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What Are You Talking About? A Guide to Commonly Used Insurance Terms
Accelerated death benefit. Feature of life insurance policy that allows the usage of a portion of the death benefit prior to death. Some policies permit this benefit to pay for long term care.
Activities of daily living (ADLs) Activities that are a part of everyday life, such as bathing, continence, dressing eating, toileting, and transferring. ADLs can impact the initiation of Long Term Care benefit.
Actual charge. The amount of money a doctor or supplier charges for certain medical service or supply. This amount is often more than Medicare approves.
Adult day care. Care given in a nonresidential facility, community based group program designed to meet the needs of functionally impaired adults. It is a structured, comprehensive program that may provide a variety of health, social and related support services during any part of the day.
Allowable charge. The amount Medicare considers a reasonable charge for medical services or supplies based on the usual or customary charges in your area.
Alternate care provision. A benefit offered in some individual long term care insurance policies that can cover unspecified treatments or services agreed to by the insuror, insured and the insured's health care provider.
Application. A statement of information made by someone applying for insurance. The information gathered helps the insurance company assess whether the risk presented by the applicant is acceptable.
Attained Age. The age that the person or insured has reached on a certain date. For life insurance, it is the age on either the nearest birthday or the last birthday, depending on the guidelines of the insurance company.
Beneficiary
- The person or persons designated to receive the specified payment(s) if the insured's death.
Benefit period. In health insurance, the number of days for which benefits are paid to the named insured and his or her dependents. For example, the number of days that benefits are calculated for a calendar year consist of the days beginning on January 1 and ending on December 31 of each year.
Benefit triggers. A term used to describe when to pay benefits. One type of benefit trigger is an activity of daily living (ADL). Insurance companies may use different events or types of benefit triggers to determine when benefits will begin to be paid. The triggers are described in the eligibility criteria of the policy.
Cancellation. Termination of an insurance policy or bond by an insurance company or a policyholder before its expiration date.
Care coordination. Services provided by a licensed or certified health care professional designated by the insurance company to perform an assessment and develop a plan to meet your long-term care needs.
Case management. A process by which an enrollee with a serious, complicated or chronic health condition is identified by a managed care organization and a plan of treatment is established in order to achieve optimum health in a cost effective manner.
Certificate of insurance. The formal document received by an employee that describes the specific benefits covered by the policyholderıs group health care contract with the insurance company. The certificate contains Copayment and/or deductible requirements, specific coverage details, exclusions and the responsibilities of both the certificate holder and the insurance company.
Chronic illness. An illness with one or more of these characteristics: permanency, residual disability, requirement of rehabilitation training, or requirement of a long period of supervision, observation, or care.Claim. A request by an insured for payment under the terms of an insurance policy.
Claimant. The person or party making a formal request for payment of benefits due under the terms of an insurance contract.
Cognitive impairment. A deficiency in a person's short- or long-term memory; orientation as to person, place and time, deductive or abstract reasoning or judgment as it related to safety awareness.
Coinsurance. Coinsurance is the set percentage you pay of the total cost of your health care expenses. For example, if your plan's summary of benefits says that it pays 80% coinsurance, it means that after your deductible is met (if there is one), your plan pays 80% of your insured expenses and you pay the remaining 20%. Be sure to read your policy because coinsurance may even vary within your plan depending on the benefit or service.
COBRA
(Consolidated Omnibus Budget Reconciliation Act of 1985) The federal law that requires companies with 20 or more employees to offer separating employees the option to continue their group health care coverage at their own expense.
Community-based services. Services designed to assist older people stay independent and in their homes.
Contract. The formal legal document, also known as the "policy" that describes the agreement between the policyholder and the insurance company. This document contains the specific responsibilities of the policyholder and the insurance company in relation to the benefits provided under the contract.
Coordination of benefits (COB) clause. A provision in a group health insurance policy that applies when a person is covered under more than one group medical program. It requires the payment of benefits to be coordinated by all insurance companies who cover that person in order to eliminate overinsurance or duplication of benefits.
Copayment.
A provision in insurance policies that requires the insured to pay a flat fee for certain medical expenses.
