Health Insurance FAQ |
What is HMO? What is PPO? What is a Self-insured plan? What are Medicare and Medical Plans? What is Medicare+Choice Medical Savings Account? What is Medicare supplement? What is Workers' compensation? What is a Primary care provider (PCP)? What is a mandate benefit? What is a base plus plan and it's advantage? What is a comprehensive plan and it's advantages? What is Managed care? What is a Managed care organization (MCO)? What is a Third party administrator (TPA)? What is Precertification? What is Premium? What services categories are generally covered by a group health insurance plan? What is Utilization review (UR)? What is Lifetime maximum benefit amount? What is a deductible and how does it work? What is coinsurance? What is a covered expense and what are the limits? What is Usual, Customary, and Reasonable (UCR) fee? Do health insurance plans cover dental care? What dental services are covered by insurance? How is vision care covered? Are all prescription drugs covered under health care plans? What is a Report card? What is Consumer Directed Healthcare Benefit? What is Flexible Spending Account (FSA)? What is Health Savings Account (HSA)? What is Health Reimbursement Account (HRA)? What is Point of Service (POS)? What is Indemnity Medical Plan? |
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What is HMO? | Top |
A health maintenance organization (HMO) is an organization that contracts with or has physicians on staff and provides comprehensive health care to a population in exchange for premium dollars either paid by an employer group or individual. Typically only services rendered by providers within the network are covered however many variations of HMO plans are available. Many health maintenance organizations utilize a Primary Care Provider (PCP) that is either assigned or selected by the member. This PCP, also known as a gatekeeper, is responsible for monitoring and approving all care given to the member by other health care providers. |
What is PPO? | Top |
A preferred provider organization (PPO) is an organization that contracts with a group of doctors, dentists, hospitals or other health care service providers to provide care at prearranged rates. Typically services rendered by providers within the contracted network are paid at a higher rate than those rendered by non-contracted providers. |
What is a Self-insured plan? | Top |
A health insurance plan under which an employer or other group sponsor, rather than a Managed Care Organization or insurance company, is financially responsible for paying plan expenses, including claims made by group plan members. |
What are Medicare and Medical Plans? | Top |
Medicare is a federal government hospital expense and medical expense insurance plan primarily for elderly and disabled persons. Medicare Part A - The part of Medicare that provides basic hospital insurance coverage automatically for most eligible persons. Medicare Part B - A voluntary program that is part of Medicare and provides benefits to cover the costs of physicians' services. Medicare Part C - The part of Medicare that allows independent entities, such as commercial Managed Care entities, to offer health plans to Medicare beneficiaries. Also known as Medicare+Choice Medicare Part D - A voluntary program that is part of Medicare and provides benefits to cover prescription drugs. |
What is Medicare+Choice Medical Savings Account? | Top |
Accounts created by contributions from Health Care Financing Agency to pay out-of-pocket medical expenses for Medicare beneficiaries. The accounts are used in conjunction with high-deductible, catastrophic healthcare policies. |
What is Medicare supplement? | Top |
A private medical expense insurance plan that supplements Medicare coverage. |
What is Workers' compensation? | Top |
It is a state-mandated insurance program that provides benefits for healthcare costs and lost wages to qualified employees and their dependents if an employee suffers a work-related injury or disease. |
What is a Primary care provider (PCP)? | Top |
A Primary care provider is a physician or other medical professional who serves as a member's (usually HMO member) first contact with a plan's healthcare system. Typically, they are responsible for monitoring and approving all care given to the member by other health care providers. They are also known as a primary care physician, personal care physician, or personal care provider. |
What is a mandate benefit? | Top |
Each state has its own insurance laws. A mandated benefit is a specific coverage that an insurer is required to include in its contract under state law. Examples of coverage mandated by some states include coverage for newborn children, mental and nervous disorders and hospice care. |
What is a base plus plan and it's advantage? | Top |
A base plus plan is a two-part health insurance plan. Basic medical coverage such as hospitalization, surgery, physician's visits, diagnostic laboratory tests and x-rays are provided under the first part. The employee is reimbursed starting with the first dollar of expenses and there are no deductible or coinsurance applied to the covered expenses.
However, there may be limits on these expenses, such as a limited number of hospital days or allowable surgical procedures.
