Retirement insights from a Colorado PERA perspective

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Staying on top of health care terminology

health care terminology
Photo credit: Ioana Drutu Hemera – 100587084 – Thinkstock

With health care topics in the news almost daily, if not hourly, it can be hard to understand some of the basic concepts and terms described – not to mention keeping up with changes to health care benefits and coverage you might rely on.

While we can’t slow down the 24-hour news cycle or predict how future debates will be resolved, we can try to provide basic information to help you follow along.

Below is a short glossary of health care terms you might see in the news or read about from PERA on the Issues (definitions are summarized from HealthCare.Gov except where otherwise noted). And if we missed something? Let us know in the comments.

Affordable Care Act (ACA): The health care reform law passed in 2010, sometimes referred to as Obamacare. The law requires subsidies for consumers with incomes between 100 and 400 percent of the federal poverty level. The ACA expanded the Medicaid program and supports medical care methods that are designed to lower the costs of health care.

Coinsurance: The percentage of health service costs paid by an insurance policy holder after any required deductible has been paid.

Copayment: A fixed amount paid for a health service by an insurance policy holder after any required deductible has been paid.

Cost sharing: Sharing the cost of health care between policy holders and insurance. The term may apply to out-of-pocket costs such as deductibles, copayments, and coinsurance but not to premiums, balance billing from non-network providers, or the cost of non-covered services.

Creditable coverage: Prior health insurance through a variety of insurance plan types that will reduce or eliminate the length of a pre-existing exclusion period under new employer-based coverage.

Deductible: The amount paid for covered health care services before insurance starts to pay. For example, with a $2,000 deductible, the policy holder pays the first $2,000 of covered services before insurance begins to pay any costs.

Durable medical equipment (DME): Equipment and supplies ordered by a health care provider for everyday or extended use. Examples of covered DME could include oxygen equipment, wheelchairs, crutches, or blood testing strips for diabetics.

Excluded services: Health care services that a health insurance plan does not pay for or cover.

Essential health benefits: A set of 10 services that health insurance plans must cover under the Affordable Care Act. These include doctors’ services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and more. Certain plans may cover additional services.

Exclusive provider organization (EPO) plan: A managed care plan where services, except for emergencies, are covered only from providers such as doctors, specialists or hospitals in the plan’s network.

Family and Medical Leave Act (FMLA): A federal law guaranteeing up to 12 weeks of job-protected leave for certain employees when they need to take time off due to serious illness or disability, to have or adopt a child or to care for another family member. Leave under FMLA allows an employee to continue coverage under a job-based health insurance plan.

Fee for service: A method in which doctors and other providers are paid for each service performed. Examples of services include tests and office visits.

Flexible benefits plan: A benefit program that offers employees a choice between various benefits including cash, life insurance, health insurance, vacation, retirement plans, and child care. Although a common core of benefits may be required, remaining benefit dollars may be allocated for each type of benefit from a total amount promised by the employer. Sometimes employees can contribute more for additional coverage. Also known as a Cafeteria Plan or IRS Section 125 Plan.

Flexible spending account (FSA): An arrangement set up through an employer to pay for many out-of-pocket medical expenses with tax-free dollars. Expenses could include insurance copayments and deductibles, qualified prescription drugs, insulin, and medical devices. Employees decide the amount of pre-tax wages to be put into an FSA while an employer’s plan sets a limit on the amount of money that can be contributed to an FSA each year. Up to $500 in FSA funds can be carried over to the next year, but any funds beyond that amount not spent by the end of the plan year cannot be used for expenses in the following year.

Formulary: A list of prescription drugs covered by an insurance plan offering prescription drug benefits.

Generic drugs: A prescription drug that has the same active-ingredient formula as a brand-name drug. Generic drugs usually cost less than brand-name drugs. The Food and Drug and Administration (FDA) rates these drugs to be as safe and effective as brand-name drugs.

Health maintenance organization: A health insurance plan that typically limits coverage to care from doctors who work for or contract with the plan. Generally, out-of-network care is not covered except in an emergency.

Health Reimbursement Accounts (HRAs): Employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the account. Health Reimbursement Accounts are sometimes called Health Reimbursement Arrangements.

Health savings account (HSA):  A type of savings account that allows a policy holder with a high-deductible health insurance plan to set money aside on a pre-tax basis to pay for qualified medical expenses. HSA funds roll over year to year and are not tied to an employer.

High deductible health plan (HDHP): A health insurance plan with a higher deductible than a traditional insurance plan. Usually, the premium is lower but policy holders may have to pay more health costs before insurance begins to pay a share. A high deductible plan can be combined with a health savings account or health reimbursement arrangement in order to pay for certain medical expenses with untaxed dollars. The IRS considers any plan with a deductible of at least $1,300 for an individual or $2,600 for a family a high deductible health plan.

