Glossary of Insurance Terms
Assignment of Benefits - The transfer of the right for reimbursement directly to the provider, from the insured person's health insurance.
- Transferring rights allows the insurer to mail any benefit payment directly to the provider.
- This legal statement may be signed by the insured person or his/her legal spouse or guardian.
Authorization/Pre-certification - Permission to provide health care services to a patient. Permission may be required by one or more of the following: a health insurance plan, medical group or a hospital.
Birthday Rule - Used to determine primary and secondary coverage for children when both parents have health insurance coverage. The word "birthday" refers only to the month and day in a calendar year, not the year in which the person was born.
- If the parents are not separated or divorced, the health insurance of the parent whose birthday occurs first in a calendar year is considered the primary insurance while the other parent's benefits are considered the secondary coverage.
- If the parents have the same birthday, the health insurance plan that has covered the parent for the longest time is considered the primary insurance.
- In situations where the parents are separated or divorced and there is more than one health insurance plan covering the child, the benefits are determined in the following order. **
- The health insurance plan of the parent with legal custody of the child.
- The plan of the spouse of the parent with legal custody of the child.
- Last is the plan of the parent who does not have legal custody of the child.
(** There can be some discrepancy, depending on a court decree, if there are no specific terms on a court decree (stating only that the parents share joint custody), the benefit determination would be the same as the first bullet above where if the parents are not separated or divorced, the insurance of the parent whose birthday occurs first in a calendar year is considered the primary insurance while the other parent's benefits are considered the secondary coverage.)
- Coordination of Benefits (COB) - A health insurance policy provision that helps determine the primary carrier in situations where an insured is covered by more than one policy.
- Deductible (DED) - The amount of money, as determined by the benefit plan that a person must pay for authorized, covered, health care services before insurance payment begins. Deductibles are usually calculated on a calendar year basis, but can also be based on the anniversary date of a patient's effective date with that plan or plan year of the named insured or subscriber.
Guarantor - The person or entity responsible for payment of a bill. A parent or legal guardian/trustee is the guarantor for patient's 18 years of age and younger.
Medicaid - A Federal health insurance program administered and operated by the state that provides health care benefits to low income individuals. California's Medicaid program is called Medi-Cal.
Medi-Cal - See Medicaid.
Medi-Cal Managed Care - The conversion of fee-for-service Medi-Cal to PCP governed care whereby eligible members select a primary care physician who manages all care provided to members. In Orange County, this program is known as Cal Optima.
Medicare - Medicare is a federal insurance program, which primarily serves individuals who are 65 years age or older, the disabled, and dialysis patients with end stage renal disease (ESRD). Medicare is divided into three parts:
- Medicare Part A covers inpatient hospital services, nursing home care, home health care and hospice care.
- Medicare Part B helps pay the cost of doctors' services, outpatient hospital services, medical equipment and supplies and other health care services.
- Medicare Part D - Prescription drug benefit
Medicare Supplement - A supplemental private insurance policy to help cover the patient's liability after benefits are paid by Medicare.
Non-Covered Services - A cost incurred by the patient, which is not covered by their health insurance plan or policy.
Out-of-Network (OON) - Services rendered by a provider, who is not contracted with a patient's health insurance plan. Typically, managed care plans are contracted with a panel of providers. If a patient seeks care out-of-network, they may be financially responsible for some or all of the care provided.
Point of Service (POS)/Tiered Plan - Health coverage that allows the patient to receive a service from a provider by utilizing different benefits levels.
Preferred Provider Organization (PPO)
- Health coverage that allows the member to direct his/her own healthcare.
- A patient may self-refer within a contracted network of physicians; after paying a deductible, a co -payment or coinsurance amount.
- A patient may choose to receive treatment from a provider outside of the PPO network thereby increasing his/her deductible or out-of-pocket maximum.
- The patient may be responsible for obtaining authorization from the health insurance plan for some services such as physical therapy and MRI services.
Primary Care Physician (PCP)
- A physician who contracts with a health insurance plan to manage a person’s health care needs. A primary care physician (PCP) can provide a wide range of general care or when medically necessary, refer a patient to a specialist. PCPs are typically Internists, General Practitioners, Pediatricians and OB/GYNs.
- Most HMO, EPO and POS plans require members to choose or be assigned to a primary care physician.
Worker's Compensation - Health insurance coverage that is provided by employers to cover employees injured on the job. This coverage is separate from regular medical coverage.