coinsurance, except that coinsurance is usually a percentage of certain charges where the co-payment is a dollar amount.
Copay Provision: Often used with major medical policies. The copay provision states what percentage of a claim the company will pay and what percentage the insured will pay. For example, an 80 percent copay provision would provide that the insurer pay 80 percent of claims and the insured pay 20 percent.
Corridor Deductible: A Major Medical deductible that provides for a deductible, or "corridor," after the full payment of basic hospital and medical expenses up to a stated amount. In the event of further expenses, payment is on the basis of participation or coinsurance, such as 80%-20% or 85%-15%, and the deductible is that portion paid by the insured.
Cosmetic Procedures: Procedures which improve the appearance, but are not medically necessary.
Cost Contract: An agreement between a provider and the Health Care Financing Administration to provide health services to covered persons based on reasonable costs for service.
Cost of Living Benefit: An optional disability benefit where the monthly benefit will be increased annually once the insured is on claim for 12 months.
Cost Sharing: A situation where covered persons pay a portion of the health costs such as deductibles, coinsurance, or co-payment amounts.
Covered Expenses:Health care expenses incurred by an insured or covered person that qualify for reimbursement under the terms of a policy contract.
Covered Person: A person who pays premiums into the contract for the benefits provided and who also meets eligibility requirements.
Custodial Care: Care that is primarily for meeting personal needs such as help in bathing, dressing, eating or taking medicine. It can be provided by someone without professional medical skills or training but must be according to doctor's orders.
Date of Service: The date that the health service was provided.
Death Benefit: The policy proceeds, or benefit that is promised to the designated beneficiary of a life insurance contract upon the insured individual's death.
Decreasing Term Insurance: Level premium term insurance with a decreasing death benefit. The death benefit may decrease according to a schedule to fit a declining need such as a loan balance.
Deductible Carryover Credit: During the last three months of a calendar year, charges incurred for health services can be used to satisfy the deductible for the following calendar year. These credits may be applied whether or not the prior calendar year's deductible had been met.
Deferred Annuity: An "accumulation" annuity product under which payments are made by the annuitant, either through a single premium or a series of periodic payments, and left to accumulate on a tax-deferred basis over a period of years. It usually begins paying an income to the annuitant at retirement.
Deferred Compensation Plan: A non-qualified benefit plan under which an employee defers current income to some future date. Under such an arrangement, the employer makes an unsecured promise to pay the employee future income. The employee is not taxed on the deferred income until it is distributed and the employer receives no tax-deduction for compensation until that same time. Permanent life insurance is a popular method of Deferred Compensation Plan funding. The plan usually provides retirement benefits to the employee and death benefits to the employee's beneficiaries.
Defined Benefit Plan: A retirement plan in which benefits are established but the contributions may vary. The defined benefit plan can be funded by a fixed annuity or a variable annuity.
Delete: This refers to the process of taking an individual off Medicare coverage.
Dental Insurance: A group Health Insurance contract that provides payment for certain enumerated dental services.
Department of Health and Human Services: A federal department whose responsibility is primarily dealing with social service functions such as administration and supervision of the Medicare program.
Dependent Coverage: Insurance coverage on the head of a family which is extended to his or her dependents, including only the lawful spouse and unmarried children who are not yet employed on a full-time basis. Step, foster, adopted, as well as natural are generally covered
Detoxification: The process an individual goes through when withdrawing from alcohol. Usually is done under guidance of medical personnel.
Diagnosis: The process of identifying a disease.
Diagnosis Related Group: A method of classifying inpatient hospital services. It is used as a method of determining financing to reimburse various providers for services performed.
Disability Buyout Insurance: A product that provides a lump sum payment in the event of the insured's total disability, which, in turn, the beneficiary can use to purchase the insured's ownership interest in a business.
Disability Insurance: A form of health insurance that provides periodic payments to replace income, actually or presumptively lost, when the insured is unable to work as a result of sickness or injury.
Disability Key Person Insurance: Disability insurance that protects a business in the event of a key employee's disability.
Disability Overhead Expense (DOE): A reimbursement plan designed to cover business expenses during the total or partial disability of a professional or business person.
