Home :: Site Map :: Privacy Policy


Patient Advocate Foundation
help@patientadvocate.org
Phone: (800) 532-5274
Fax: (757) 873-8999
Home > Resources > PAF Publications > PAF Guides & Major Publications > National Underinsured Resource Directory Booklet > Definitions

Definitions

BENEFIT LIMITS also known as Capped Benefits can come in many ways such as annual, lifetime, or limit on a specific treatment. A benefit limit states how much the health plan will pay for a specific product or service, or the number of services a consumer may receive, an example would be the number of visits allowed for specialty physicians. Consumers are responsible to pay for products or services that are considered benefit exclusions and not covered by their insurance plan.

BENEFIT EXCLUSIONS are a healthcare product or service that is not considered eligible for coverage (payment) by health insurance plan.

CATASTROPHIC PLAN may be referred to as a Limited Benefit Plan. It is an insurance policy that provides minimal or "bare bones" coverage for an unexpected illness or injury with lower monthly premiums and caps on out-of-pocket expenses. The limitation on the benefit may be daily or per incident.

CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT (COBRA) This federal law ensuring that employers with 20 or more employees allow for continuation of group health benefits for a temporary period of time under certain circumstances (such as loss or change of employment, reduction in hours worked, death, divorce or other life events). A qualified beneficiary is any individual covered by the plan the day before the qualifying event. Each beneficiary can elect COBRA independently.

CO-INSURANCE An insurance policy provision under which both the insured person and the insurer share the covered charges in a specified ration (e.g. 80% by the insurer and 20% by the enrollee).

CO-PAYMENT A cost-sharing arrangement in which the managed care enrollee pays a specified flat amount for a specific service (such as $15.00 for an office visit or $10.00 for each prescription drug). Typically it does not vary with the cost of the service, unlike co-insurance, which is based on a percentage of charges.You may see a variation in non-formulary drug co-pays which are based on a percentage of the total cost.

DEDUCTIBLES Amounts required to be paid by the insured under a health insurance contract before benefits become payable.

DISCOUNTED FEE-FOR-SERVICE An agreed upon rate for service between the provider and payer that is usually less than the provider's full fee. This may be a fixed amount per service or a percentage discount. Providers generally accept such contracts because they represent a means of increasing their volume or reducing their chances of losing volume.

MEDICAID is a federal and state-funded program that administered by the individual states. You must meet one of the eligibility criteria (aged, blind or disabled, or under 19) for the program, as well as the income and asset requirements. There are no national guidelines governing the program, so eligibility requirements vary from state to state. For further information you can contact your local Medicaid office or visit www.cms.hhs.gov to research the benefits available in your state.

NON-COVERED SERVICE OR INSURANCE denials can be a result of a pre-existing health condition, benefit exclusion of the plan or not obtaining pre-authorization prior to receiving a service.

OUT-OF-NETWORK issues occur when a member uses a hospital, physician or other providers that do not have a contract with the insurance plan. Depending on the provider you would be subject to balance billing, the difference between what the provider charges and your insurance pays. If you belong to a HMO health plan there is no benefit if you use non-participating providers unless an exception is made by the health insurance plan.

OUT-OF-POCKET COSTS are the amounts for healthcare products or services which members are responsible to pay. Out-of-pocket costs include co-payments, co-insurance and deductibles as well as the insurance premium.

PHARMACY BENEFITS describe how your insurance will cover prescription medications. There are a variety of pharmacy benefits such as:
  • Benefit Limits or Caps determine how much the insurance plan will pay for specific healthcare products or services, or the quantity of services a consumer may receive.
  • Generic only coverage which does not cover brand name drugs but allows for medicine that is the chemical equivalent of a brand-name drug.
  • Off-Formulary drugs are medications being prescribed for you but are not on your insurance formulary.
  • Off-Label drugs are medications being prescribed for you but that have received FDA approval but not your specific diagnosis.
  • Non-covered benefits are for a requested
    medication not eligible for payment through the health insurance plan.
  • Specialty or high-tier drugs is a list of medications determined by the insurance plan that are assigned different levels of cost share and co-payments.


PRE-AUTHORIZATION (PRIOR AUTHORIZATIONS) is determined by each health insurance plan and requires that their members receive approval before undergoing specific medical treatments, tests or surgical procedures.

PRE-EXISTING CONDITIONS are a prior medical condition for which a plan member has received, or was recommended to receive, medical advice or treatment before the effective date of the health insurance plan.

PREMIUM The amount paid to an insurer for providing coverage, typically paid on a periodic basis (monthly, quarterly, etc.).

PREVAILING CHARGE This is a fee based on the customary charges for covered medical insurance services. In Medicare payments for services or items, it is the maximum approved charge allowed.

REASONABLE CHARGE A method used by Medicare to determine reimbursement for items or services not yet covered under any fee schedule. Reasonable charges are usually determined by the lowest of the actual charge,
the prevailing charge in the locality, the physician's customary charge, or the carrier's usual payment for comparable services.

REIMBURSEMENT Refers to the actual payments received by providers or patients for benefits covered under an insurance plan.

USUAL, CUSTOMARY, AND REASONABLE (UCR) CHARGES Are a calculation by a managed care plan of what it believes is the appropriate fee to pay for a specific healthcare product or service, in the geographic area in
which the plan operates. "Usual" refers to the individual physician's fee profile, equivalent to Medicare’s "Customary" charge screen. "Customary," refers to a percentile of the pattern of charges made by physicians in a
given locality. "Reasonable"is the lesser of the usual or customary screens.