Health Insurance - Industry Lingo

To make the right business purchases, you have to know the language. Here's a guide to health insurance lingo.

Blue Cross/Blue Shield
A loosely affiliated group of health insurance providers. Blue Cross/Blue Shield plans were initially nonprofit organizations, but today many are not very different from regular insurance companies.

Capitation
The annual per-person HMO membership fee. Most HMOs set at least two capitation figures, one for individuals and one for families.

Co-Insurance
The part of a health care bill that is shared between the insurer and the patient. For example, co-insurance often requires the patient to pay 20 percent of the first $5,000 of health care costs for the year. This means that a patient may owe as much as $1,000 toward the cost of treatment. Most policies use co-insurance to reduce the insurer's share of smaller claims.

Deductible
The initial fee a patient pays for health care before insurance coverage begins. Deductibles can be fixed on a per-treatment, -individual or -family basis.

Exclusive Provider Organization (EPO)
Similar to an HMO, a managed health care program that requires members to use doctors within the network. However, EPOs are not governed by most state and federal HMO regulations. As a result, certain conditions may not be covered by an EPO.

Health Maintenance Organization (HMO)
An alternate type of managed care network. HMOs are governed by more regulations than PPOs, which makes them usually more rigid in terms of network rules and structure.

Managed Care
Used to describe all programs that try to control health costs by limiting unnecessary treatment. HMOs, PPOs, point-of-service plans, and utilization review are all forms of managed care.

Point-of-Service (POS)
HMO plans that allow members to obtain coverage for care outside the network. Point-of-service plans encourage members to use doctors within the HMO network by paying a greater percentage of the cost of treatment. Also known as an open-ended HMO.

Primary Care Provider (PCP)
A physician or other medical professional who serves as a group member's first contact with a plan's health care system. Also known as a primary care physician, personal care physician, or personal care provider.

Self Insure
A self insure plan lets employees deposit premiums into a company fund, which is used to pay health care expenditures up to a specific limit. The organization may choose to purchase insurance above that limit.

Short-Term Medical Insurance
An inexpensive form of insurance that covers periods of up to six months and costs about half the price of longer-term plans. The affordability of short-term medical insurance usually comes with many limitations - pre-existing medical conditions, medical expenses outside the United States, and maternity expenses may not be covered under such a plan.

Staff Model
A type of HMO that operates its own health clinics and hires its own doctors. This model has become less common over time, as more HMOs contract services from independent physician practices.

Traditional Health Insurance
The traditional form of health insurance where policyholders can visit any doctor or hospital they want, and receive coverage for any treatment covered under the policy. Because there are few oversight or cost-saving measures, premiums for traditional health insurance tend to be higher than for other types of plans.

Utilization Review
A cost management technique that normally requires the patient or doctor to first contact a reviewer at the insurance company to get expensive procedures approved. In many cases, the reviewer may require a second opinion before proceeding. In some situations, a reviewer may ask for a change in the physician's treatment plan before authorizing coverage.

Wellness Programs
Increasingly offered by health care providers, wellness programs promote individual well-being through discounts on fitness club memberships or health regimens like aromatherapy, acupuncture, massage, and yoga. Services are usually offered at a discount to members, as opposed to being co-paid by the employer.

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