Health Insurance FAQ

What is the basic difference between individual and group health insurance coverages?

An individual policy is purchased by you directly with the insurance company.

With a group health insurance policy, the group is the master insured and the insurance company contracts with the group. Insurance certificates, issued to a participating member, act as your policy. Often group health insurance costs less than would have been charged had the insurance company sold individual policies to each member separately. In addition, group health insurance often contains special coverages that are not available or are very expensive on an individual basis. The purchasing power of the group makes this economically feasible.

What types of group health insurance coverages are available?

Group health insurance makes individual coverages available on a group basis. A primary advantage is the purchasing power of the group that achieves reduced acquisition costs for the insurance company. The insurance company is then able to reduce the rate it charges to provide insurance for each individual member of the group. The Group is in a better position to bargain with the insurance company for additional benefits for its members. There are a variety of types of group health insurance plans, the major distinctions being the mechanism used for purchasing the insurance. Common varieties of group health insurance plans include:

1. Fully Insured Employer Group - The employer contracts directly with the insurance company to provide certificates to covered employees. Typical arrangement is either for major medical or health maintenance organization (HMO) coverages.

2. Small Employer Group - Insurance companies group certain industries together and then gather small employers together to form a larger group. These groupings enable the insurance company to better predict the cost of providing the insurance. The small employers can then get coverages otherwise not available unless charged a much higher rate. All the small employers get the same policy without deviation.

3. Large Employer Group - same as a fully insured employer group with direct contract between the insurance company and the employer to provide individual certificates to covered employees.

4. Health Maintenance Organization (HMO) - a group program under which the organization provides a full range of medical services to participants. Participants are either assigned or select from a group of general practitioners, who then refer their patients to specialists when the need arises. Good generalized system of providing medical care which is marked by curtailment in selection by the individual participant of the health care provider who render services. Individual participants insured by an HMO are called "enrollees".

5. Self-Funded ERISA - available to large groups. The group contracts with an insurance company or third-party administrator to handle the paperwork. The group pays for all costs associated with the operation of the insurance plan itself, along with the added cost for administration.

6. Association Group - similar to a fully insured employer group, the distinction being that instead of an employer, it is a different type of group, such as a credit card company offering insurance as a benefit to its cardholders or a church group offering insurance to its parishioners.

7. Group Managed Care - a long-term health insurance plan offered through the group or association.

8. Preferred Provider Organization - another kind of health care network (doctors, hospitals, and other health care providers) that contracts with health insurance companies.

There are so many different health plans out there. What does all those letters - HMO, PPO, POS, Etc. - mean?

HMO: An HMO (Health Maintenance Organization) is an organization that provides or arranges for coverage of certain health care services required by members of the organization. Typical HMO coverages include access to a primary care physician, emergency care, and specialists/hospitalization when needed.

Many HMOs operate with preventative medicine in mind by addressing your health care needs while you are healthy so as to prevent disease or illness.

Critics of HMOs address concerns as to a lack of selection of primary care physicians, "assembly line" medicine, and denial of adequate referrals in the event of disease or illness. Critics often claim that a HMO may deny certain claims and may make health care decisions based upon a pure profitability standpoint as opposed to decisions driven by providing the best level of care for its patients.

HMOs are valuable in providing good care for many members - many HMOs organizations take very good care of their members' health care needs while managing costs.

PPO: PPO (Preferred Provider Organization) is a form of managed care under which health care providers contract to provide medical services at pre-negotiated rates. Members who subscribe to a PPO are required to use the health care providers who participate in the PPO network - utilization of a health care provider outside the PPO network may result in the member paying more out-of-pocket for services which could have been provided within the network.

POS: POS (Point of Service) plans allow the individual policy holder or certificate holder to visit out-of-network, non-participating doctors for a fee. If the services of a non-participating health care provider are utilized, the individual often obtains restrictions of benefits or incurs more out-of-pocket costs.

How can I get health coverage?

