North Carolina Health Insurance

Insurance Terms and Definitions

Agent A person who is authorized by an insurer to act on its behalf to negotiate, sell, and service contracts.
Annuity Is designed to protect against the risk of living too long; that is out living one's financial resources and income during retirement period. By definition, an annuity is a guaranteed income for the life of annuitant. 
Beneficiary A beneficiary is the person or entity you name in a life insurance policy to receive the death benefit. You can name (1)one person, (2) two or more people, (3) the trustee of a trust you’ve set up, (4) a charity , or (5) your estate.  If you don't name a beneficiary, the death benefit will be paid to your estate.  If a minor is named as beneficiary, the minor's guardian will receive the death benefit.
Broker A salesperson who has obtained a state license to sell and service contracts of multiple health plans or insurers, and who is ordinarily considered to be an agent of the buyer, not the health plan or insurer.
COBRA A federal act which requires each group health plan to allow employees and certain dependents to continue their group coverage for a stated period of time following a qualifying event that causes the loss of group health coverage. Qualifying events include reduced work hours, death or divorce of a covered employee, and termination of employment.  Not all companies are required to be COBRA compliant.
Coinsurance An amount you may be required to pay for services after you pay any plan deductibles.  In Original Medicare Plan, this is a percentage (like 20%) of the Medicare Approved Amount.  For group and individual coverage, this is a percentage of the network approved amount. 
Coinsurance Max For most group and individual insurance, this is the dollar amount you must pay before the insurance company will pay 100% of the network approved charges. In Original Medicare Plan, there is no coinsurance max.   Coinsurance max may also be called out of pocket max or stop loss limit.
Contingent Beneficiary Contingent beneficiaries get the death benefits if the primary beneficiary can’t be found. If no primary or contingent beneficiaries can be found, the death benefit will be paid to your estate.
Co-pay Same as Co-payment
Co-payment In some individual, group, and Medicare health and prescription drug plans, an amount you pay for each medical service, like a doctor's visit, or prescription.  You insurance plan pays the balance of the cost.  The co-payment is sometimes referred to as First Dollar Benefits since you receive the benefit before your deductible and coinsurance amounts are met. 
Creditable Coverage Certain kinds of previous health insurance coverage that can be used to shorten pre-existing condition waiting period under a Medigap Policy, group insurance or individual insurance.   This is not the same as creditable prescription drug coverage.
Creditable Prescription Drug Coverage The plan is expected to pay, non average, at least as much as Medicare's standard prescription drug coverage.  If you have creditable prescription drug coverage and elect not to join Medicare Part D when you are first eligible, you will not have to pay the 1% monthly penalty.  If your do NOT have creditable prescription drug coverage, and you elect not to join a Medicare Part D plan, you will be penalized 1% of national average premium per month not enrolled in a credible plan with no cap on the penalty. 
Deductible The amount you must pay for health care or prescriptions, before the Original Medicare Plan, your prescription drug plan, or individual, group, or other insurance begins to pay. 
Disability Income Insurance Provides periodic payments when the insured is unable to work because of injury or illness. These policies pay a weekly or monthly income benefit to replace a portion of the salary or wages lost due to the insured's inability to work.  Disability income policies are issued on an individual basis or on a group basis through an employer sponsored plan, labor union or association.   Benefits paid are in accordance with the policy's provision and to a degree, the insured's loss of income. 
Equity Indexed Annuity A type of fixed annuity. 
Exclusions Claims from certain injuries or illnesses are excluded from payment.  These exclusions may include intentionally self-inflicted injuries and injuries that are caused by acts of war or arise while on active military duty.  Other common exclusions include cosmetic surgery, eyeglasses or hearing aids.  Lists of exclusions for policies are included in company product brochures and in your policy. 
Fixed Annuity A fully guaranteed contract, which is backed by funds invested in the insurer's general account.  Principal, interest and the amounts of the benefit payments are guaranteed.  There may be two levels of guaranteed interest- a current rate which is guaranteed at the beginning of each calendar year, and a minimum guaranteed rate which will be paid if the current rate falls below this level. 
H R A Health reimbursement arrangements (H R A), also known as "health reimbursement accounts" or "personal care accounts," are a type of health insurance plan that the employer reimburses employees for qualified medical expenses. 