The second, which is the major medical part of the plan, covers other health expenses. Usually, this coverage is broad with fewer limits; however, a deductible is required before the employee is reimbursed for expenses. The base plus plans appear to provide more generous benefits because of the absence of deductibles and coinsurance for the first part of the base plus plan. |
What is a comprehensive plan and it's advantages? | Top |
A comprehensive plan provides coverage for most medical services using one reimbursement formula. In a pure comprehensive plan, a deductible must be met before reimbursement for any covered expenses begins, and coinsurance applies to all covered expenses until the maximum employee out-of-pocket expense limit is reached. Additional covered expenses are paid in full.
Because employees share from the beginning in the cost of their medical expenses when they are incurred, a comprehensive plan encourages them to use more cost-effective health care. The patient is more likely to be cost-conscious and to seek out more cost-effective health care services and providers. |
What is Managed care? | Top |
Managed care is the integration of both the financing and delivery of healthcare within a system that seeks to manage the accessibility, cost, and quality of that care. |
What is a Managed care organization (MCO)? | Top |
An MCO is any entity that utilizes certain concepts or techniques to manage the accessibility, cost, and quality of healthcare. They are also known as a managed care plan. |
What is a Third party administrator (TPA)? | Top |
A TPA is a company that provides administrative services to Managed Care Organizations or self-funded health plans. They are licensed by each individual state. |
What is Precertification? | Top |
Precertification is authorization to deliver healthcare service that is issued by a health insurance plan before any service is rendered. Typically this term is used in relation to hospital inpatient services. An authorization of physician services that will rendered by a non-network or non-PCP provider is typically called a referral. |
What is Premium? | Top |
A prepaid payment or series of payments made to a health insurance plan by purchasers, and often plan members, for medical benefits. |
What services categories are generally covered by a group health insurance plan? | Top |
Base plus and comprehensive plans vary by insurer, but generally cover the same kinds of services. These include:
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| - Professional services of doctors of medicine and osteopathy and other recognized medical practitioners
- Hospital charges for semiprivate room and board and other necessary services and supplies
- Services of registered nurses and, in some cases, licensed practical nurses
- Anesthetics and their administration
- X-rays and other diagnostic laboratory procedures
- X-ray or radium treatment
- Oxygen and other gases and their administration
- Blood transfusions, including the cost of bloom when charged
- Drugs and medicines requiring a prescription
- Specified ambulance services
- Rental of durable mechanical equipment required for therapeutic use
- Artificial limbs and other prosthetic appliances, except replacement of such appliances
- Casts, splints, trusses, braces and crutches
- Rental of a wheelchair or hospital-type bed
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What is Utilization review (UR)? | Top |
UR is the evaluation of the medical necessity, efficiency, and/or appropriateness of healthcare services and treatment plans. It is conducted by health insurance plans. |
What is Lifetime maximum benefit amount? | Top |
It is the maximum dollar amount set by a health insurance organization that limits the total amount the plan must pay for all healthcare services provided to a covered individual in his/her lifetime. |
What is a deductible and how does it work? | Top |
It is a specific dollar amount that an individual must pay before reimbursement for expenses begins. The higher the deductible, the lower the cost of the health insurance plan. Each person covered under a health insurance plan must meet a deductible before expenses will be covered. However, plans usually include some type of family deductible in order to limit a family's exposure for health care expenses. For the family deductible to be satisfied, the combined expenses of covered family members are accumulated. Some plans require, however, that at least one family member satisfy the full individual deductible before the family deductible can be met. |
What is coinsurance? | Top |
Coinsurance defines the percentage of covered expenses that the members and the health insurance plan will pay. The most common coinsurance level is 80/20, in which the employee pays 20 percent of the expenses and the insurance plan pays 80 percent. This is also called 80 percent coinsurance. |
What is a covered expense and what are the limits? | Top |
A covered expense is an eligible expense incurred by a covered individual that will be reimbursed in whole or in part under the health insurance plan. Just because an expense is covered does not mean that the coverage is unlimited. The members are recommended to check with their insurance plan for the coverage status and limits of any particular service. |
What is Usual, Customary, and Reasonable (UCR) fee? | Top |
The amount commonly charged for a particular medical service by physicians within a particular geographic region. UCR fees are used by traditional health insurance companies as the basis for provider reimbursement and for Managed Care Organizations as the basis for non-network provider reimbursement. |
Do health insurance plans cover dental care? | Top |
