Glossary Section 1-Types of Health Insurance
Navigating the healthcare system can feel like learning a new language. Knowing the right terms matters. It can help you
- Understand what your insurance will and won't cover.
- Know what questions to ask about your health insurance, financial assistance, or income.
- Avoid unexpected costs.
- Get financial help.
- Advocate for yourself or your patients when insurance companies deny coverage or when bills don't add up.
This glossary is a tool you can use whenever you aren't sure about a word or term. It covers health insurance basics, prescription drug coverage, billing, the approvals and appeals process, financial assistance, and income support.
Remember, health policy, program eligibility, and insurance rules change all the time. It is a good idea to check with your insurance company, job, healthcare providers or other federal/state agencies about your specific needs or questions about your coverage.
Key Terms
Affordable Care Act (ACA) Marketplace Plans: Health insurance plans sold on the Health Insurance Marketplace (exchange). These plans were created by the Affordable Care Act (passed 2010). Some states have their own exchange; others utilize the federal exchange, www.healthcare.gov.
Benefit Period (non-Medicare): The time period your health insurance coverage is active. Can be calendar year (January 1-December 31), fiscal year (July 1-June 30), or other dates based on your individual plan or employer’s enrollment schedule.
Benefit Period (Medicare): How Medicare measures your use of your hospital or skilled nursing facility services. A benefit period begins the day you are admitted to a hospital or skilled nursing facility. It ends when you have not received inpatient care for 60 days in a row. The Part A deductible resets with each new benefit period. This means you can have more than one benefits period in a year. There is no limit to the number of benefit periods you can have every year.
Catastrophic Coverage: A type of health plan with low monthly premiums but very high deductibles. Available only to people under age 30 or those who qualify for a hardship exemption. Covers three primary care visits and preventive services per year at no cost, but offers limited coverage for routine care. Designed to protect you financially in the case of a serious illness or accident.
Children’s Health Insurance Program (CHIP): Provides free or low-cost coverage to children in families who earn too much to qualify for Medicaid but cannot afford private insurance. In some states, pregnant women may also qualify. Eligibility is based on family income and varies by state. To apply, contact your state Medicaid office.
Critical Illness Insurance: a supplemental insurance that pays a lump sum cash benefit to you if you are diagnosed with a covered condition like cancer, heart attack, or stroke. The money can be used for anything including medical bills, lost income, household expenses, or travel for treatment. You may be able to get critical illness insurance through your job or buy it on your own. Be aware, private critical illness plans may not cover pre-existing conditions and may require medical underwriting. This can affect your eligibility and the price of the plan.
Employer-Affiliated Insurance: Health insurance offered through your employer. Plan options, costs and coverage varies by employer. You may also be able to cover your spouse and dependent children through your employer-affiliated insurance. If you lose your job, you may be able to keep you coverage through COBRA.
Exclusive Provider Organization (EPO): A type of health insurance where you must use doctors, hospitals and providers within the plan’s network. If you go out-of-network, you will probably have to pay the full cost of care yourself. An EPO may be a good fit for you if you want lower premiums and are comfortable going to only a set group of providers. Remember, in a medical emergency, you can always get emergency care, even if the provider is out-of-network.
Grandfathered Plans: A health insurance plan that existed before the Affordable Care Act (ACA) was passed in 2010. These plans do not have to follow the same ACA rules and as a result may have more coverage gaps than ACA-compliant plans. This can include lifetime or annual caps on coverage, limited or no coverage for preventive care and not as many patient protections. Plans have to tell you if they are grandfathered. You can ask your employer or the insurance company if your plan is a grandfathered plan.
Hardship Exemption: A special exception that allows people over age 30 to enroll in a catastrophic health plan if they have certain difficult life circumstances such as homelessness, bankruptcy, domestic violence, or loss of health insurance coverage. Eligibility is determined by the federal government and the list of qualifying hardships may change. Visit HealthCare.gov to see if you qualify.
Health Maintenance Organization (HMO): A type of health insurance. You have to use network doctors, hospitals, and providers. You usually need to have a primary care provider (PCP) who coordinates all of your care. You also need referrals to go to specialists. Out-of-network care is not covered except in a medical emergency. An HMO may be a good fit if you want lower premiums and don’t mind getting referrals for specialist care.
High Deductible Health Plan (HDHP): A type of health insurance plan with lower monthly premiums but higher out-of-pocket costs when you need care. You pay more out of pocket before your insurance starts to cover costs. Preventive care is covered at no cost before you meet your deductible. If you have an HDHP, you can also have an Health Savings Account (HSA), which lets you save pre-tax money to pay for qualified medical expenses. An HDHP may be a good fit if you are generally healthy, want lower monthly premiums, or want to take advantage of an HSA.
Long Term Care Insurance: A type of insurance that helps pay for long-term care services that are not covered by Medicare. This could be in a nursing home, assisted living facility, memory care unit, or at home. You can usually use your benefits when you can’t do your activities of daily living - things like dressing, bathing, eating or getting around-without help. Long-term care plans vary a lot in what they cover, how much they cover and how long you can use your benefits. If you have pre-existing conditions, you may not be eligible, your plan could cost more, or have limited benefits. Long term care plans may also be available through your employer or through private companies.
