Health Insurance Glossary | UCSF Medical Center

The following are brief definitions of the terms and acronyms commonly used in regard to health insurance plans and health maintenance organizations.

Authorization: Obtaining approval from the primary care physician and/or health plan (depending on the plan's specifications) prior to receiving health care services, such as visiting specialists.

Catastrophic illness: A very serious and costly health problem that could be life threatening or cause life-long disability.

Claim: A claim is a request for payment for services and benefits you received.

Coinsurance: The share of health care premiums paid by an enrollee. Coinsurance is generally found in conjunction with a deductible. Once the deductible is met, the enrollee is typically responsible for a specified percentage of the medical bill.

Co-payment: The fixed fee paid by the enrollee at the time of service such as office and emergency room visits. Co-payments are generally charged by health maintenance organizations and some Preferred Provider Organization (PPO) plans.

Covered benefit: A health service or item that is included in your health plan and that is paid for either partially or fully.

Deductible: The annual amount paid by the enrollee for services. The deductible must be met before the insurer pays for services.

Covered charges: Services or benefits that a health plan makes either partial or full payment.

Enroll: To join a health plan.

Exclusive Provider Organization (EPO): This managed care plan is similar to an HMO plan in that members must choose a primary care physician. The health plan administers the plan and pays providers directly. If specialty services are not authorized, the plan usually does not cover the services.

Gatekeeper: The primary care physician in a managed care plan through which all other care (e.g., visits to specialists and other providers, lab and radiology tests, hospitalizations, etc.), with the exception of emergencies, must be coordinated.

Health Insurance Discount Plan: A discount plan allows members to access health care providers, such as doctors and dentists, who have agreed to provide services to plan members at discounted rates. Such plans typically charge members a monthly membership fee. Discount plans are not a substitute for health insurance. They are not licensed, even when sold by insurance agents, and can be sold by anyone.

Health Maintenance Organization (HMO): Health maintenance organizations provide care through a specified network of doctors and hospitals. Members of HMOs select a primary care physician who coordinates all care. A co-payment is typically required for each office visit. Aside from the co-payment, the patient does not pay for services from a physician or hospital. However, the patient is responsible for the cost of services that are not covered benefits or the cost of unauthorized services that the patient elects to receive.

Health Savings Account (HSA): This savings account is an alternative to traditional health insurance. It was created by a Medicare bill signed by President Bush in December 2003 to provide a way for consumers to set aside pre-tax dollars for medical expenses, such as co-payments, deductibles and medication, and save for future medical expenses. You must be covered by a "high deductible health plan (HDHP)" to take advantage of HSAs. A high deductible health plan generally costs less than a traditional plan so the money you save on insurance can be put into the health savings account. For more information, visit the U.S. Department of Treasury Web site.

HIPAA: The Health Insurance Portability and Accountability Act (HIPAA) is a law passed in 1996 that expands your health care coverage if you lose your job or if you move from one job to another. It also mandates significant changes in the legal and regulatory environments governing the delivery and payment of healthcare services and the security and confidentiality of patient health information.

Indemnity: A traditional insurance medical plan that allows the enrollee to choose any provider and pays a portion of the medical bills. The enrollee pays a deductible and coinsurance.

Independent Practice Association (IPA): An organization of providers who have joined together for the purpose of entering into HMO contracts to provide medical care as a participating medical group.

In-network: This refers to doctors, hospitals, pharmacies and other health care providers that have agreed to provide members of a certain insurance plan with services and supplies at a discounted price. Under some insurance plans, your care is covered only if you get it from in-network providers.

Managed Care: Managed care refers to a variety of approaches to managing health care, from managed indemnity plans to health maintenance organizations. The focus of managed care is on controlling health care costs and utilization. This is accomplished in a number of ways, including contracts with specific providers, incentives to those providers to keep costs down and a review process to promote appropriate use of health services.

Medi-Cal: A California state sponsored assistance program for medical care.

Medi-Cal Managed Care: A type of Medi-Cal plan in which participants select primary care physicians to serve as gatekeepers to manage all care provided.

Medicare: A federally funded health insurance program for patients who are disabled or over age 65. The original Medicare plan has two parts — Part A is hospital insurance with coverage including hospitalization, hospice and skilled nursing facility services. Medicare Part B is medical insurance with coverage including physician services, medical supplies and clinic care.

Medicare Advantage: These are health plan options approved by Medicare but run by private companies. They are part of the Medicare program. You may have to use the plan's doctors and hospitals to get services. With these plans, you generally receive:

Medicare High-deductible Medigap Policy: This is a type of policy that has a high deductible but a lower premium. You must pay the deductible before the Medigap policy pays anything. The deductible amount can change each year.

Medicare Private Fee-for-Service Plan: This type of Medicare Advantage plan, offered by a private insurance company, allows patients to seek care from any doctor or hospital that accepts Medicare and the fee-for-service plan. The plan provides Medicare benefits and may provide additional benefits. The insurance company, which receives funds from Medicare, decides how much it will pay for each service and the share the patient pays.

Medicare Preferred Provider Organization (PPO): This is a type of Medicare Advantage plan available in a local or regional area in which you pay less if you use doctors, hospitals and other providers that belong to a network. If you use providers outside of the network, there is an additional cost.

Medicare Risk HMOs: This is a type of Medicare Advantage plan that's an alternative to traditional Medicare coverage in which patients assign their Medicare benefits to health plans that receive monthly premiums from the federal Health Care Financing Administration. Care is provided like HMOs with gatekeepers or primary care physicians coordinating care. Seniors elect these plans to eliminate the paperwork and deductibles associated with Medicare. These plans offer the same benefits as Medicare and often additional benefits such as prescription coverage as incentives to enroll.

Medicare Supplemental Insurance: This is a supplemental insurance plan to help cover the medical fees and services not covered by Medicare. These plans also are known as "Medi-gap" plans.

Medicare Supplement: A supplemental insurance policy to help cover the difference between approved medical charges and benefits paid by Medicare. These plans are also known as "Medi-gap" plans.

Participating Medical Group (PMG): A physician group (a primary care or multi-specialty group) that is a member of a health plan's network and therefore may provide services to members who are covered by that health plan.

Point-Of-Service (POS): A health plan that offers the option to either coordinate care through a primary care physician or seek medical care from another provider. To exercise the first option, sometimes called "tier 1," the patient selects a primary care physician to coordinate all care. As with a health maintenance organization, the patient is responsible for a nominal co-payment.

For a higher degree of choice, or "tier 2," the patient may elect to receive care from the plan's network of physicians and hospitals without coordinating through the primary care physician. As with a preferred provider organization, the patient is generally responsible for a deductible and for paying a percentage of the bill.

In "tier 3," the patient may choose any doctor outside the network, but pays an even higher percentage of the bill.

Precertification: Obtaining approval from a health plan for an elective hospital stay, prior to admission to the hospital. Expected length of stay is also determined during precertification.

Preferred Provider Organization (PPO): Preferred provider organizations offer care through a network of specified physicians and hospitals. Generally, there is no gatekeeper. Many services, however, require prior authorization by the insurer or the patient may be held accountable for a larger portion of the bill. Some plans have an annual deductible that must be met before services are covered by the insurer. Other plans have a co-payment. If a non-participating provider is seen, the patient is responsible for a higher percentage of the bill.

Referral: A referral is when a physician sends a patient to another physician for a specific, usually complex problem.

Self-insured: The self-insured employer assumes risk for health care expenses in a plan that is self-administered or through a contract with a third-party administrator. This form of coverage is regulated by the Employee Retirement Income Security Act of 1974.