Coverage. The scope of protection provided under an insurance contract.
Daily benefit. The amount of insurance benefit in dollars a policy holder selects to purchase for covered long term care expeses.
Deductible. It is the portion of eligible medical expenses that the insured must pay before the plan will make any benefit payments.
Dependent. An individual--usually a child or a spouse--who relies on another person for support and who obtains health coverage through that person (usually a spouse or parent.)
Disability insurance. A type of health insurance that pays a monthly income to the policyholder when he or she is unable to work because of an illness or accident.
Drug formulary. Many defined network plans establish a list of prescription drugs that the plan considers medically appropriate and cost effective. The defined network plan will provide coverage for only those prescription drugs names in the list. However, your doctor may present medical evidence to the insurer to obtain an exception that will allow coverage for a prescription drug not routinely covered by the plan.
Effective Date.
The date on which insurance coverage goes into effect. This date is not always the same as the date the application is completed.
Elimination period. A type of deductible, the length of time the individual must pay for covered services before the insurance carrier starts to pay. The longer the elimination period in a policy, the lower the premium.
Exclusions or limitation. Specific situations, conditions or circumstances that are listed in the insurance policy as not being covered.
Face Amount. The amount stated on the insurance policy that will be paid in case of death or at maturity. It does not include dividend additions or additional amounts payable under other special provisions.
Free look period. The period of time after the delivery of an insurance policy when you can review the policy. If you change your mind about keeping the policy during this time period, you can cancel the policy and get your initial premium back.
Gatekeeper. A primary cares physician responsible for overseeing and coordinating all aspects of a patient's medical care. The gatekeeper may have to preauhtorize other specialty care or hospital admission.
Grace period. A period time after a premium becomes due in which you can still pay for the insurance and keep it in force.
Guaranteed renewable policy. An individual health insurance policy that specifies that the insurer will continue the policy until the insured reaches a specified age if premium payments are made when due. The insurer can change premium rates for broad classes of insureds.
Health maintenance organization (HMO),
A health care financing and delivery system that provides comprehensive health care services for enrollees in a particular geographic area. HMOs require the use of specific plan providers.
Home care services: Household activities done by an individual othre than yourself, because you are unable to undertake them.
Home health care. Services for occupational, physical, respiratory, speeech therapy, or nursing care. Includes medical, social worker, and home health aide services.
Hospice Care, A specially designed package of social and medical services that primarily provides pain relief, symptom management, and supportive services to terminally ill people and their family.
Independent agent. An independent agent represents several different insurance companies and searches the market for the best place for a client's business.
In-Network. A provider, hospital, pharmacy, or other facility is "in-network" when it has contractually accepted the health insurance company's terms and conditions for payment of service.
Insurablility. Acceptability by the insurance company of an applicant for insurance.
Insured. The party covered by an insurance arrangement to which an insurance company agrees to indemnify for losses, provide benefits or render services.
Insurable interest. A condition in which the person applying for an insurance policy and the person who is to receive the policy benefit will suffer emotional and financial loss if the event insured against occurs. Without the presence of insurable interest, an insurance contract is not formed for lawful purpose and, thus, is void from the start.
Lapsed policy
. A policy terminated at the end of the grace period because of nonpayment of premiums and no value to be loaned against to cover the due premium.
Licensed health care practitioner. Any physician, registered nurse, licensed or certified social worker, or any other individual who meets such requirements as may be prescribed by the Secretary of the State.
Lifetime benefit maximum. The total amount an insurance company will pay for health care services over your lifetime. If the cost of the benefits you receive since enrolling in a plan exceeds this amount, coverage ends and no additional services will be covered.
Managed care. Generally a health delivery system that links doctors, hospitals and an insurance plan to deliver care to the plan's members with the intent of improving quality and reducing costs. Health insurance can manage care in a number of ways, including requiring members to choose a primary care provider, to obtain the primary care provider's permission to see a specialist and to use only providers with the plan's network of providers.
Medicaid. A joint federal/state program that pays for health care services for those with low incomes or very high medical bills relative to income and assets.
