Health Insurance Terms Glossary

Get definitions for common health insurance expressions and terms for a better understanding of medical insurance terminology.

A | B | C

A

ANNUAL ENROLLMENT PERIOD - A certain period of time when you can join a health plan or enroll in a Medicare plan. During that time, the plan must allow all eligible individuals to join. For people who receive coverage from their employer or association, the enrollment period usually occurs once a year or whenever you experience a life change (getting married, having/adopting a child).

ACUTE CARE - Medical services provided to treat an illness or injury, usually for a short time. The opposite of chronic, or long-term, care.

ACUTE ILLNESS - A disease or condition that comes on rapidly and severely, but can-with proper treatment-be cured, such as pneumonia or a broken bone.

ANNUAL COORDINATED ELECTION PERIOD (AEP) - The period of time between November 15 and December 31 of every year when you can change your Medicare private drug plan and/or your Medicare health plan choice for the following year. This is also the time you can enroll in the Medicare prescription drug benefit (Part D) if you did not enroll during your Initial Enrollment Period (you may have to pay a premium penalty if you enroll during this time unless you had drug coverage from another source that was at least as good as Medicare's and you were not without that coverage for more than 63 days). Coverage selected during this time begins on January 1.

APPEAL - A special kind of complaint you make if you disagree with certain kinds of decisions made by Original Medicare or by your health plan. You can appeal if you request a health care service, supply or prescription that you think you should be able to get from your health plan, or you request payment for health care you already received, and Medicare or the health plan denies the request. You can also appeal if you are already receiving coverage and Medicare or the plan stops paying. There are specific processes the Medicare Advantage plan, other Medicare health plans,Medicare drug plan, or the Original Medicare plan must use when you ask for an appeal.

APPROVED AMOUNT - The fee that Medicare sets as its rate for a medical service. Medicare will cover 80 percent of this amount (or 50 percent for mental health services) and you (or your supplemental insurance) are responsible for the remainder. All doctors and other providers who take assignment must accept this approved amount as full payment, even if they normally charge more for the service.

ASSIGNMENT - In Original Medicare (Parts A and B), this means a doctor or supplier agrees to accept the Medicare-approved amount as full payment. If you are in the Original Medicare plan, it can save you money if your doctor accepts assignment. You still pay your share of the cost of doctor visits.

ASSOCIATION HEALTH PLAN (AHP) - Health insurance arrangement sponsored by business coalitions and trade and professional associations. AHPs operate under states insurance laws and regulations. Current legislative proposals would regulate AHPs primarily under federal law.

B

BENEFICIARY - A person who is enrolled or covered under has health care insurance.

BENEFIT PERIOD - A "benefit period" begins the day you go to a hospital or skilled nursing facility (SNF). The benefit period ends when you haven't received any hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a SNF after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There is no limit to the number of benefit periods.

C

CATASTROPHIC HEALTH INSURANCE - Health insurance which provides protection against the high cost of treating severe or lengthy illnesses. Such policies may cover all or most of approved medical expenses above a relatively high specified deductible amount.

CENTERS FOR MEDICARE & MEDICAID SERVICES (CMS) - Formerly known as the Health Care Financing Administration (HCFA), CMS is the United States government agency responsible for administering Medicare and Medicaid. It is made up of three agencies: the Center for Beneficiary Choices, the Center for Medicare Management, and the Center for Medicaid and State Operations.

CERTIFICATE OF CREDITABLE COVERAGE - A written certificate issued by a group health plan or health insurance issuer (including an HMO) that states the period of time you were covered by your health plan.

CHRONIC CARE - Medical services provided to those with long-term conditions which need continued care over time. The opposite of Acute, or immediate, care.

CHRONIC CONDITION - A condition that that lasts a year or longer or recurs(comes and goes), and may result in long-term care needs. Some examples of chronic illnesses include Alzheimer's disease, arthritis and diabetes.

COINSURANCE - A portion of the bill for a medical service, that is not covered by the patient's health insurance policy and therefore must be paid out of pocket by the patient.
Coinsurance is calculated by a percentage, for example, 10 percent of the total charge up to a specified maximum. Coinsurance is different to a Copayment, which is stated as a flat amount, for example, $5 per office visit.