H S A A health savings account (H S A) is a special account owned by an individual used to pay current and future medical expenses.  A H S A is used in conjunction with a high deductible health plan (HDHP)
HDHP High Deductible Health Plan is insurance that does not cover first dollar benefits , except for preventive care.  It may be an HMO, PPO, or indemnity plan as long as it meets the requirements.
Health Insurance Also referred to as accident and sickness or disability insurance, protects the insured against financial loss caused by accidents and sicknesses.  It may reimburse the insured for actual medical expenses incurred due to an accident or illness (hospitalization insurance) or it may provide protection for loss of income experienced by the insured during periods of disability due to accident or sickness (disability income insurance). Health insurance can be written on both an individual and group basis and includes medical expense, hospital indemnity, major medical, hospital, surgical, disability, cancer, accident, dental expenses, eyeglasses, prescription medication and other health related expenses. 
HIPAA A federal act that protects people who change jobs, are self-employed, or who have pre-existing medical conditions. HIPAA standardizes an approach to the continuation of healthcare benefits for individuals and members of small group health plans and establishes parity between the benefits extended to these individuals and those benefits offered to employees in large group plans. The act also contains provisions designed to ensure that prospective or current enrollees in a group health plan are not discriminated against based on health status.
HMO One of the forms of managed care.  An HMO is any organization, either for the profit or nonprofit, that accepts responsibility for providing and delivering a predetermined set of comprehensive health maintenance and treatment services to a voluntarily enrolled population for a pre-negotiated and fixed periodic premium payment.  HMO's utilize a network of doctors and operate in a specific area. The principal objectives of HMO's are to reduce medical expenses by (1) stressing preventative medicine through routine physical exams, (2) reducing the number of unnecessary hospital admissions and reducing the number of days per hospital visit, (3) reducing the duplication of benefits, and (4) saving on administrative costs. 
ILIT An irrevocable life insurance trust, often called by its abbreviation - ILIT, is a unique legal document to help keep the proceeds of a life insurance policy outside of the estate and thus potentially free of estate tax and income tax.
Life Insurance Is designed to protect against the risk of premature death-dying too soon.  Premature death exposes a family or business to certain financial risks such as burial expenses, paying off debts, loss of family income and business profits. 
Limitations Medical expense policies frequently provide limited coverage or benefits for certain medical conditions.  Many plans will include limitations on benefits to be provide for the following:  rehabilitation, home health care, hospice care, some medical equipment and supplies, psychiatric conditions, etc.  The limitations are included in company product brochures and in your policy. 
Major Medical Expense Insurance Covers a much broader range of medical expense with higher individual benefits and policy maximums.  Major Medical insurance is sometimes referred to as catastrophe medical expenses.  Major medical policies may be issued as individual or group coverage. Major medical insurance is characterized by deductibles, coinsurance, and large benefit maximums.  Covered expenses usually include doctor's fees, nursing fees, hospital R&B coverage, out of hospital expenses such as doctors' office calls, prescription medication and diagnostic services.  These expenses are covered in accordance with the policy's deductible and coinsurance provisions up to the policy's maximum benefit. 
Medicare  The Original Medicare Plan- Medicare provides this coverage.  It includes Part A (hospital insurance) and/or Part B (Medical Insurance)  This plan pays for many health care  services and supplies, but it doesn't pay off of your health care costs.  There are costs that you must pay (like coinsurance, co-payments, and deductibles).  If you have Original Medicare Plan, you may want to buy a Medigap policy to help cover your out-of-pocket costs.  Generally, you must have Medicare Part and Part B to buy a Medigap Policy. 
Medicare Advantage Plans (Part C) like HMO's and PPO's- Private insurance companies approved by Medicare provide this coverage.  This plan combines your Medicare Part A and Part B coverage and often provides extra benefits that aren't included under the Original Medicare Plan.  Medicare Advantage Plans include Medicare Preferred Provider Organization (PPO) Plans, Medicare Health Maintenance Organization (HMO) Plans, Medicare Private Fee-for-Service Plans (PFFS), Medicare Special Needs Plans (SNPs), and Medicare Medical Savings Account (MSA) Plans. 