Employer-sponsored group insurance

Millions of people obtain their insurance through their employment. Upon reaching the eligibility requirement (such as a full-time employee working more than 40 hours per week for a six month continuous basis), the employee becomes covered under the employer's group insurance policy and the employee is issued an insurance certificate or health insurance card. Medical insurance is a very common fringe benefit of employment. Some employers will provide coverage solely for the employee, some employers pass along the cost of dependent coverage to the employee, while other employers pay the entire cost of medical insurance for the employee and his/her family.

Individual insurance

Health insurance which is purchased by the individual. Some major health insurance companies offer a broad range of coverages and options to individuals, who pay directly out-of-pocket for the cost of the insurance. Many insurance companies require completion of an exhaustive application and may require a medical examination before coverage will be offered to the individual.

Government-sponsored insurance

Some states offer health insurance benefits to their residents, often with certain income requirements for eligibility. These plans are designed for the "working poor" - individuals who are employed but no health care coverage is available where they work. This enables the state to protect its residents from catastrophic loss due to illness, disease or accident without placing an additional burden upon its program for the truly indigent.

Association-sponsored insurance

You may belong to a group or organization that offers health insurance as a benefit of membership. Check membership benefit statements, brochures, or ask organizations leaders to determine availability of health insurance through your group or organization.

What services and items might be paid for under my health insurance?

Medical expenses as the result of accident, illness, injury, and disease are typically covered by medical insurance. The particulars of how much coverage for each expense incurred is determined by the provisions of the particular health insurance policy.

Typically doctor visits, surgeon and surgery expenses, costs of hospitalization, and follow-up therapy are covered by health insurance. Some plans provide for psychiatric care, drug and alcohol rehabilitation programs, and prescription medicines.

What is the coinsurance clause in medical expense plans and how does it work?

Coinsurance, sometimes called "percentage participation," requires the insured to share in the cost of medical care. Under an 80/20 coinsurance provision, the medical expense plan pays 80 percent of eligible medical charges above any deductible. The insured is required to pay the remaining 20 percent. Other coinsurance arrangements, e.g., 70/30 or 90/10, are sometimes used. In the event of large or catastrophic medical expenses, an insured might suffer severe financial hardship due to the operation of the coinsurance clause. To compensate for this possibility, many major medical expense plans contain a coinsurance cap, or stop-loss limit. This provision places a limit on the insured's out-of-pocket costs in a given year arising from the operation of the coinsurance clause. The size of the coinsurance cap generally ranges from $2,000 to $3,000, depending on the plan, although limits as low as $1,000 are sometimes used. Once the coinsurance cap has been reached, all eligible expenses above this amount are paid in full, up to the plan's overall limit of coverage.

What is the difference between coinsurance and copayment?

On occasion, these terms have been used interchangeably. However, it is preferable to define the two terms differently, despite their similarity of purpose. Under a copayment or copay provision, the insured usually is required to pay a set or fixed dollar amount (e.g., $10, $20, or $30) each time a particular medical service is used. Copay provisions are frequently found in medical plans offered by health maintenance organizations (HMOs) where a nominal copayment is applied to each office visit and to each prescription that is filled.

What will determine my insurance premium?

Insurance premiums are determined by actuaries employed by insurance companies. The cost of advertising, selling, paying for services rendered by health care practitioners, administration of the insurance program as well as the investment of premium payments and a profit margin are factored into the premium amount. Actuaries determine the exposure to risk according to the provisions of the insurance policy and then set a premium rate. Additional underwriting factors, such as adverse selection for individual policies and special industry exposures for employer-sponsored group health insurance plans, are also factors of the premium charged.

Often the premium charged on an individual plan is much higher than the premium charged for similar coverages offered through a group plan due to "adverse selection." Under group plans, an insurance company can determine that a percentage of participants will generally be in good health. Under individual plans, it is more likely that people in poor health and having a greater need for insurance will seek to buy coverage - "adverse selection" is the result of the basic premise that those people in good health do not have as much need for insurance as people who are in poor health.

What variables will affect my insurance premium?