COMPREHENSIVE OUTPATIENT REHABILITATION FACILITY (CORF) - A facility that mainly provides rehabilitation services after an illness or injury, and provides a variety of services including physician's services, physical therapy, social or psychological services, and outpatient rehabilitation.

CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985 (COBRA) - This law includes one part which entitles former employees of companies with 20 or more employees to continue to receive coverage under the group plan for up to 18 months after leaving, if the former employee pays the full cost of the coverage.

COORDINATION OF BENEFITS - Process for determining the respective responsibilities of two or more health plans that have some financial responsibility for a medical claim. Also called cross-over.

COPAYMENT (or CO-PAYMENT) - The amount you pay for each medical service, A copayment is usually a set amount you pay out of pocket. For example, this could be $10 or $20 for a doctor visit or a prescription. Copayments are also used for some hospital outpatient services in the Original Medicare plan.

COST SHARING - Any out-of-pocket payment the patient makes for a portion of the costs of covered services. Deductibles, coinsurance, copayments and balance bills are types of cost sharing.

COST TIERS - A system that drug plans use to price medications. Generic drugs are generally on the first, and least expensive tier, followed by brand-name drugs, and then specialty drugs, with each subsequent tier requiring higher out-of-pocket costs.

COVERAGE GAP - Also called the "Doughnut Hole." A gap in the Medicare Part D prescription drug coverage during which you must pay all drug costs in full.The coverage gap is followed by "catastrophic coverage" phase in which coverage from the insurance plan resumes.

CREDITABLE COVERAGE - Is health coverage that you had in the past that gives you certain rights when you apply for new coverage.

CUSTODIAL CARE - Nonskilled, personal care, such as help with activities of daily living like bathing, dressing, eating, getting in or out of a bed or chair, moving around, and using the bathroom. It may also include care that most people do themselves, like using eye drops. In most cases, Medicare doesn't pay for custodial care. Providers of custodial care are not required to undergo medical training.

D | E | F

D

DEDUCTIBLE - The amount of health care expenses you must pay before your individual health plan or Medicare plan begins to pay for costs associated with a medical service. These amounts can change every year.

DEFINED BENEFIT - A health insurance model used by an employer or government program where specified health services covered under the plan are standardized and guaranteed. The cost of providing the standard benefits may go up and down. One example of a defined benefit plan is Medicare.

DEFINED CONTRIBUTION - A health benefit model used by employers or government programs where the health services covered may go up and down based on choice of plan, but the employer or government contributes a set amount (percentage or dollar amount) towards your purchase of the selected health plan. A defined contribution plan limits the amount of money employers or the government contribute to the purchase price because the contribution is defined. An example of a defined contribution plan is the State Children's Health Insurance Benefit.

DENIAL OF COVERAGE - A refusal by Medicare or a private plan to pay for medical services that are not covered under its policy.

DOUGHNUT HOLE - See "Coverage Gap."

DRUG CLASS - A group of drugs that treat the same symptoms or have similar effects on the body.

DRUG LIST - A list of drugs covered by a plan. This list is also called a formulary.

DUAL ELIGIBLE - A person who has both Medicare and Medicaid.

DURABLE MEDICAL EQUIPMENT (DME) - Equipment that is primarily serving a medical purpose, is able to withstand repeated use, and is appropriate for use in the home; for example, wheelchairs, oxygen equipment and hospital beds. To be covered by Medicare, durable medical equipment must be prescribed by a doctor. Many types of adaptive equipment are not covered.

E

ELECTION / ENROLLMENT PERIODS - The times when you can enroll in health benefits, or a Medicare-eligible person can choose to join or leave a Medicare plan. For people who receive coverage from their employer or association, the enrollment period usually occurs once a year or whenever you experience a life change (getting married, having/adopting a child). For Medicare-eligible persons there are four types of election periods: the annual coordinated election period, the initial enrollment period, the special enrollment period, and the open enrollment period.

