What is an aggregate group for health insurance
An aggregate deductible includes the combined expenses of all covered family members rather than separate deductibles for each family member. the insured must pay the deductible before benefits are paid for all or part of the remaining covered services.
A brand-name drug is a prescription drug sold under a brand name owned by the company that makes it. once the patents run out, other companies sell lower-cost generic versions. most insurance plans offer lower copays for generic drugs.
cobra (Consolidated Omnibus Budget Reconciliation Act of 1985)
cobra is a federal law that applies to employer-sponsored group health plans with 20 or more employees that provides for continuation of an employee’s health insurance coverage, as well as coverage for dependents, if the employee terminates his employment. (This law applies whether the termination is voluntary or not.) (Note: New York State has “mini charge” laws that apply to employers with 2-19 employees.)
A cafeteria plan is an employer-sponsored benefit plan that allows employees to use pre-tax or taxable dollars to purchase benefits. (also known as a flexible benefit plan or section 125 plan).
the type of benefits that may be offered in a cafeteria plan:
- accident and health insurance
- dental insurance
- group term life insurance (with limitations)
- disability insurance (benefit tax implications)
- reimbursement of medical expenses
- dependent care assistance
- money in lieu of health insurance (opt-out plan)
- group vision
- 401(k) salary deferrals
For health insurance, coinsurance refers to the money a person must pay for services after paying a deductible. For a 20% coinsurance clause, the policyholder pays the deductible plus 20% of their covered losses. after paying 80% of losses up to a specified limit, the insurer begins to pay 100% of covered services.
With community rating, health insurance premiums are based on actual or anticipated costs in a specific geographic location. all groups in the area pay the same premium for a plan, regardless of your claims history. In New York State, the community rating applies to groups of up to 50 employees.
A copay is a fixed fee paid by the member to receive a covered service.
The deductible is the amount an insured person pays for health care expenses before health insurance benefits begin. a plan with a higher deductible will have a lower premium than one with a lower deductible or no deductible.
an epo is an exclusive supplier organization. In an EPO health plan, only services provided by doctors and hospitals within the EPO network are covered. no out-of-network benefits, except in emergencies.
employee assistance program (eap)
Employers offer an EAP that includes assessment, referrals, and short-term counseling to help employees manage personal issues that can interfere with productivity, health, and morale.
The elimination period is the waiting period between the time you become disabled and the time you are eligible for benefits. a shorter waiting period will increase the premium.
Experience rating is a system for determining future insurance premium rates based on past claim experience. In New York State, the experience rating applies to groups of more than 50 employees.
family medical leave act (fmla)
The fmla applies to employers with 50 or more employees and requires employers to grant 12 weeks of unpaid leave to eligible employees with a serious health condition that makes the employee unable to perform their job or Caring for a family member with a serious health condition. for more information, click here.
first dollar coverage
First dollar coverage includes insurance benefits that are not subject to a deductible or copay.
flexible spending account (fsa)
an fsa is a type of employer-sponsored cafeteria plan with pre-tax funds set aside to reimburse employees for health expenses not covered by insurance (such as deductibles, copays, vision and dental care) and expenses dependent care.
A formulary is a list of preferred prescription drugs that an insurance company has determined to be safe and cost-effective. drugs that are not on the formulary will be more expensive and will be subject to restrictions. An open formulary may allow a non-formulary drug to be covered, but at a higher cost. a closed formulary will generally not cover any part of the cost of a non-formulary drug.
Most health plans are fully insured, meaning the insurance company bears all the risk of claims submitted by subscribers. larger companies may take on some or all of the risk (self-financing) as a way to save on premium costs.
A generic drug is one that is a duplicate of a brand-name prescription drug and produced by other manufacturers after the patent on the brand-name drug has expired. Generic drugs are often less expensive than brand-name drugs, and most health and prescription plans reward customers for choosing generic drugs.