Purchasers of insurance often can control several factors used to determine the insurance premium. Some of these factors, which act as limitations of the insurance coverage, include:

• Deductibles - The amount you yourself have to pay out-of-pocket before reimbursement of your expenses from the insurance coverage. It is usually a flat dollar amount. The higher the deductible, the lower the premium.

• Co-payments and co-insurance - for example, in a 80/20 plan, the insurance pays 80% of the covered expense and you pay out-of-pocket the remaining 20%. Most plans with a co-pay have a maximum, out-of-pocket, cost.

• Lifetime maximums - the maximum amount of insurance coverage that will be paid on your behalf during your lifetime. The higher the maximum, the more coverage is potentially available under the insurance coverage.

• Annual or "out-of-pocket" limits - the maximum amount of deductible and co-payments you will have to pay each year. The lower the annual limit, the higher the premium.

• Coordination of Benefits - some insurance companies now offer insurance plans which recognize the fact that other insurance may be available to you, such as coverages under worker's compensation, automobile insurance, a state disability program, or from coverage available as an employee benefit to a spouse. This provision specifies how multiple coverages will coordinate their payments.

What kind of health insurance might be offered through my employer?

Health insurance is one of the most common forms of fringe benefits offered to employees. A good health insurance plan offered by an employer protects its employees from catastrophic loss in the event of accident, disease or illness.

There are many varieties of employer provided health insurance plans, with differing levels of coverage and options. Often a large employer will offer their employees choices on the particular program (such as the choice between a reimbursement plan or an HMO plan) and the employee decides which program would best suit their needs.

If your employer does not offer health insurance as a benefit, you might consider suggesting that such a benefit be made available. It is better for an employee to have coverage that they pay for as opposed to being employed and without health insurance.

Will it cost me anything?

Some employers

1. Pay all the premium,

2. charge a small amount for the coverage,

3. require the employee to contribute to the cost of coverage for their spouse, children and dependents,

4. make the program available for their employees to purchase if they choose.

Can you help me understand the cafeteria plan my employer offers?

A Cafeteria Plan gives the employee a range of options about the types and levels of benefits, as opposed to having these decided by the employer and the insurer. Under a cafeteria plan, the employee may choose among 2 or more benefits consisting of cash and qualified benefits (such as health insurance, optical plan, dental plan, short-term disability coverage, life insurance, or additional sick days or vacation time). The employee decides which benefits fit his/her needs and utilizes the benefits selected.

Doesn't my employer have to cover my spouse and children under my health plan?

No. Most health insurance plans have available riders to extend coverage under the policy to spouses and other family members. The cost for the additional insureds is much less than if purchased on an individual basis. Some employers pass the cost on to their employees, while others pay a percentage (up to 100%) of the additional family coverage.

My employer does not offer health insurance to its employees. What kinds of individual personal policies are out there?

If you are unable to obtain health insurance through employment or as a member of an association, you should consider the purchase of individual health insurance. Although such coverage is typically more expensive than health insurance provided under a group plan, it is important for people to maintain good health insurance coverage since an accident, disease or illness could result in financial ruin.

One benefit of having your own individual health insurance coverage is selection. Often as an employee or member of an organization, you are forced to take the plan that is being offered. You may find that if you purchase health insurance on your own, you are able to obtain particular benefits more suited to your needs and situation. With a variety of individual health insurance policies available in the open market, it is a good idea to shop around and see which plan is best for you.

If you have the financial ability to cover your typical doctors visits and medicines out of your own pocket then you may consider a two part approach to health insurance coverage. Ask your agent about High Deductible Insurance plans. These plans require you to cover some level of medical expenses first ($5,000) out of pocket before they start to provide coverage. In exchange for the high deductible, you pay less in monthly premiums. Once, you have the High Deductible Plan, you can set up a Health Savings Account (HSA) to pay your out of pocket medical expenses with tax deferred income. You have to honestly assess your predicted annual medical expenses and

Medicare, Medicaid And Medigaps (Medsupp) - What's the difference?