"EMPLOYER MANDATE" or EMPLOYER CONTRIBUTION REQUIREMENT - Requirement that employers either provide health care benefits to their workers or pay a fee that contributes to the cost of covering their workers under a public (state) plan. Such proposals are also called "pay or play".

END-STAGE RENAL DISEASE (ESRD) - Permanent kidney failure that requires a regular course of dialysis (a medical procedure that performs the work healthy kidneys would do if they could) or a kidney transplant.

EXCESS CHARGES - This is the difference between a doctor's or other health care provider's actual charge and the payment amount approved by your health insurance company or by Medicare. In some cases, the Medicare program or your state may limit the actual charge a doctor or health care provider can make; however for pre-Medicare eligible persons, there is no cap on what a doctor can charge.

EXPLANATION OF MEDICARE BENEFITS (EOMB) - The notice you get from your health insurance company or from Medicare after receiving medical services from a doctor, hospital or other health care provider. It tells you what the provider billed to your insurance company or to Medicare, Medicare's approved amount, the amount Medicare paid, and what you have to pay. It is not a bill, but it lets you know what amount you will have to pay when the bill from the doctor, hospital, or other health care provider arrives.

EXTRA HELP - A federal program that is administered by Social Security that helps people with Medicare who have low incomes and assets pay for their Medicare drug coverage (including coinsurance, deductibles, and premiums). If you have Medicaid, receive Supplemental Security Income (SSI), or are enrolled in a Medicare Savings Program (MSP), then you are automatically eligible for Extra Help.

F

FEDERAL POVERTY LEVEL (FPL) - The federally set level of income that an individual or family can earn below which it is recognized that they can not afford necessary services. The FPL is used in eligibility criteria of many programs, including Extra Help and Medicaid. The FPL changes every year and varies depending on the number of people in your household. It is higher in Alaska and Hawaii.

FEE-FOR-SERVICE - A method of paying health care providers a fee for each medical service they provide to you, rather than paying them salaries or monthly fixed payments.

FIRST DOLLAR COVERAGE - Insurance plans that provide benefits without first requiring payment of a deductible.

FISCAL INTERMEDIARY - A private company that has a contract with Medicare to pay Part A and some Part B bills (for example, bills from hospitals).

FORMULARY - A list of prescription drugs covered by a plan.

G | H | I

G

GENERIC DRUG - A copy of a brand-name drug that is regulated by the Food and Drug Administration to be identical in dosage, safety, strength, how it is taken, quality, performance and intended use (definition from the U.S. Food and Drug Association).

GROUP INSURANCE - Health insurance offered through business, union trusts or other groups and associations. The policy holder is generally the employer or other entity. This system of health insurance is the most common in the United States.

GUARANTEED ISSUE - A requirement that health plans cannot reject coverage for an applicant based on medical history. For example, under federal law, small employers that purchase health insurance cannot be denied coverage for sick workers. However, plans can adjust premiums based on medical history or other factors.

GUARANTEED RENEWAL - A requirement that an insurance company cannot refuse to renew a policy for a group or individual. Guaranteed renewal is intended to prevent insurers for dropping coverage for a group or individual because they have had to cover a group or individual's medical expenses over the previous year. At renewal, insurers can adjust premiums within allowed rating rules.

H

HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA) - A 1996 federal law that provides some protection for employed persons and their families against discrimination in health coverage based on past or present health. Generally, the law guarantees the right to renew health coverage, but does not restrict the premiums that insurers may charge. HIPAA does not replace the states' role as primary regulators of insurance. HIPAA also requires the collection of certain health care information by providers and sets rules designed to protect the privacy of that information.

HEALTH INSURANCE PURCHASING COOPERATIVE (HIPC) - A health insurance purchasing cooperative is an entity that purchases health insurance for individuals as well as employers. By belonging to a cooperative, individuals and employers are provided access to more affordable health insurance as a result of the HIPC's increased purchasing power. By definition, the HIPC is a pool of individuals and/or employers. Hence, the underwriter is able to spread the risk among a greater number of people, resulting in reduced premiums. Because the insurer can deal uniformly with a large group, this creates economies of scale and reduced administrative costs. The larger the risk pool, the greater the purchasing power, resulting in the ability to lower rates for covered health services.