Discharge Planning: Determining what the patient's medical needs will be after discharge from a hospital or other inpatient treatment.
Dismemberment: The complete or functional loss of specified members of the body resulting from accidental bodily injury.
Dismemberment Benefit: The benefits payable for various types of dismemberment.
Dread Disease Policy: Coverage, usually with a high maximum limit, for all types of medical expenses arising out of diseases named in the contract. Common diseases covered are poliomyelitis, diphtheria, multiple sclerosis, spinal meningitis, and tetanus. Cancer is sometimes covered or may be added with some companies by a rider.
Drug Formulary: A schedule of prescription drugs approved for use which will be covered by the plan and dispensed through participating pharmacies.
Drug Price Review: A procedure used to determine drug price maximums. It involves determining wholesale drug prices based on the American Druggist Blue Book.
Drug Utilization Review: A method for evaluating or reviewing the use of drugs in order to determine the appropriateness of the drug therapy.
Duplicate Coverage Inquiry: A request to determine whether or not other coverage exists. Used to apply the coordination of benefits provisions where two or more insurance companies are involved.
Duplication of Benefits: A situation where identical or overlapping coverage exists between two or more insurance companies or service organizations.
Electronic Funds Transfer (EFT): A transaction that allows ISA+ payors to have premium payments drawn directly from their bank accounts, eliminating the need to write checks. EFTs simplify record keeping, eliminate postage fees, and reduce bank processing charges.
Elective Benefits: Lump sum payments which the insured may generally choose in lieu of periodic payments for certain injuries, such as fractures and dislocations.
Eligibility Date: The date that a person is eligible for benefits.
Eligibility Period: The period of time during which potential members of a Group Life or Health program may enroll without providing evidence of insurability.
The period of time under a Major Medical policy during which reimbursable expenses may be accrued.
Eligibility Requirements: Requirements imposed for eligibility for coverage, usually in a group insurance or pension plan.
Eligible Dependent: A dependent of an insured person who is eligible for coverage according to the requirements set forth in the contract.
Eligible Employee: An employee who is eligible based on the requirements as indicated in the group contract.
Eligible Expenses: Expenses as defined in the health plan as being eligible for coverage. This could involve specified health service fees or customary and reasonable charges.
Eligible Person: Similar to eligible employee except it could be a contract covering people who are not employees of a specified employer. An example might be members of an association, union, etc.
Emergency: An injury or disease which happens suddenly and requires treatment within 24 hours.
Emergency Accident Benefit: A group medical benefit which reimburses the insured for expenses incurred for emergency treatment of accidents.
Employee Benefit Program: Benefits offered an employee at his place of work by his employer, covering such contingencies as medical expenses, disability, retirement, and death, usually paid for wholly or in part by the employer. These benefits are usually insured.
Employee Certificate of Insurance: The employee's evidence of participation in a group insurance plan, consisting of a brief summary of plan benefits. The employee is provided with a certificate of insurance rather than the actual insurance policy.
Encounter: Each time a person meets with a health care provider to receive services, is a separate encounter.
Encounters Per Member Per Year: The total number of encounters per year divided by the total number of members per year.
Enrollee: An eligible individual who is enrolled in a health Plan.
Enrollment: Used to describe the total number of enrollees in a health plan. It may also be used to refer to the process of enrolling people in a health plan.
Enrollment Period: The amount of time an employee has to sign up for a contributory health plan.
Entire Contract Clause: A provision in an insurance contract stating that the entire agreement between the insured and the insurer is contained in the contract, including the application if it is attached, declarations, insuring agreements, exclusions, conditions and endorsements.
Estate Planning: Planning for the orderly handling and administration of an estate upon the death of the owner. This usually involves drawing up a will and setting up trusts and insurance, with the intention of minimizing loss to the estate value incurred by estate taxes and administrative expenses.
Evidence of Insurability: The statement of information needed for the underwriting of an insurance policy.
Examination: The medical examination of an applicant for Life or Health insurance.
Examined Business: Coverage written on an applicant who has been examined and who has signed the application but has paid no premium.
Examiner: A physician appointed by the medical director of a Life or Health insurer to examine applicants.
