Your Guide to Health Insurance Jargon
Ever wonder what the differences are between the health insurance plans?
Or stopped to ponder what all those acronyms littered across your health insurance paperwork stood for?
Here's a guide with straight talk on common industry acronyms and jargon.
HMOs: Health Maintenance Organizations - This form of insurance is a prepaid health insurance plan that includes an organized network of health care personnel and facilities that offer a wide range of services, including preventative care, and often requiring a monthly fee. If your employees go out of the network, care is not usually covered unless previously authorized or it is an emergency situation.
PPOs: Preferred Provider Organizations - This type of insurance combines the features of an HMO with private insurance and often involves a small fee, or co-pay, when your employees visit the doctor. The plan is made up of a pre-selected group of physicians and hospitals (a.k.a. the "in network" group) that provide medical care at a discounted rate. Your employees can go "out of network," but they risk paying a higher percentage of the bill.
POS Plan: Point-of-Service Plan - Under this coverage plan, an employee's primary care doctor usually refers them to other providers in the network as needed. Your employees also can refer themselves outside the plan and still get coverage, but there may be some restrictions on the services they can receive outside the network.
EPO: Exclusive Provider Organization - In this type of managed care system, the network consists of health care providers from which your employees must choose a primary care physician to handle most medical issues and make referrals for specialists; they are restricted to in-network doctors only. EPO's focus on preventative care and encourage plan members to take steps to stay healthy.
EOB: Explanation of Benefits - Your employees receive this document after a claim has been processed for payment by the health plan. It explains the amount paid, the benefits available, reasons for denying payment or amounts not covered (either because an uncovered service was billed, or because of a PPO Reduction), and the total amount billable to the patient.FSA
FSA: Flexible Spending Account or Arrangement- Enrolling in an FSA program is a great benefit for employers to provide an opportunity to their employees to save money. FSAs allow employees to set aside a portion of their paycheck - pretax - to pay for their out-of-pocket medical expenses throughout the year.
HSA: Health Savings Account - The number of companies that offer HSAs is on the rise. HSAs are pre-tax medical savings accounts that your employees 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 health care benefits than it is to contract with a national provider.
Fully Insured: Occurs when an 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 health care benefits.
Case, Utilization, and Disease Management: These services are offered by health care networks to help reduce costs for businesses. It is important for businesses to look for these features to be a part of their company's insurance plan.
- 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.
- Utilization Management (UM) - This process involves reviewing an employee's health care services and procedures for appropriateness, medical need and efficiency of 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 to be proactive about their employee's total well being.