HEALTH MAINTENANCE ORGANIZATION - A Health Maintenance Organization (HMO) is a type of health care plan that contracts with specific care providers and negotiates for less expensive health care than the patients would receive on their own. HMOs have strict guidelines on the care they provide. They also focus on preventative health care with an eye toward the long-term health of their members.

HEALTH MAINTENANCE ORGANIZATION (HMO) (MEDICARE) - A type of Medicare Advantage Plan that is available in some areas of the country. Plans must cover all Medicare Part A and Part B health care. Some HMOs cover extra benefits, like extra days in the hospital. In most HMOs, you can only go to doctors, specialists, or hospitals on the plan's list except in an emergency.

HIGH-RISK POOL - A subsidized health insurance pool organized by many states as a source of coverage for individuals who have been denied health insurance because of a medical condition, or whose premiums are significantly higher than the average due to health status or claims experience.

HOMEBOUND - A person whose condition is such that there exists a normal inability to leave home, and leaving home requires "a considerable and taxing effort. A person does not have to be restricted to the bed to be considered homebound by Medicare. Leaving home for short periods of time for special non-medical events, such as a family reunion, funeral or graduation, would not exclude someone from being considered homebound. A doctor must certify this condition.

HOME HEALTH AIDE - A worker who helps a patient at home with activities of daily living, such as getting in and out of bed, dressing, bathing, eating and using the bathroom. Medicare does not pay separately for aides to perform house-keeping services, such as cooking and cleaning, but they may do light housekeeping related to personal care during the visit. Medicare will not pay for home health aide services unless they are accompanied by a skilled need.

HOME HEALTH CARE - Limited part-time or intermittent skilled nursing care and home health aide services, physical therapy, occupational therapy, speech-language pathology services, medical social services, durable medical equipment (such as wheelchairs, hospital beds, oxygen, and walkers), medical supplies, and other services.

HOSPICE CARE - A special way of caring for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the medical, physical, social, emotional and spiritual needs of the patient. Hospice also provides support to the patient's family or caregiver as well. Hospice care is covered under Medicare Part A (Hospital Insurance).

I

INITIAL ENROLLMENT PERIOD - The Initial Enrollment Period is the Medicare enrollment period for individuals as they turn age 65. This seven-month period starts three months prior to the month of the individual's 65th birthday and continues three months following the month the individual turns 65 years of age. The individual's Medicare effective date depends on when the individual enrolls in Medicare within the Initial Enrollment Period.

INPATIENT CARE - Health care that you get when you are admitted to a hospital or skilled nursing facility.

J | K | L

L

LIFETIME RESERVE DAYS - Also known as "reserve days." When you are in the hospital for more than 90 days, Medicare pays for 60 additional reserve days that you can only use once in your lifetime. They are not renewable once you use them.

LONG TERM CARE - A variety of services that can help people with personal needs and activities of daily living over a period of time. Long term care can be provided at home, in the community, or in various types of facilities, including nursing homes and assisted living facilities. Most long-term care is custodial care. Medicare doesn't pay for this type of care if this is the only kind of care you need.

LONG TERM CARE OMBUDSMAN - An independent advocate for nursing home and assisted living facility residents who provides information about how to find a facility and how to get quality care. Every state is required to have an Ombudsman Program that addresses complaints and advocates for improvements in the long term care system.

LOSS RATIO - The ratio of money paid out by an insurer for claims divided by premiums collected for a particular type of insurance policy. Low loss ratios indicate that a small proportion of premium dollars was paid out for benefits, while a high loss ratio indicates that a high percentage of the premium dollars was paid out.

LOW-INCOME SUBSIDY (LIS): See Extra Help.

M | N | O

M

MANDATE - Used in two senses in health policy discussions. (1) Employer or individual mandate, in which the government imposes a requirement on some or all employers to help pay for insurance coverage for their workers (and perhaps their families), or on individuals to obtain coverage, (2) State mandate, a requirement imposed by state on insurance companies to include, as part of any health insurance policy they sell, coverage for a specific service, such as well baby care, or provider, such as psychologists or optometrists.