Medicaid: Medicaid is the federal program which provides for the health care needs of certain low-income people.

Medicare: Medicare is the federal program which provides for the health care needs of the elderly, the blind and the disabled.

Medigap: Medigap (also known as medical supplemental insurance) refers an individual insurance policy which can be purchased to cover certain health care services and costs which are not provided by Medicare. Medigap insurance is becoming very important to people covered under the Medicare program since reduction in levels of benefits and curtailment in availability of services have become reality as a result of the need to control the costs of this program.

I have health coverage through my employer but i'm leaving my job soon. Though I like my current coverage, I cannot carry it from job to job. What are

If your employment ends, voluntarily or otherwise, or you lose coverage because of reduced work hours, you have the right under COBRA (the Consolidated Omnibus Budget Reconciliation Act) to continue in the group on a temporary basis. COBRA applies to all employers with 20 or more workers. You will have to pay for the full group coverage, but you may be able to retain your insurance for yourself for up to 18 months.

Your employer will furnish you (or your spouse) a booklet that explains all the twists and turns under COBRA as well as a summary plan description that contains information about COBRA. In addition, when a plan receives notice of a qualifying event, the plan must notify the covered person of their right to choose continuation of coverage.

Glossary of health insurance words and phrases

Actual charge: the charge(s) for a particular service/treatment by a health care provider

Alternative medicine: some medical techniques once considered outside the boundaries of standard practice have become more accepted in recent years and may now be eligible for coverage. Acupuncture, midwives, and osteopathic treatments are examples of formerly excluded treatments that are now covered under many health insurance policies.

Annual limits: are maximums on the dollar amounts the plan will pay for any given year

Approved charge: the dollar amount on which your insurer bases its payments and your co-payments.

Assignments of benefits: the insured allows a hospital or doctor to collect your health insurance benefits directly from your insurance company.

Associated group plans: fully insured plans issued to employee groups, including those formed by labor unions, nonprofit membership corporations, etc.

Beneficiary: the recipient of the benefits of the policy

Benefit maximum: the most a policy pays for a specified loss or covered service. This can be expressed as either a period of time, a dollar amount, or a percentage of the approved amount.

Benefit period: the time period for which payments for benefits of an insurance policy are available.

Capitation to providers: a system where an HMO pays a doctor or hospital a flat monthly fee for the care of each health plan member, whether or not any services are delivered.

Chronic condition: prolonged conditions or illness, such as asthma, diabetes, etc.

Claim: a request from the insured to the insurance company for payment

Closed practice: a primary care physician that is not accepting new patients.

COBRA: a Federal law that gives the right to workers to continue group health care coverage for a specified period for themselves if the worker loses coverage because of reduced work hours or loses the job.

Conditionally renewable: an insurance policy that the company will renew with each premium payment, as long as you meet certain conditions.

Conversion privileges: group plans generally have a conversion privilege that allows an employee to covert to an individual health insurance plan upon termination of employment. Alternatively, coverage under a COBRA plan may be available.

Co-insurance: is the share of the covered charges, usually a percentage, that the insured and plan each pay. If the plan has a deductible, the coinsurance is applied after the deductible has been satisfied. For example, if the insured has bills amounting to $400 and the plan has a $100 deductible amount, the insured is responsible for paying the first $100 and the insurer will begin paying after that. But because of the coinsurance, the company will pay only a percentage of the covered expenses and the insured must pay the remaining percentage. Between the two of them, they will pay 100%. So, in our example, if the plan pays 80% of the $300 remaining after the deductible, the insurer will pay $240 (80% of $300) and the insured will pay $60 (20% of $300).

Coordination of benefits (COB): When the insured is covered under more than one plan (for example under a group plan at work, and as a family member on a spouse's plan) the benefits from the plans are coordinated so as to limit the total benefits from all plans. Usually, the benefits from all plans will not exceed 100% of the covered medical expenses.