Medicare. A federal health insurance program for people age 65 and older and some younger disabled people. In original Medicare, a fee-for-service program, you can go to any doctor or hospital that participated in Medicare. Medicare will pay the doctor or hospital for eligible services they provide. Medicare has two parts. Part A, which covers hospital services and Part B, which covers doctor programs.
Network. A group of doctors, nurses and hospitals that work for a managed care plan to provide health care services to its members. To get the most benefits for the lowest cost to the insured, one generally has to use the planıs network.
Nonparticipating physician. A doctor or supplier who does not accept assignment on all Medicare claims. A doctor or supplier who does not have a network agreement with a managed care plan.
Nursing home. Facility that is focused primarily in providing nursing care and related services on an inpatient basis under a license issued by the department of public health or the appropriate licensing agency of the state in which it is located. (learn how a nursing home rates at Nursing Home Compare.
Medicare.gov site" 
Out-of-pocket costs. The costs that you must pay on your own because they are not covered by insurance.
Plan of care. A plan outlining the care you need and the length of time the care will be needed.
Policy. A written contract for insurance between the insurance company and the policyholder and contains pertinent facts about the policy owner, the insurance coverage, the insured and the insurer.
Policyholder. The person who owns the insurance policy. Usually the policyholder is the insured person, but it also may be a relative of the insured, a partnership or a corporation.
Preauthorization/precertification. A provision in insurance policies that requires prior approval by a managed care plan or limited service health organization in order for services to be covered by the plan.
Preexisting condition. An illness, medical condition or injury that has been diagnosed, or for which a person has been treated, before buying a new health care policy.
Premium. The sum of money an insurance company charges, based on a given rate, to provide the coverage described in the policy, or simply stated, the price of insurance protection for a specified risk for a specified period of time, typically one year.
Rate. The cost of a unit of insurance as determined by insurance companies and state regulators. The rate serves as the basis for the premium.
Rated policy. A policy issued at a higher premium to cover a person classified as a greater-than-average risk, usually because of impaired health or a dangerous occupation or hobby.
Referral. A process by which the primary care physician makes a request to a managed care plan on behalf of the enrollee to receive medical care from a nonparticipating provider or specialist.
Respite care. Services to temporarily relieve family caregivers of the stresses and demands of caring for a person with chronic illnesses or cognitive impairment.
Rider. A document or form containing special provisions that are not contained in the policy contract. Such forms are to be added or attached to the policy.
Self-insured plan. An employer who offers health insurance to its employers, with the benefits paid for entirely by the employer. Self-insured plans are exempt from regulation by state laws, but are subject to certain federal requirements under ERISA.
Service area. The area where a health plan accepts members. For plans that require you to use their doctors and hospitals, it is also the area where services are provided. The plan may disenroll you if you move out of the area.
Skilled nursing care. Daily nursing and rehabilitation care that can be performed only by or under the supervision of skilled medical personnel. The care received must be based on a doctor's orders.
Surrender charges. Charges an insurance company may deduct if you cash inıor surrenderıyour life insurance policy or annuity. Companies also deduct these charges if you borrow money on your policy or your policy lapses for nonpayment.
Tax-qualified long-term care insurance policy. A policy that conforms to certain standards in federal law and offers certain federal tax advantages.
Term insurance. Life insurance under which the benefit is payable only if the insured dies during a specified period. If an insured dies during that period, the beneficiary receives the death payments. If the insured survives, the policy ends and the beneficiary receives nothing.
Urgent care. Medically necessary care for an accident or illness that is needed sooner than a routine doctor's visit.
Underwriting. The process of examining and accepting or rejecting insurance risks, and classifying those selected in order to charge the proper premium for each.
Waiting period. A set period of time that an employer may make a new employee wait before enrolling in the companyıs health care plan. The health insurance policy cannot impose a waiting period, but the employer may.
Waiver of premium. A provision in an insurance policy that relives the insured of paying the premiums while receiving benefits.
Whole life insurance. Life insurance that remains in force during the insuredıs entire lifetime provided premiums are paid as specified in the policy. Whole life insurance also builds a savings called the cash value.