MEDICAID - Public health insurance program that provides coverage for an estimated 60 million low income persons for acute and long-term care. It is financed jointly by state and federal funds (the federal government pays at least 50 percent of the total cost in each state), and is administered by states within broad federal guidelines.

MEDICAID SPEND-DOWN - A state-run Medicaid program for people whose income is higher than would normally qualify them for Medicaid, but who have high medical expenses that reduce their incomes to the Medicaid eligibility level. Not all states have Medicaid spend-down.

MEDICAL SOCIAL SERVICES - A service generally intended to help the patient and family cope with the logistics of daily life with an advanced illness. Medical social services include assessing social and emotional factors related to the patient's illness and care; evaluating the patient's home situation, financial resources, and availability of community resources; and helping the patient access community resources to assist in recovery. The social worker may also provide counseling to the patient and family to address emotions and issues related to the illness.

MEDICALLY NECESSARY - Services or supplies that are needed for the diagnosis or treatment of your medical condition, meet the standards of good medical practice in the local area, and aren't mainly for the convenience of you or your doctor.

MEDICARE ADVANTAGE PLAN - A plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits. Medicare Advantage Plans are HMOs, PPOs, or Private Fee-for-Service Plans. If you are enrolled in a Medicare Advantage Plan, Medicare services are covered through the plans, and are not paid for under Original Medicare.

MEDICARE-APPROVED AMOUNT - Also called "Medicare-approved charge." This is the amount Medicare will pay for certain medical services or equipment. Generally you are responsible for paying 20% of the Medicare-approved amount.

MEDICARE ADVANTAGE PRESCRIPTION DRUG (MA-PD) PLAN - A plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits, as well as the Medicare Part D (prescription drug coverage) benefit in one plan.

MEDICARE COST PLANS - Medicare cost plans are a type of HMO that contracts as a Medicare Health Plan. As with other HMOs, the plan only pays for services outside its service area when they are emergency or urgently needed services. However, when you are enrolled in a Medicare Cost Plan, if you get routine services outside of the plan's network without a referral, your Medicare-covered services will be paid for under the Original Medicare Plan, and you will be responsible for the Original Medicare deductibles and coinsurance.

MEDICARE MANAGED CARE PLAN - A type of Medicare Advantage Plan that is available in some areas of the country. In most managed care plans, you can only go to doctors, specialists, or hospitals on the plan's list. Plans must cover all Medicare Part A and Part B health care. Some managed care plans cover extras, like prescription drugs. Your costs may be lower than in the Original Medicare Plan.

MEDICARE MEDICAL SAVINGS ACCOUNT (MSA) - A savings account that allows Medicare to deposit a certain amount of money you can use to pay towards the deductible of a high-deductible Medicare private health plan (Medicare Advantage plan). The amount deposited each year is only a portion of the deductible the plan charges. If you need enough care to meet the full deductible, you have to pay the remainder yourself.

MEDICARE PRESCRIPTION DRUG COVERAGE - Also known as Medicare Part D. Optional coverage for prescription medications available to all people with Medicare. The coverage is available through insurance companies and other private companies.

MEDICARE SAVINGS PROGRAMS (MSP) - Programs that help pay your Medicare premiums and sometimes also coinsurance and deductibles.

MEDICARE SELECT - A type of Medicare supplement policy that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits.

MEDICARE SUMMARY NOTICE (MSN) - A notice you get after the doctor or provider files a claim for Part A and Part B services in the Original Medicare Plan. It explains what the provider billed for, the Medicare-approved amount, how much Medicare paid, and what you must pay.

MEDICARE SUPPLEMENT OPEN ENROLLMENT PERIOD - A one-time-only six month period when you can buy any Medicare supplement policy you want that is sold in your state. It starts in the first month that you are covered under Medicare Part B and you are age 65 or older. During this period, you can't be denied coverage or charged more due to past or present health problems.