Covered dependents: traditionally, under group health insurance plans dependent coverage was only available for spouses and children. More recently, reflecting the changing lifestyles of Americans, some groups have also begun covering domestic partners of homosexuals and lesbians, children of divorced parents, and dependent parents of employees. Also, common law marriages have been recognized by some plans because they need to be in compliance with legal requirements.

Co-Pay: are fixed dollar payments that the insured must pay directly to the provider at the time services are received. For example, the contract for a certain network of doctors may require that patients pay a $10 co-pay each time they visit one of the doctors who is a member of that network. Or, the insured may have to pay $10 for each pharmacy prescription filled.

Covered services and supplies: Usually, the insured will receive a booklet that describes the services and supplies that are covered and reimbursable under the plan. This booklet will probably also describe the types of services and supplies that are not covered and reimbursable under the plan.

Covered services generally include the professional services of standard medical practitioners such as doctors, nurses, and midwives. Other types of care providers may also be covered under the plan.

For a hospital plan, covered services would probably include confinement in hospitals and possibly other facilities such as hospices, rehabilitation centers and nursing homes.

Covered supplies refers to certain medical equipment and supplies that may be medically necessary for treatment and therefore are covered under the terms of the plan. For example, the plan might include coverage for such items as prescription drugs, diabetic supplies, walkers, crutches and other items of this nature.

The specifics of what items are covered vary from plan to plan. Also, such details of coverage as dollar limitations and deductibles and coinsurance percentages vary. So you need to check your own plan to determine exactly what is covered, and what is not, as well as exactly how much the plan will pay for covered services and supplies.

Deductible: is the amount the insured is required to pay before the insurer begins paying benefits. For example, if the insured has bills amounting to $400 and the plan has a $100 deductible amount, the insured is responsible for paying the first $100 and the insurer will begin paying after that. Higher deductible, lower the premium.

Discount fees for service to providers: HMOs contract with health providers to provide services at discounted rates.

Elimination period: the number of days of care that you pay before your insurance plan picks up the benefits.

Enrollment period: the period during which individuals may enroll for an insurance policy, Medicare, HMO benefits.

ERISA: Employee Retirement Income Security Act, a federal law that regulates employer-sponsored pension and insurance plans for employees.

Evidence of insurability: proof that you're in good health

Exclusions: conditions or procedures that are not covered. Every health care plan has its own list of exclusions and limitations. Some of the more common ones are experimental medications/treatments/procedures, sickness or injury as a result of war, attempted suicide, cosmetic surgery, etc.

Experimental and investigational procedures: health insurance coverage generally excludes medical treatments that are deemed to be unproven, ineffective, or non-standard. This includes surgical techniques and medicines not approved by the Food and Drug Administration. Sometimes such treatments may be available by traveling to another country, but these treatments would generally not be covered.

Explanation of benefits (EOB): the insurance company's explanation of its decision regarding your claim.

Fee for service: a health plan that allows you, as the patient, to use any doctors you want, but requires you pay for the services yourself and file (or your provider files) claims for reimbursement.

Free look: the period during which you may reconsider the purchase of an insurance policy, cancel, and get a full refund. The clock starts running the day you receive the policy. Check your state's insurance law for the specific provisions that apply in your state.

Gatekeeper: a term applied to a primary care physician

Grace period: a specified period of time after a premium is due during which you can still make a payment without losing the insurance. Check your policy to be sure what it provides.

Grievance procedure: the required appeal process an HMO/insurance company provides to protest a decision regarding a claim payment

Guarantee issue: an insurance policy that is issued to anyone, regardless of prior medical history.

Guaranteed renewable: an agreement by an insurance company to insure a person for as long as premiums are paid.

Health care reimbursement accounts: accounts that allow you to set aside pre-tax dollars to pay for medical care or costs

HIPAA: Health Insurance Portability & Accountability Act, a federal law that guarantees health care plan eligibility for people who change jobs, if the new employer offers group insurance.

HMO (Health Maintenance Organizations): provide health services through a network of hospitals, doctors, laboratories, and so forth.

Hospital indemnity policy: pays a fixed dollar amount for each day you are hospitalized, regardless of the actual costs.