Group insurance is coverage through an employer or other entity that covers everyone enrolled in the group. a single contract outlines the benefits and provisions that apply to all members.
health insurance portability and accountability act (hipaa)
Enacted into law in 1996, HIPAA was passed to protect health coverage after job loss or change and to maintain the privacy of personal health information. HIPAA Title I limits the restrictions that a group health plan can place on benefits for pre-existing conditions. Title II creates standards for the use and dissemination of health care information.
health maintenance organization (hmo)
an hmo is an organization that provides health care in a specific geographic area to enrolled groups. the agreed service providers are reimbursed through periodic and predetermined payments without taking into account the amounts of the actual services provided. covered individuals have limited out-of-pocket costs and must choose a primary care physician to coordinate their care.
health savings account (hsa)
An HSA is a savings account used with certain high-deductible health insurance plans to pay for qualified medical expenses. contributions can be made to the account tax-free. Funds remain in the account from year to year and can be invested at the discretion of the account owner. interest or investment income accumulates tax-free. Click here for more information on HSAS.
high deductible health plan (hdhp)
HDHP features a higher annual deductible and annual out-of-pocket limit than other insurance plans in exchange for lower premiums. The IRS sets limits on the minimum allowable deductible, maximum out-of-pocket expenses, and maximum contribution. click here for more information.
long-term disability insurance (ltd)
insurance ltd is designed to provide income payments for injuries, illnesses or long-term disabilities. long-term is often considered more than 90 days.
Out-of-pocket expenses are costs, such as deductible and copays, that you must pay yourself and for which your insurance company will not reimburse you.
a predetermined amount a person must pay before an insurance company will pay 100% of a person’s covered health care expenses
Some disability insurance policies provide coverage if you are disabled due to illness or injury and are unable to perform the material and substantial tasks of your regular occupation (or “own occupation”) that you perform at the time you become disabled. other policies provide coverage only if you are unable to perform any task that suits your skills, education, and experience (“any occupation” provision). carriers may have different definitions of “own occupancy”.
preferred provider organization (ppo)
A ppo is a group of health care providers who agree to offer services at a lower cost in exchange for a steady volume of patients. Depending on the terms of coverage, a doctor or hospital outside the preferred provider list will cost more and the ppo will pay 60-80% of the costs.
A pre-existing condition is a medical condition that is excluded from coverage by an insurance company because it existed before coverage began. The health reform bill passed in March 2010 prohibits insurance plans from excluding coverage related to a pre-existing condition. For children up to age 19, this became effective September 2010. For individuals age 19 and over, the prohibition against the imposition of a pre-existing condition, exclusion, or waiting period, becomes effective upon issuance or renewal as of January 1, 2014.
For people who are covered by more than one plan, health insurance policies have a coordination of benefits clause to determine which plan is primary for payment of claims. coverage under a person’s own employer’s plan is considered primary. if there are 2 employer plans, the one with the earliest effective date is primary. coverage as a dependent under someone else’s health insurance plan is usually considered secondary. provides reimbursement for medical expenses not covered by the primary plan.
For employed individuals over age 65 enrolled in Medicare and still covered by their employer’s group health plan, the employer’s plan is primary if there are more than 20 employees. for more information, click here.
reasonable and customary
To determine how much it will pay for a covered service, an insurance company uses a rate that is consistent with the prevailing rates charged by most health care providers in a geographic area. If your doctor charges more than what your insurance company has defined as reasonable and customary, you may have to pay the difference.
A rider is a modification to an insurance policy that allows amendments to its terms and/or coverage.
Supplementary insurance may be purchased in addition to major medical insurance. usually pays a cash benefit for coverage for accidents, hospital stays, or a specific illness.
The underwriter is the company that assumes responsibility for the risks involved in enrolling applicants for coverage, issuing the insurance policies, and receiving the premiums.
underwriting is the process an insurer uses to evaluate and bear risk to determine whether to accept an application for insurance.
A waiting period is a period of time when you are not covered by insurance for a particular problem.
A premium waiver clause in an insurance policy allows for the policy premiums to be waived if the policyholder becomes seriously ill or disabled. A waiver of premium allows people to benefit from a life insurance policy, even when they are unable to work.
Wellness programs are employer activities that are designed to improve the health of their employees and reduce health risks. Activities may focus on disease prevention, risk screening, medical self-care, and lifestyle modification.