Healthcare Financial, Inc. - Glossary of Terms

Acute Care

Medical treatment given to individuals whose illnesses are short-term or episodic.

Acute Condition

An illness or condition that is short-term or episodic. Examples would include a case of bronchitis or a broken arm.

Aid to Families with Dependent Children (AFDC)

A state-based federal assistance program that provided cash payments to needy children (and their caretakers), who met certain income requirements. AFDC has now been replaced by a new block grant program.

Beneficiary

A person who is eligible for or receiving benefits under an insurance policy or plan.

Cafeteria Plan

Health benefits that are excludable for income and employment tax purposes. Under a cafeteria plan, an employee is provided a fixed budget to purchase various benefits such as health, life and disability.

Catastrophic Health Insurance

Limited health insurance that provides coverage for treating only severe or lengthy illnesses or disability.

Centers for Medicare and Medicaid Services (CMS)

Formerly known as the Health Care Financing Administration (HCFA), the Centers for Medicare and Medicaid Services is the federal agency that administers Medicare and works in conjunction with state governments to oversee the federal-state Medicaid and the State Children’s Health Insurance Program (S-CHIP).

CHAMPUS

(Civilian Health and Medical Program of the Uniformed Services) A health plan that serves the dependents of active duty military personnel and retired military personnel and their dependents.

Chronic Care

Treatment or services necessary to treat a medical condition that lasts a lifetime or recurs.

Chronic Condition

A medical problem that will not improve, that lasts a lifetime, or recurs and usually requires a long period of supervision, observation or care. Examples include diabetes, asthma and high blood pressure.

Co-insurance

The percentage of a medical bill that a patient must pick up that is not covered by a health policy.

Co-payment

The part of the medical bill that is not covered by a patient’s health insurance policy and must be covered out of pocket by the patient. It is usually a flat amount, such as $10 for an office visit.

COBRA

(Consolidated Omnibus Budget Reconciliation Act of 1985) A federal law that allows individuals leaving a company to continue the health insurance policy they had when employed. COBRA applies when individuals lose or leave a job. The individual is allowed to pay group rates plus a set administrative fee, usually for up to 18 months.

Collectively Bargained Health Plan

An employer provided benefit, pension or annuity plan that is established through a union-negotiated contract.

Community Rating

A method for setting health insurance rates in which everyone in a specific area is charged the same premium rather than having it adjusted individually according to a person’s health history. The rate is usually based on the average cost of delivering health care to people living in that area.

Coverage

A person has coverage if all or part of his health care costs is paid either by insurance or by the government.

Deductible

The amount of money, or value of certain services (such as one physician visit), a patient or family must pay before costs are covered by the health plan or insurance company, usually per year.

Diversion

The routing of patients to other hospitals because an Emergency Room is full.

Employment Retirement Income Security Act (ERISA)

A law enacted in 1974 that sets federal reporting and disclosure rules for employer-sponsored health plans. Under ERISA law, companies that self-insure and pay for workers’ health benefits directly are exempt from state insurance regulation and taxes.

Exclusion Period

a period during which a health insurance plan will not pay for a new enrollee’s health care relating to a previous medical condition.

Experience Rating

a practice in which premium rates for health insurance are based on the past cost experiences of the enrolled individual or group.

Federal Employees Health Benefit Program (FEHBP)

The health benefit system for federal civilian employees. Under the FEHBP, employees choose from among multiple health plans approved by the federal government. The federal government picks up a large portion of the cost of coverage.

Federal Poverty Guidelines

The official annual income level for poverty is defined by the federal government. Under the 2001 guidelines, the federal poverty level for a family of four was $17,650.

Fee-for-service

An approach in which physicians or other providers bill separately for each patient encounter or service they provide. The insurance company or government program pays all or some set percentage of the fees that hospitals and doctors charge.

Flexible Spending Account

Also Flexible Spending Arrangements. Benefit plans in which an employer reduces an employee's earnings, before income tax is taken out, to pay for medical expenses not covered by insurance. These plans also can be used to pay for child care services.

Group Insurance

Health insurance offered through business, union trusts or other groups and associations. This system of health insurance is the most common in the United States.

Guarantee Issue

A requirement in which health plans must enroll people regardless of health status, age, gender or other factors predicting use of health services. However, plans that provide guaranteed issue can turn enrollees away for other reasons.

Guarantee Renewability

When a health plan has a guaranteed renewability clause it prevents coverage from being discontinued because a person gets sick.