Hospital pre-certification: managed care plans often require prior approval before the insured enters the hospital. In the case of an emergency, or other situation where pre-certification is not possible, such plans often require prompt notification - often in 48 hours after admission.

Individual practice associations (IPAs): a network of individual practitioners who have entered into contracts (generally an HMO) to provide medical services to enrolled members. Visits take place in the doctor's office.

Insured: an individual or organization protected by an insurance plan

Lifetime maximum: is the total dollar amount the plan will pay for all types of medical expenses, for all benefit periods, while the insured person is alive and covered under the plan.

Limitations: the conditions or circumstances for which benefits are not payable or are limited.

Loss: the basis for a claim under an insurance policy.

Loss ratio: the dollar amount an insurer pays in claims compared to the amount it collects in premiums.

Managed health care plans: a system that organizes a network of doctors, hospitals, and other providers to provide comprehensive health services to their members at lower costs.

Mandated benefits: health care benefits that state or federal law says must be include din health care plans.

Medically necessary: a provision in a health care insurance policy that excludes coverage for treatment that is not "medically necessary". This term may be defined differently from one health care plan to another.

Medical Savings Account (MSA): an account held in trust for the account holder. The employer or employee makes annual tax-free contributions to the account that must be maintained in conjunction with a high deductible health insurance policy.

Multiple employer plans: benefit plans that serve employees of more than one employer and are set up under collective bargaining agreements.

Multiple Employer Welfare Arrangements (MEWA): a type of employee association plan that provides benefits to employees of more than one employer.

Network: all physicians, specialists, hospitals and other health care providers who agree to provide medical care to HMO/PPO members under the terms of a contract.

Open enrollment: a specified period of time when new subscribers may enroll in a health insurance plan or HMO regardless of their health.

Out-of-pocket limit: is a dollar limit on the portion of covered medical expenses that the insured must pay during a benefit period (usually a calendar year). When the out of pocket limit is met, the insured will not have to pay further deductibles or coinsurance for that year. To illustrate, say the out of pocket is $1000 per calendar year and the insured's coinsurance is 20%. When $5000 of covered medical expenses have been incurred, the $1000 out of pocket limit will be met ($5000 at 20%). Thereafter, the plan will pay benefits at 100% and the insured's portion will be $0 for the remainder of that year.

Outpatient services: services usually provided in clinics, physician or provider officers, ambulatory surgical centers, hospices, home health services, and so forth.

Physical examination: physical examination, as well as information about your medical history, may be required to qualify for health insurance. The requirements will vary for individual or group coverage, for different insurance companies, and for very large or very small groups.

Point-of-service (POS) plans: these plans allow members the option of using services outside the HMO network without prior approval

Portability: under HIPAA, workers with pre-existing medical conditions must receive credit for time in a previous health plan if they join an employer plan

Pre-certification: a requirement that you notify the insurance company for its approval before you check into a hospital, have elective surgery, visit specialists, have expensive tests (e.g., MRI). Pre-certification does not guarantee the insurance company will pay the medical bills. Also called "utilization review".

Pre-existing condition: health problem/condition/illness you had prior to applying for insurance and for which you received medical advice, diagnosis, care or treatment. Policies can exclude coverage of any medical condition for a period of time.

Preferred Provider Organization (PPO): a network of doctors, hospitals, and suppliers (preferred providers) who agree to provide services to members of a health plan for discounted fees.

Premium: the amount you pay each year for insurance coverage

Primary care physician (gatekeeper): the physician selected by HMO members who serves as a personal doctor and provides all medical treatments and any referrals to medical specialists.

