Glossary of Terms

Agent: Licensed salesperson(s) representing one or more health insurance companies and presents their products to consumers.

Brand-name drug: Prescription drugs that are marketed with the specific brand name of the company that manufactures it, which is usually the company that develops and patents the drug. When patents run out, generic versions of many popular drugs are marketed at a lower cost by other companies. Check your insurance plan to see if coverage differs between Brand-name drugs and their generics.

Certificate of Credible Coverage: This is a letter from an individual’s prior insurance company certifying that they covered the individual for the period of time specified in the letter.  This may or may not apply when you switch employers or insurance plans. A  waiting period for a pre-existing condition met while you were under an employer’s (qualifying) coverage may be honored by your new plan if any interruption in the coverage between the two plans meets state guidelines.

Co-Insurance: Co-insurance refers to money that an individual is required to pay for services after a deductible has been paid. Co-insurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.  

Co-Payment: Co-payment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some HMOs require a $10 “co-payment” for each office visit, regardless of the type or level of services provided during the visit. Co-payments are not usually specified by percentages.

Deductible: The amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.

Effective Date: The date your insurance actually begins. You are not covered until the policy’s effective date. 

Explanation of Benefits: The insurance company’s written explanation of a claim, showing what they paid and what the individual must pay.

Generic Drug: An “equivalent” to a “brand-name drug”, which is usually developed after the brand name company’s patent has expired, allowing other drug companies to sell a duplicate of the original. Most often Generic drugs are cheaper, and most prescription and health plans reward clients for choosing generic drugs. 

HIPAA: A Federal law passed in 1996 that allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also creates the authority to mandate the use of standards for the electronic exchange of health care data, to specify what medical and administrative code sets should be used within those standards, to require the use of national identification systems for health care patients, providers, payers (or plans) and employers (or sponsors) and to specify the types of measures required to protect the security and privacy of personally identifiable health care. The law’s full name is “The Health Insurance Portability and Accountability Act of 1996.”

In-Network: Providers or health care facilities that are part of a health plan’s network of providers with which it has negotiated a discount. Insured individuals usually pay less when using an in-network provider, because those networks provide services at lower cost to the insurance companies with which they have contracts. 

Individual Health Insurance: Health insurance coverage on an individual or family outside of a business. 

Out-of-Network: This phrase usually refers to physicians, hospitals or other health care providers who do not participate in an insurance plan (usually an HMO or PPO). Depending on the health insurance plan, expenses incurred on services provided by out-of-network health professionals may not be covered, or will be covered only in part by an insurance company.

Out-Of-Pocket Maximum: A predetermined limited amount of money that an individual must pay out of their own savings before an insurance company or (self-insured employer) will pay 100 percent for an individual’s health care expenses.

Pre-Existing Condition: Any medical condition diagnosed or treated prior to a policy’s effective date. Short-Term Medical: Temporary coverage for an individual for a short period of time, usually spanning from 30 days to six months.