Health Insurance Portability and Accountability Act

HIPAA. A federal law enacted in 1996, offering limited protections to ensure continuity of health care coverage. Under HIPAA, insured individuals who have a health condition cannot be denied benefits when they change jobs. It also prevents health plans from refusing coverage on the basis of pre-existing conditions.

Health Maintenance Organization (HMO)

A health plan, either for-profit or not-for-profit, that provides comprehensive medical services to its members for a fixed, prepaid premium. Members must use participating providers and are enrolled for a fixed period of time.

Indemnity Insurance

A system of health insurance in which the insurer pays for the costs of covered services after care has been given, and that usually defines the maximum amounts that will be paid for covered services.

Individual Health Plan

Health policies for people not connected to an employer or other group. This term also refers to coverage purchased by self-employed persons who have no other employees.

Managed Care

This term describes types of health insurance that control the use of health services by their members so they can contain healthcare costs, the quality of care, or both.

Medicaid

The federal-state program for certain categories of low-income people that covers 36 million Americans, including children, the aged, blind, disabled, and people who are eligible to receive federally assisted income maintenance payments.

Medical Savings Accounts (MSAs)

A tax-exempt account, similar to an Individual Retirement Account, that is used to pay for routine medical expenses. These are used to pay for health care not covered by insurance, including deductible and co-payments.

Medicare

The federal health insurance program for people age 65 and older, the disabled, and people with end-stage renal disease, with about 39 million beneficiaries.

Multiple Employer Welfare Arrangement (MEWA)

When a group of employers band together to purchase group health insurance, usually via self-funding, to avoid state mandates, taxes and insurance regulation. In some states, these are illegal.

Out-of-pocket Expenditures

The portion of medical expenses a patient is responsible for paying.

Outpatient Care

Health care services that do not require a patient to receive overnight care in a hospital.

Pre-existing Condition

A medical condition a person develops before applying for a particular health insurance policy that could affect their ability to get coverage.

Preferred Provider Organization (PPO)

A managed care plan that contracts with networks or panels of providers, which furnish services and are paid according to a negotiated fee schedule. Enrollees are offered a financial incentive to use providers on the preferred list, but may use non-network providers as well.

Premium

An amount paid periodically (usually monthly) to buy health insurance coverage.

Private Insurance

Health insurance that is provided by private insurance companies such as commercial insurers and Blue Cross plans; self funded plans sponsored by employers; and insurance provided through commercial health plans such as Health Maintenance Organizations and other private managed care arrangements.

Purchasing Pools

Through these pools, businesses and associations band together to increase their buying power with health insurance plans.

Refundable Tax Credit

A type of tax credit to help people purchase insurance. They are used to offset other taxes or are paid to a household directly if there is no tax liability.

Safety Net Providers

Providers who have a mandate or mission to deliver large amounts of care to uninsured and other vulnerable patients. Examples include community health centers, clinics, public hospitals and teaching hospitals.

Self-employed Deduction for Health Insurance

Self-employed taxpayers can deduct portions of their payments for health insurance when figuring their annual income for tax purposes. By 2003, self-employed persons will be able to deduct the full cost of insurance payments.

Self-insured Health Plan

Employer-provided health insurance in which the employer, rather than an insurer, is at risk for its employees’ medical expenses.

State Children’s Health Insurance Program (S-CHIP)

A federal-state program enrolling children from families that earn too much to qualify for Medicaid but not enough to afford private health insurance.

Stop-loss

An annual limit or cap on how much in deductibles and co-payments the patient has to pay.

Tax Credit

Under some health care reform proposals people with moderate to low-incomes would be given a tax credit to help them buy health insurance in the private market. It could be refundable and it could vary according to age, health status or income.

Tax-favored Fringe Benefit

Under federal tax law, employer-paid health benefits are treated as a deductible business expense for the employer and not as taxable income for the worker.

Temporary Assistance to Needy Families (TANF)

Block grant program that replaced Aid to Families with Dependent Children

Uncompensated Care

Health care provided to persons unable to pay and not covered by private or governmental health insurance plans; includes both unbilled charity care and bad debts (services billed but not paid).

Underinsured

Refers to people who have some type of health insurance, such as catastrophic care, but not enough insurance to cover all their health care costs.

Uninsured

People who lack health insurance of any kind.

Veterans Health Care

Health care provided by the Department of Veterans Affairs to eligible veterans and to members of veterans families and survivors of deceased veterans.

Waiting Period

The period from which a person is deemed eligible for health insurance coverage to the date that coverage becomes effective.

This glossary was extracted from the Covering the Uninsured website http://www.coveringtheuninsured.org