Primary plan: this is the plan that pays first when you are covered by more than one insurance plan

Prior qualifying coverage: health plan coverage that was in effect before the effective date of the current or new coverage

Provider: a doctor, hospital, x-ray company, pharmacy, etc. that provides medical health care services

Reasonable and customary fees: when a doctor or other provider of medical services submits a bill, the insurer will make an evaluation of whether the charges are reasonable and customary for that medical service provider and for the type of service performed. What is reasonable and customary depends on factors such as the specific medical service provided, the qualifications and skill level of the doctor (or other care provider), the geographic area (fees can vary widely in different areas) and anything else that the insurer may consider to be pertinent to the evaluation. Companies maintain large computerized databases of information and sophisticated computer programs to determine what is reasonable and customary in a specific situation.

Reinstatement: policies which have lapsed can usually be reinstated by paying the past due premiums and giving appropriate evidence of insurability.

Renewability: group health insurance plans are normally 1 year term. Insurers generally review the claims experience of the group at each renewal date and make a renewal offer - often at a different premium. The company then decides whether to accept the renewal offer.

Individual policies are renewed periodically (as specified in the policy). Premiums for individual health insurance plans are adjusted based on the experience of all similar individual health insurance plans issued by the insurance company. Details of renewability are spelled out in the policy.

Rider: a legal document that modifies an insurance policy

Second surgical opinion: If surgery is recommended, the insurance company may require, or in some cases the insured may request, a review of the case by a second surgeon. If a second opinion is deemed warranted the insurer would pay a second surgeon to review the case and concur with the first doctor or suggest an alternative treatment.

Secondary plan: applies only when you have more than one health insurance plan. The second plan pays only after the primary plan has processed the claim.

Self-insured plan: an organization that pays health care costs out of the organization's own pocket

Specific disease policy: a plan that covers expenses only for a specific disease identified in the policy. Also called Dread Disease policy.

Spell of illness provision: spell of illness usually refers to a period of time during which a patient is being treated for a particular incidence of an illness. Some companies use the terminology "per cause" rather than "spell of illness." The exact definition can also vary from plan to plan. Here is one example of how it might work: If a patient is confined in a hospital for 5 days for a specific condition, the spell of illness is 5 days. If the confinement continues for an additional 7 days because of another non-related condition, that might be considered to be another 7 day spell of illness. On the other hand, if the total confinement of 12 days (5 days plus 7 days) results from the initial condition or a related condition -- hospital plans usually have lists of conditions that are considered closely related and so constitute a single spell of illness -- the entire confinement might be considered to be one spell of illness lasting 12 days.

Spell of illness is more commonly associated with disability insurance than health insurance, but it sometimes comes into play in health insurance as a limitation on what will be covered. For instance, in the above example, there might be a limitation of 10 days hospital confinement per spell of illness, where spell of illness is defined as being for only one condition. Therefore, the plan would pay for the entire 12 days where the confinements are for non-related conditions (5 days for one spell of illness and 7 days for the other spell of illness). But if the entire 12 days is only for one condition, then benefits might be limited to covering only 10 days confinement.

Stop-loss clause: the clause in the contract between the insurer and the insured that specifies the maximum payment that will be made for particular types of coverages - for example the total payments for psychiatric coverage or surgery may be limited to some maximum dollar amount. Sometimes the term stop-loss is also used to refer to an arrangement of risk management where the risk is shared among several insurance companies.

Third party administrator: they administer employee benefit plans under contract with insurance companies, HMOs and self-funded plans.

Underwriting: the process by which an insurer establishes and assumes risks.

Usual, customary & reasonable (UCR): the dollar amount the insurance companies believe to be a fair price for the medical service/procedure in a specific geographic area. Companies have developed their own UCR, which often do not reflect the doctor's actual bill. If the doctor's chargers are higher than the companies UCR charge, you generally have to pay the balance.

Utilization review services: a process that reviews, on a case-by-case basis, the utilization, appropriateness, or quality of medical services provided to a person. Examples of utilization review are pre-hospital admission, pre-inpatient certification, second opinions, etc.

Waiting period: has two meanings: (1) the time period you must wait before you can get health insurance from a new employer; and (2) the time that must pass after becoming insured before the policy will begin to pay benefits for a pre-existing condition or specified illness.

Waiver: an amendment to a policy that excludes coverage for certain medical conditions.

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