MEDIGAP POLICY - Medicare supplement insurance sold by private insurance companies to fill "gaps" in Original Medicare Plan coverage. Except in Massachusetts, Minnesota, and Wisconsin, there are 12 standardized plans labeled Plan A through Plan L. Medigap policies only work with the Original Medicare Plan (Parts A and B).

N

NON-FORMULARY DRUGS - Prescription drugs that are not on the approved drug list for a specific health plan.

O

OPT OUT - Doctors can "opt out" of Medicare by notifying the Medicare carrier that they will not accept Medicare payments and telling their patients-in writing before treating them-that Medicare will not pay for their services and that the patients must pay for the care themselves. Doctors who have "opted out" can charge as much as they want, and their patients have to pay the entire bill themselves. The only time a doctor who has opted out can receive payment from Medicare is when the doctor provides a patient emergency or urgent care services and the patient does not have a contract with that doctor. If the doctor did not provide a written contract before the patient received the services, the patient is not liable for payment.

ORIGINAL MEDICARE PLAN - A fee-for-service health plan that lets you go to any doctor, hospital, or other health care supplier who accepts Medicare and is accepting new Medicare patients. You must pay the deductible. Medicare pays its share of the Medicare-approved amount, and you pay your share (coinsurance). In some cases you may be charged more than the Medicare-approved amount. The Original Medicare Plan has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance). Also known as Traditional Medicare.

OUTPATIENT HOSPITAL CARE - Medical or surgical care furnished by a hospital to you if you have not been admitted as an inpatient but are registered on hospital records as an outpatient. If a doctor orders that you must be placed under observation, it may be considered outpatient care, even if you stay under observation overnight.

P | Q | R

P

PART A - The part of Medicare that covers most medically necessary hospital, skilled nursing facility, home health, and hospice care.

PART B - The part of Medicare that covers most medically necessary doctors' services, preventive care, durable medical equipment, hospital outpatient services, laboratory tests, x-rays, mental health, and some home health and ambulance services.

PART C - The part of Medicare that allows private health insurance companies to offer the benefits of Parts A and B, and also sometimes Part D, to Medicare-eligible persons. These plans, which are sometimes known as Medicare Advantage plans, include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee for Service plans (PFFSs) and Medical Savings Accounts (MSAs). You must have Medicare Parts A and B to join a Part C plan.

PART D - The part of Medicare that allows private health insurance companies to offer prescription drug coverage benefits to Medicare-eligible persons. Most people who enroll in Part D pay a monthly premium in addition to their Part B premium.

PAY OR PLAY - See Employer Mandate

POINT-OF-SERVICE (POS) OPTION - An HMO option that lets you use doctors and hospitals outside the plan for an additional cost.

PORTABILITY - A means of preventing "job lock" - a condition where workers stay in a job they would prefer to leave just to protect their health coverage. Portability allows people who have had continuous health care coverage to avoid pre-existing condition exclusions when they obtain a new policy.

PRE-EXISTING CONDITION - A physical or mental condition for an individual which is known to the individual before an insurance policy is issued. Insurers may choose not to cover treatment for such a condition. At least for a period, may raise rates because of it, or may deny coverage altogether.

PREFERRED PROVIDER ORGANIZATION (PPO) PLAN - A preferred provider organization (PPO) is a type of health care plan that uses a subscription-based medical care arrangement. A PPO allows patients to receive a substantial discount below regular rates for using specific care providers. PPOs provide more flexibility than a HMO because patients are allowed to use doctors or hospitals outside of the preferred provider list - but patients are usually responsible for the majority of these costs.

PREFERRED PROVIDER ORGANIZATION (PPO) PLAN (MEDICARE) - A type of Medicare Advantage Plan in which pay less if you use doctors, hospitals, and providers that belong to the network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

PREMIUM - The cost of health plan coverage, not including any required deductibles or copayments.

PRESCRIPTION DRUG PLAN (PDP) - A "stand-alone" Medicare drug plan offered through a private insurance company that only offers prescription drug benefits for people with Medicare.

PREVENTIVE HEALTH SERVICE - Services aimed at preventing a disease from occurring, or reducing the effects of the disease if it does occur. This includes care aimed at preventing illnesses altogether (such as shots and immunizations), at catching the existence of a disease early (such as pap smears or other screenings), and at stopping the future advance of a disease (such as cholesterol-lowering medication).