Traditionally dental care has not been included in group health insurance plans. However, there are some plans that include dental coverage. Regardless, many health insurance plans do provide coverage for non-cosmetic dental work necessary as the result of an accident including even hospital stays that may be required for the specific procedure. |
What dental services are covered by insurance? | Top |
Dental services are usually classified into different coverage levels. Level I services include preventive and diagnostic care services such as semiannual examinations & cleaning, x-rays and other diagnostic services. Level II (basic services) includes simple restoration (fillings), crowns and jackets, repair of crowns, extractions and root canals. Level III (major services) includes dentures, bridges and replacement of bridges and dentures. Dental insurances usually cover Level II & III services at a much lower reimbursement rate than Level I services. |
How is vision care covered? | Top |
Most health insurance plans provide coverage for medical care related to eye injury or disease, but do not cover the costs of periodic eye examinations or corrective lenses. However, many employers provide vision care benefits. Vision care is most often covered on a scheduled basis by paying a fixed dollar amount for lenses and frames. |
Are all prescription drugs covered under health care plans? | Top |
Generally, only prescription drugs that are for treatment of an illness or injury are covered. Many prescription drug programs impose coinsurance and copays. Many plans do not cover contraceptive prescription drugs, for example, or nicotine chewing gum prescribed for smokers who are trying to quit. Many pharmacy benefit plans have their own formulary (list of drugs) they approve for their members. Drugs outside the formulary may not be reimbursed or reimbursed at a very low rate.
There are a number of variations of drug plans. The most common plans are open panel, closed panel, mail order and prescription drug card plans. |
What is a Report card? | Top |
A Report Card is a set of performance measures applied uniformly to different health insurance plans or providers that is made available to members to assist them in plan and provider selection. |
What is Consumer Directed Healthcare Benefit? | Top |
Consumer Directed Healthcare Benefits (CDHB) provide healthcare benefits that are funded jointly by employers and their employees. This joint funding leads to increased choice and responsibility for the employee plus more accountability for the health plans and providers. Typically, an employer makes its contribution toward either a plan (e.g., a health insurance plan, an HMO, etc.) or an account (e.g., a personal health account) or both, and then provides employees choices as to how the money will be spent. |
What is Flexible Spending Account (FSA)? | Top |
Flexible Spending Accounts (FSA) are accounts typically funded on a pre-tax basis through employee salary reductions. Any amounts in the account unused as of the end of the year must be forfeited. This forfeiture requirement, frequently referred to as the use it or lose it rule, keeps FSA amounts from being carried over to subsequent years and strongly motivate individuals to consume healthcare by the end of the year. FSAs are typically an employer-offered health reimbursement arrangement (sometimes called cafeteria plan) solely funded by the subscriber or employee. Essentially, the employee contributes a percentage of their pretax salary, up to the limit the plan allows. These dollars can then be used to pay for qualifying expenses, including medical costs that aren't covered by your health insurance, childcare, and care for your elderly or disabled dependents. FSAs are also available to self-employed persons and some small businesses. Although they are similar to Health Savings Accounts (HSAs), they are much less flexible in many respects. |
What is Health Savings Account (HSA)? | Top |
Health Savings Account is a tax advantaged savings plan (a financial account with various restrictions) available to taxpayers in the United States to cover current and future medical expenses. It allows money to be put in before tax is paid on it and then to withdraw the money tax free for qualified medical expenses. These accounts can be funded by the subscriber, his/her employer, or a combination of the two. |
What is Health Reimbursement Account (HRA)? | Top |
HRA stands for Health Reimbursement Account and is an employer-provided health reimbursement arrangement solely funded by the employer. It reimburses the employee for medical care expenses as defined by the 213 IRS code. These expenses can be incurred by the employee, the employee's spouse and/or dependants. It provides reimbursement to a maximum dollar amount in subsequent coverage periods. Employers have much flexibility with regard to the plan's design. |
What is Point of Service (POS)? | Top |
POS is a type of managed care plan that combines elements of managed care, such as restricted provider choice, with traditional indemnity insurance, which has no restrictions on provider selection. Generally, each plan member selects a Primary Care Physician for HMO-type benefits for authorized services, but may self-refer to any nonparticipating provider at a lower benefit level. |
What is Indemnity Medical Plan? | Top |
In this traditional fee-for-service medical plan, the patient chooses whichever doctor and hospital he or she wants to use, and the plan reimburses the patient for covered medical services. The reimbursement from the plan is solely based on the plan benefits, however the usual coverage is at 80% level. |
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Health Insurance FAQ 