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Guide to Health Insurance Jargon
At AFMC, we know you want to make the most of your healthcare options, but we also know you may have questions and are not sure where to go, or who to ask.
And, we understand how confusing healthcare can be, so we have prepared the following information to help you better navigate and understand some of the differences, features, and benefits of managed care plans, and how they impact you.
Having this information will help you fully maximize your benefits by making smart choices, and knowing the ins and outs of your plan choice will give you more control over your healthcare dollars.
Managed Care. You probably hear the term “managed care” quite a lot. The term “managed care” is simply a description on how businesses control costs. Almost all plans have some sort of managed care program to help control costs.
For example, if you need to go to the hospital, one form of managed care requires that you receive approval from your insurance company before you are admitted to make sure that the hospitalization is needed. If you go to the hospital without this approval, you may not be covered for the hospital bill.
Another form of managed care allows you to self-refer. In most cases you do not have to receive approval from your insurance company before you are admitted to the hospital, but you still want to make sure you receive treatment at an “in-network” hospital.
The most common types of health plans are:
- Health Maintenance Organizations - HMO
- Preferred Provider Organizations - PPO
- Point-of-Service Plans - POS
- Exclusive Provider Organizations - EPO
Some other terms you might encounter while looking through your health insurance/health plan paperwork:
EOB - Explanation of Benefits. This is a document you will receive after a claim has been processed for payment by the health plan. It explains the amount paid; the benefits available; the reason(s) for denying payment or amounts not covered (either because an uncovered service or because of a PPO discount); and the total amount billable to the patient.
FSA - Flexible Spending Account or Arrangement. Enrolling in an FSA program is a great benefit for employees to save money. FSAs allows you to set aside a portion of your paycheck – pretax – to pay for out-of-pocket medical expenses throughout the year.
HSA - Health Savings Account. HSAs are pre-tax medical savings accounts that you can use to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses are treated similarly to those in an IRA account, providing tax advantages if taken after retirement age and incurring penalties if taken earlier.
Self-insured. Self-insured businesses are employers that operate their own health insurance plan rather than purchasing coverage from an insurance company. Typically the employer pays a third party administrator and contracts with a medical network. In some cases, it is more cost-effective for businesses to fund their employee’s healthcare benefits than it is to contract with a national provider.
Fully-insured. A fully insured employer pays a monthly premium to an insurance carrier to assume all of the risk associated with the group insurance claims of their employees. Many small businesses find this to be the best option in providing healthcare benefits.
Utilization, Case, and Disease Management. These services are offered by healthcare networks to help reduce costs for businesses. It is important for your employer to look for these features to be a part of their company’s insurance plan.
Utilization Management (UM) – This process involves reviewing an employee’s healthcare services and procedures for appropriateness, medical need and efficiency of care.
Case Management (CM) – Employees with high-cost medical conditions fall into the case management category. The goal of CM is to coordinate care to improve continuity of health services and reduce costs.
Disease Management (DM) – Employees with chronic diseases benefit from DM, which seeks to reduce healthcare costs and improve quality of life by monitoring the disease through integrative care.
EAPs Employee Assistance Programs. These are benefit programs designed to help businesses address employee’s personal problems that might adversely impact their work performance, such as assessment, short-term counseling and referral services. Signing up for an EAP is a great way for an employer, and employee, to be proactive about the employee’s total well being.
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