PRIMARY CARE DOCTOR - A doctor who is trained to give you basic care. Your primary care doctor is the doctor you see first for most health problems. He or she makes sure that you get the care that you need to keep you healthy. He or she may talk with other doctors and health care providers about your care and refer you to them. In many HMOs, you must see your primary care doctor before you can see any other health care provider.

PRIVATE FEE-FOR-SERVICE PLAN (PFFS PLAN) - A type of Medicare Advantage Plan in which you may go to any Medicare-approved doctor or hospital that accepts the plan's payment. The insurance plan, rather than the Medicare Program, decides how much it will pay and what you pay for the services you get. You may pay more or less for Medicare-covered benefits. You may haveextra benefits the Original Medicare Plan doesn't cover.

PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE) - PACE combines medical, social, and long-term care services for frail people to help people stay independent and living in their community as long as possible, while getting the high-quality care they need. PACE is available only in states that have chosen to offer it under Medicaid. Special rules for eligibility may apply.

PUBLIC HEALTH INSURANCE OPTION - There is varying opinion about a single definition or model of public health insurance options. Broadly defined, this is a plan run or sponsored by the federal or state government (much like Medicare).

PURCHASING POOL - A group of people, businesses or associations who come together to enhance their bargaining power and negotiate lower premiums from health insurance plans than they could on their own, while also pooling risks across sick and healthy individuals.

Q

QUALIFIED MEDICARE BENEFICIARY PROGRAM (QMB) - Federal program administered by each state's Medicaid program that helps people with Medicare with low incomes pay their coinsurance, deductibles, and premiums.

R

RATING - The process of evaluating, or underwriting, a group or an individual to figure out a health insurance premium rate in relation to the risk the health insurance company takes to cover health care of the person or group. Key components of the rating formula include age, sex, location, and how many benefits the plan includes.

RATING BANDS - Amounts by which insurance rates for a specific class of insured individuals may vary. All states have laws regulating insurer rating practices, and many states periodically update these laws with small group market reform proposals to restrict or loosen allowable variations.

RISK ADJUSTMENT - Increases or reductions in payment made to a health plan on behalf of a group of enrollees to compensate for health care expenditures that are expected to be higher or lower than average.

RISK SEGMENTATION - The practice of grouping large numbers of persons with higher than average health risks together in what are called "high-risk pools." This kind of grouping "sections off" the higher-risk people from the lower-risk people so that insurance companies can charge different rates for each.

S | T | U

S

SECONDARY PAYER - An insurance policy, plan, or program that pays second on a claim for medical care. This could be Medicare, Medicaid, or other insurance depending on the situation.

SERVICE AREA - The area where a health plan accepts members. For plans that require you to use their doctors and hospitals, it is also the area where services are provided. The plan may dis-enroll you if you move out of the plan's service area.

SERVICE CATEGORY - A general description of the types of services provided under the service and/or the characteristics that define the service category.

SHIP (State Health Insurance Assistance Program) - A federally-funded program in each state that answers questions about Medicare free of charge.

SIGNIFICANT BREAK IN COVERAGE - Generally, a significant break in coverage is a period of 63 consecutive days during which an individual does not have health coverage by a licensed insurance company. In some states, the period is longer if the individual's coverage is provided through an insurance policy or HMO. Days in a waiting period during which you had no other health coverage cannot be counted toward determining a significant break in coverage.

SINGLE PAYER SYSTEM - a health care system in which a single organization, typically a government-run organization, acts as the administrator (or "payer") to collect all health care fees, and pay out all health care costs. Single-payer health care does not necessarily mean that the government or some government agency delivers or controls health care services. It may pay for health professionals and services that are delivered in either private or public sector settings according to the needs and wishes of the patient and his or her doctor. Medicare is an example of a single payer system.

SKILLED CARE - Medically reasonable and necessary care performed by a skilled nurse or therapist. If a home health aide (someone who provides help with daily living activities, such as bathing and eating) or other person can perform the service, it is not considered "skilled care." Skilled nursing includes care from Registered Nurses (RNs) and Licensed Practical Nurses (LPNs). Skilled therapy includes care from licensed physical, occupational and speech therapists.