Health Insurance Portability and Accountability Act (HIPAA): A federal law that expanded health care coverage in the event of job loss or job changes. HIPAA provides protections for pre-existing medical conditions or difficulty obtaining health coverage if based on past or present health. HIPAA also limits how companies can use pre-existing conditions to limit health insurance coverage and provides privacy standards to protect patients’ medical records and other health information provided to health plans, doctors, hospitals and other providers. (Source: Centers for Medicaid and Medicare Services and MedicineNet.com)

Lifetime limit: A cap on the total lifetime benefits provided from an insurance company. Total lifetime limits could be on dollar benefits (such as a $1 million lifetime cap) or on specific benefits (such as a $200,000 lifetime cap on organ transplants or one gastric bypass per lifetime) or a combination. After a lifetime limit is reached, the plan will no longer pay for covered services.

Long-term care: Medical and non-medical care provided to people who are unable to perform basic activities of daily living such as dressing or bathing. Can be provided at home, in the community or in assisted living or nursing homes. Typically not covered by Medicare and most health insurance plans. (Read more about long-term care from PERA on the Issues).

Medicaid: Public health insurance programs providing free or low-cost health coverage to some lower income people such as families and children, pregnant women, the elderly, and people with disabilities. Medicaid benefits and program names vary between states. (Health First Colorado, for example, is the Medicaid program for some lower income Colorado residents).

Medically necessary: Health care services or supplies needed to diagnose or treat an illness, injury, condition, disease, or their symptoms, and that meet accepted standards of medicine.

Medicare: A federal health insurance program for people 65 and older and certain younger people with disabilities.

Medicare Advantage: A type of Medicare health plan offered by private companies that contract with Medicare to provide all Medicare Part A and Part B benefits. Most Medicare Advantage Plans offer prescription drug coverage.

Medicare Part D: A program that helps pay for prescription drugs for people with Medicare who join a plan that includes Medicare prescription drug coverage. There are two ways to get Medicare prescription drug coverage: through a Medicare Prescription Drug Plan or a Medicare Advantage Plan that includes drug coverage.

Network: The facilities, providers, and suppliers contracted with a health insurance plan to provide services to its members.

Obamacare: See Affordable Care Act.

Open enrollment: The period when a health insurance policy is open for new members to enroll or for members to change their policies. Health insurance plans generally allow for enrollment outside of the open enrollment window for qualifying events such as marriage or birth of a baby. (Learn more about open enrollment in PERACare.)

Out-of-pocket maximum: The maximum amount a policy holder would pay for covered services in a plan year. After the out-of-pocket maximum is spent through deductibles, copayments, and coinsurance, the health plan pays 100 percent of the remaining costs of covered benefits. The out-of-pocket maximum does not include monthly premiums or any costs for services not covered by the insurance plan.

PERACare: Health insurance plans for PERA retirees and their dependents as well as for active members whose employers choose to offer a PERACare plan.

PERACare Select: A fixed-cost hip or knee replacement procedure offered to pre-Medicare retirees and their dependents enrolled in an Anthem health insurance plan through PERA Care.

Pre-existing condition: Any condition (physical or mental) including a disability for which medical treatment was recommended or received within the six-month period ending on the enrollment date in a new health insurance plan.

Preferred provider organization (PPO): A type of health plan that contracts with medical doctors, such as hospitals and doctors, to create a network of participating providers. Costs to policy holders are typically lower when using providers that belong to the plan’s network, but doctors, hospitals, and other providers may be available outside of the network for an additional cost.

Premium: The amount paid for a health insurance policy every month. In addition to the premium, there are typically other costs for health care, including deductibles, copayments, and coinsurance.

Primary care: Health services that cover a range of prevention, wellness, and treatment for common illnesses. Primary care providers include doctors, nurses, nurse practitioners, and physician assistants.

Prior authorization: Approval from a health plan that may be required for a service to be provided or a prescription filled and to be covered by the plan.

Prescription drug coverage: Health insurance or plan that helps pay for prescription drugs and medications.

Preventive services: Routine health care that includes screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems.

Qualifying life event: A change in situation or status such as getting married, having a baby, or losing health coverage, that can allow eligibility in a special enrollment period and enrollment in a health insurance plan outside the yearly open enrollment period.

Referral: A written order from a primary care doctor to see a specialist or receive certain medical services. In many HMOs, a referral is required before receiving medical care from anyone except for a covered primary care doctor.

Skilled nursing care: Services from licensed nurses provided in a policy holder’s home or a nursing home. Skilled care services are from technicians and therapists at home or in a nursing home.

Specialty drugs: High-cost prescription medications used to treat complex, chronic conditions like cancer, rheumatoid arthritis and multiple sclerosis. (Source: healthinsurance.org). (Read more about specialty drugs from PERA on the Issues).

Urgent care: Care for an illness, injury, or condition serious enough that a reasonable person would seek care right away, but not so severe that it requires emergency room care.

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