Health Insurance Terms
If you’re a small business who is still getting up to date on your health care insurance terminology, take a few minutes to review the following terms.
- Benefit - Reimbursement for covered medical expenses as specified by the plan.
- Carrier - Insurance provider or HMO insuring the health plan.
- COBRA (Consolidated Omnibus Budget Reconciliation Act) - Federal legislation that requires group health plans to provide health plan members the opportunity to purchase continued coverage in the event their insurance is terminated. This applies only to employer groups with 20 or more employees.
- Co-payment - The amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might necessitate $10 co-pay for each doctor's office visit.
- Deductible - The dollar amount an insured individual must pay for covered expenses during a calendar year before the plan begins paying co-insurance benefits.
- Dependents – These are typically the spouse and unmarried children (adopted, step or natural) of an employee.
- HIPAA – This is the health Insurance Portability and Accountability Act of 1996, P.L. 104-91. This law relates to underwriting, pre-existing limitations, guaranteed renewal, COBRA and certification requirements in the event someone terminates from the plan. The new law, commonly referred to as the "Kennedy-Kassebaum Bill," establishes new requirements for self-funded, fully-insured group plans (including church plans) and Individual Health policies. The purpose of the law is to:
- Improve portability and continuity of health insurance coverage in the group and individual markets
- To combat waste, fraud and abuse in health insurance and health care delivery
- To promote the use of medical savings accounts
- To improve access to long-term care services and coverage
- To simplify the administration of health insurance
- Long-term disability (LTD) – This is insurance which pays employees a percentage of monthly earnings in the event of disability.
- Multiple Employer Trust (MET) - An arrangement formed to obtain health and other benefits for participating employer groups. Small employers can pool their contributions to obtain the advantages of large group underwriting.
- Pre-existing condition - An illness, injury or condition for which the insured individual acquired medical advice, treatment, services or supplies; had diagnostic tests done or recommended; had medicines prescribed or recommended; or had symptoms of typically within one year (time periods may vary depending on state laws) prior to the effective date of insurance coverage.
- Small employer group - Groups with 1 to 99 employees. The definition of small employer group may differ nationwide.
- Workers' Compensation Insurance - Insurance coverage for work-related illness and injury. All states require employers to carry this insurance.