Medicaid: A health insurance program that provides free or low-cost coverage to those with limited income and financial resources. Eligibility rules and covered services vary by state. Eligibility is based on income, number of people in the household, age, and disability status. In some states, other groups may be eligible for Medicaid. Medicaid also supports long-term care (in nursing homes or at home) for low-income individuals. You can also have Medicaid as a secondary to Medicare. This is called dual eligibility.
Medicare: A health insurance program for people 65 and older, those with end-stage renal disease (ESRD) or ALS (Lou Gherig's disease), or younger people receiving Social Security Disability benefits (SSDI). Medicare Part A covers hospital care, skilled nursing facilities, hospice and some home health care. Part B covers doctor visits, outpatient care, preventive services, labs, radiology and other home care services. Part D covers prescription medications. Part C (Medicare Advantage) is an alternative that bundles Part A, B, and usually D together under plans managed by private health insurance companies. You can also have Medicaid as a secondary to Medicare. This is called dual eligibility. Medicare does not cover long-term care.
Medicare Special Enrollment Period: If you didn’t sign up for Medicare when you were first eligible because you had coverage through your job or your spouse’s job, you may qualify for a Medicare Special Enrollment Period. This lets you enroll in Medicare without penalty. You will need to coordinate this enrollment with your current insurance and the Social Security Administration.
Medigap Supplemental Plan: A private health insurance plan that helps pay for costs that Original Medicare (Parts A and B) does not cover, such as copays, coinsurance, and deductibles. Medigap plans are sold by private insurance companies. You have to have Part A and Part B to buy a Medigap plan. Medigap plans don’t include prescription drug coverage. You cannot buy a Medigap plan if you have Medicare Part C (Medicare Advantage). Not all states require Medigap plans to be offered to individuals under 65 with Medicare. Pricing can depend on the state you live in, the type of Medigap plan you purchase, and your age. If you buy a Medigap plan outside your initial enrollment period for Medicare the company can look at your pre-existing conditions and deny coverage or charge more (underwriting).
Open Enrollment: the time each year when you can make changes to your health insurance coverage. Rules and timing of open enrollment vary based on your plan. Always check with your job, insurance company, or visit healthcare.gov for more information.
Point of Service (POS): a type of health insurance that combines some features of HMO and PPO plans. You can use in or out-of-network providers, but you may pay more if you go out of network. Out-of-network care is not covered except in a medical emergency. You will probably need to have a primary care provider (PCP) who manages your care and gives you referrals to specialists. You get more flexibility with a POS plan while still managing your costs.
Preferred Provider Organization (PPO): A type of health insurance that lets you choose what doctors, hospitals or providers you want to go to. You can see any provider in or out of network and you don’t need a PCP or referrals. Out-of-network care may be more expensive. These plans can also have higher premiums. These plans offer the most choice and flexibility.
Short Term Health Insurance Plans: Health insurance plans that provide temporary coverage for a limited period of time. These plans do not have to follow Affordable Care Act rules and can deny coverage or charge more if you have pre-existing conditions. These plans may also have annual or lifetime caps on how much they will cover and may not cover prescription medications, preventive care or behavioral health services. These plans may look like a good option because of their lower cost, but they may not cover you or your needs when you need it most. Always check what is and isn’t covered before you sign-up.
Special Enrollment Period (SEP): a period of time outside of open enrollment when you can sign-up for or make changes to your health insurance coverage. You must have a qualifying life event to be eligible for a special enrollment period. These include, losing your health insurance coverage, getting married or divorced, have a baby or adopting a child, moving, or for Marketplace plans, changes in your income that effect your eligibility. Always check with your insurance company, job, or visit healthcare.gov for information about qualifying events and if you are eligible for an SEP.
TRICARE: health insurance for active duty and retired military members, and their eligible family members. TRICARE is managed by the Department of Defense. There are many different types of TRICARE plans depending on your military status, location, and needs. You can also have Medicare A and B and TRICARE as a secondary payer. You can learn more at www.tricare.mil.
Underwriting: how an insurance company evaluates the risk of covering you under their plan. It determines if you can buy a plan and how much you will pay for that plan. They may look at things like your medical history, age, lifestyle factors (smoking, exercise, diet, weight) and other factors. Underwriting is used in life insurance, disability insurance, and property/casualty insurance. In health insurance, there may be underwriting in short-term plans, Medigap (supplemental) plans and private plans bought outside of the Marketplace that may not need to follow ACA rules.
VA Healthcare: Healthcare services (not insurance) provided by the US Department of Veterans Affairs to eligible veterans. Care is available at VA medical centers, outpatient clinics and sometime community based providers. Eligibility is based on your military service history, discharge status and for some services, your income. Some veterans have copays for some services, depending on your priority group. You can apply for VA healthcare online at www.va.gov or by going to your local VA facility.