SKILLED NURSING FACILITY (SNF) - A nursing facility with the staff and equipment to give skilled nursing care and/or skilled rehabilitation services and other related health services.

SMALL GROUP MARKET REFORM - Generally refers to laws, regulations and proposals that are designed to simplify rules for small employers (50 workers or fewer) purchasing health insurance. While most regulation of health insurance is done at the state level, the 1996 Health Insurance Portability and Accountability Act made some key reforms.

STATE CHILDREN'S HEALTH INSURANCE PROGRAM (SCHIP) - A program established by Congress in 1997 that provides up to $40 billion in federal matching funds for states to spend on health coverage for uninsured children. The program is designed to reach uninsured children whose families earn too much money to qualify for Medicaid but are too poor to afford private coverage.

SPECIAL ENROLLMENT PERIOD (SEP) - A period of time, triggered by specific circumstances, during which you can enroll in Medicare Part B or Part D without having to pay a premium penalty. Under Part B, your SEP begins the month after employment or group health coverage ends (whichever comes first). Under Part D, you are eligible for an SEP if you lose-through no fault of your own-any type of drug coverage that was considered "creditable."

SPECIAL NEEDS PLAN - A special type of plan that provides more focused health care for specific groups of people, such as those who have both Medicare and Medicaid, who reside in a nursing home, or who have certain chronic medical conditions.

SPECIALIST - A doctor who treats only certain parts of the body, certain health problems, or certain age groups. For example, some doctors treat only heart problems.

SPECIFIED LOW-INCOME MEDICARE BENEFICIARY PROGRAM (SLMB) - Federal program administered by each state's Medicaid program that pays the Part B premium for people with Medicare with low incomes.

STATE HEALTH INSURANCE ASSISTANCE PROGRAM (SHIP) - A State program that gets money from the federal government to give free local health insurance counseling to people with Medicare.

STATE INSURANCE DEPARTMENT - A state agency that regulates insurance and can provide information about Medigap policies and other private insurance.

STATE MANDATE - State coverage laws requiring private insurers to cover specific services (such as well baby care) or reimbursement for specific providers (such as psychologists).

SUPPLEMENTAL INSURANCE (MEDICARE) - Supplemental insurance fills gaps in Medicare coverage by helping to pay for the portion of health care expenses that Original Medicare does not pay for, such as deductibles and coinsurance. Supplemental insurance includes Medigap plans and retiree insurance from a former employer. Supplemental insurance may offer additional benefits that Medicare does not cover.

T

THIRD PARTY PAYER - Organization, public or private, that pays or insures medical expenses on behalf of enrollees. An individual pays a premium, and the payer organization pays providers' actual medical bills on the individual's behalf. Such payments are called third-party payments and are distinguished by the separation among the individual receiving the service (the first party), the individual or institution providing it (the second party), and the organization paying for it (the third party).

U

UNCOMPENSATED CARE - Care rendered by hospitals or other providers without payment from the patient or a government-sponsored or private insurance program. It includes both charity care, which is provided without the expectation of payment, and bad debt, for which the provider has made an unsuccessful effort to collect payment due from the patient.

UNDERINSURED - People with public or private insurance policies that do not cover all necessary heath services, resulting in out-of-pocket expenses that often exceed their ability to pay.

UNDERWRITING - The process by which health insurers decide whether or not to accept an individual's application for insurance, and, if the applicant is accepted, what conditions to apply. Underwriting is also applied to small employers. If the insurer decides that a particular individual or group poses greater than normal financial risks, it might charge higher premiums, offer more limited benefits, or refuse to pay for service relating to a particular "pre-existing" condition.

V | W | X

V

VOUCHER - In various health reform proposals, a certificate or fixed dollar amount that is provided to low or moderate-income persons, which is used to pay all or part of the cost of health insurance services.

W

WAITING PERIOD - The time between when you sign up for a Medigap or private Medicare health plan and the coverage begins.