Medicare Part A Hospital Insurance covers inpatient care in hospitals, skilled nursing facilities, and some home health, and hospice care. 
Medicare Part B Medical Insurance covers doctors' services and outpatient care, other medical services that Part A doesn't cover (like physical and occupational therapists), and home health care.
Medicare Part C Medicare Advantage Plans Private insurers (like HMO's and PPO's) provide both Part A and Part B benefits to people who enroll.
Medicare Part D Medicare prescription drug coverage covers prescription drugs. 
Medicare Supplement Health insurance designed to supplement the Original Medicare Plan, that is, to help pay some of the health care costs (gaps) that the Original Medicare Plan doesn't cover (like co-payments, coinsurance, and deductibles).  If you are in the Original Medicare Plan and you buy a Medicare supplement policy, then both plans will pay their share of the Medicare-approved amounts for covered health care costs.  Insurance companies can only sell you a "standardized" Medigap policy Plans A through L.  
Medigap Policy Also called Medicare Supplement.  See Medicare Supplement for more information.
Per Capita Used in wills and life insurance policies to indicate that each of the named beneficiaries should receive, by devise or bequest, equal shares of the estate
Per Stirpes used in wills and life insurance policies that specifies that each family branch of a group of beneficiaries is to receive an equal share of an estate, usually to take effect in the case where the first choice beneficiary has died and their share is to be redistributed to their descendants.
POS A Point of Service (POS) plan is a type of managed healthcare system that combines characteristics of the HMO and the PPO. Like an HMO, you pay no deductible and usually only a minimal co-payment when you use a healthcare provider within your network. You also must choose a primary care physician who is responsible for all referrals within the POS network. If you choose to go outside the network for healthcare, POS coverage functions more like a PPO.
PPO Preferred Provider Organization refers to an arrangement under which a selected group of independent hospitals and medical practitioners in a certain area, such as a state, agree to provide a range of services at a prearranged cost.   The organizers and the providers agree upon medical service charges that are generally less than the providers would charge patients not associated wit the PPO. 
Pre-existing Condition Can be excluded from coverage under a health insurance policy. This exclusion may be permanent or temporary.  A preexisting condition is usually defined as any condition for which the insured sought treatment or advise prior to the effective date of the policy. Also, a preexisting condition can be defined as any symptom that would cause a reasonable and prudent person to seek diagnosis or medical treatment.  Some pre-existing conditions may be covered by individual plans.  Group plans may only have up to one year waiting period for coverage of pre-existing conditions. Decisions regarding pre-existing conditions are determined by the company and the company's underwriting.
Primary Beneficiary The primary beneficiary gets the death benefits if he or she can be found after your death.  Minor children cannot receive this benefit.  Their guardian will receive the death benefit.
State Continuation In Georgia, state continuation coverage for employers with less than 20 employees allows continuation of current coverage for the remaining days in the month of termination and then for three full months. In order to quality for state continuation, you must have had coverage under the group policy for at least six months.
Term Life  provides temporary insurance protection for  a specified period of time (the policy term).  The term may be one year, five years, ten years, twenty years, to a specified age such as 65, or any other period the insurance company is willing to coverage.  A term insurance policy pays a death benefit only if the insured dies during the term of coverage.  Since there is no cash value, term is less expensive initially than other forms of insurance.  Term usually gives the highest face value amounts for the premium dollar.
Underwriting The process of identifying and classifying the risk represented by an individual or group.
Universal Life The universal life policy was designed for people who need flexible coverage over the course of their lifetime.  A Universal Life is a Flexible Premium, Adjustable Benefit Life Insurance Contract that Accumulates Cash Value.  Universal life is Permanent Insurance.  The contract can provide coverage until death or age 95 or 110.
Usual, customary and reasonable The amount commonly charged for a particular medical or dental service by physicians or dentists within a particular geographic region. 
Variable Annuity Is designed to provide a hedge against inflation through investments in a separate account if the insurer consisting primarily of common stock.  A variable annuity is not a fully guaranteed contract. 
Whole Life As the name implies, (whole LIFE), this policy form offers insurance coverage for the whole life (or up to age 100 or 120).  If the insured lives to age 100, the cash value equals the face amount and is paid to the insurance in a lump sum.  Whole life policy may also be referred to as "straight life policy". 

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