Exclusive Provider Organization: A type of preferred provider organization where individual members use particular preferred providers rather than having a variety of preferred providers to choose from. EPOs are characterized by a primary physician who monitors care and makes referrals to a network of providers.
Executive Bonus Plan: A plan whereby an employee owns a life insurance policy that was purchased, all or in part, by the employer. The employee treats the employer's payments as reportable income for tax purposes. The employer deducts its payments as compensation under IRC §162. Also known as an Employee Bonus Plan.
Expense Charges: The charges assessed against a policy to cover part or all of the insurance company's acquisition and maintenance expenses related to issuing and servicing the policy, including charges covering various federal, state and local taxes.
Expected Claims: The estimated claims for a person or group for a contract year based usually on actuarial statistics.
Expected Morbidity: The expected incidence of sickness or injury within a given group during a given period of time as shown on a morbidity table.
Expense: A policy's share of the company's operating costs, fees for medical examinations and inspection reports, underwriting, printing costs, commissions, advertising, agency expenses, premium taxes, salaries, rent, etc. Such costs are important in determining dividends and premium rates.
Experimental or Unproven Procedures: Any health care services, supplies, procedures, therapies, or devices that the health plan determines regarding coverage for a particular case to be either not proven by scientific evidence to be effective, or not accepted by health care professionals as being effective.
Explanation of Benefits: A statement sent to a participant in a health plan listing services, amounts paid by the plan, and total amount billed to the patient.
Explanation of Medicare Benefits: A notice which is sent to the Medicare patient which provides information designed to explain how the claim is to be paid.
Extended Care Facility: A facility such as a nursing home which is licensed to provide 24-hour nursing care service in accordance with state and local laws.
Extended Coverage: A provision in certain Health policies, usually Group, to allow the insured to receive benefits for specified losses sustained after the termination of coverage, such as maternity expense benefits incurred for a pregnancy in progress at the time of the termination.
Extension of Benefits: A condition in the insurance policy which allows coverage to continue beyond the expiration date of the policy in the case of employees who are not actively at work or dependents who are hospitalized on that date. The extended coverage applies only where the employee or dependent is disabled as of that date and continues only until the employee returns to work or the dependent leaves the hospital.
Face Amount: The original death benefit on a life insurance policy. On whole life policies, dividends are often used to purchase paid-up additions, thereby increasing the death benefit.
Face Page: The first page of a life insurance policy. It includes basic information such as the policy number, type of policy, and premium amount, as well as the name of the insured, the owner, and the beneficiary.
Fiduciary: An individual, company, or association holding assets in trust for a beneficiary. The fiduciary has the responsibility of managing the money for the benefit of the beneficiary.
Family Dependent: A person entitled to coverage because he or she is the enrollee's spouse, a single dependent child of either the enrollee or the enrollee's spouse or resident of the enrollee's home.
Family Expense Policy: A policy which insures the medical expenses of all members of a family.
Fee-for-Service Reimbursement: A health care system where physicians and other providers receive payment based on their billed charge for each service provided.
Fee Maximum: The maximum amount available to a provider for specific health care services under a contract.
Fee Schedule: A list of maximum fees for providers who are on a fee-for-service basis.
Fiscal Intermediary: A commercial insurer contracted by the Department of Health and Human Services for the purpose of processing and administering Part A Medicare claims.
Flat Maternity Benefit: A stipulated benefit in a Hospital Reimbursement policy that is paid for maternity confinement, regardless of the actual cost of the confinement.
Flexible Benefit Plan: A type of program where employees can tailor their benefits to meet their own specific needs.
Free-Standing Emergency Medical Service Center: A facility whose primary purpose is the provision of care for emergency medical conditions.
Free-Standing Outpatient Surgical Center: A facility which only provides outpatient surgical services.
Frequency: The number of times a service is provided over a given time period.
Funding Level: The dollar amount required to purchase a particular medical care program. Usually measured by the premium rate for an insured program, or an amount assessed for expected claim loss and related fees under a self-funded program.
Funding Methods: The agreed means by which an employer pays for health coverage. Future Increase Option. An option which allows the insured to increase disability income benefits at predetermined times, specified in the policy, without evidence of insurability.
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