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Glossary of Insurance Terms

This list of insurance terms is intended to help you better understand the complexities of medical billing and insurance coverage.

 Administrator Individual or third party firm responsible for the administration of a group insurance program.
 Allowable or maximum limit Maximum amount an insurer will pay for a given procedure or service.
 Allowed charges Charges for services rendered or supplies furnished by a health care provider which would qualify as covered expenses and for which the insurer will pay in whole or in part subject to any deductible or coinsurance.
 Assignment of benefits Provision in a health benefits claim form by which the insured directs the insurer to pay any benefits directly to the provider of care on whose charge the claim is based.
 Association group insurance Group insurance provided to a professional or trade association by which eligible members are covered under one master policy.
 Benefit Payable by the insurance company to a claimant, assignee or beneficiary when the insured suffers a loss covered by the policy.
 Civilian Hospital and Medical Program of the Uniformed Services (CHAMPUS) Government-provided medical care to dependents of service persons on active duty.
 Claim administrator Any entity that reviews and determines whether to pay claims to enrollees or physicians on behalf of the health benefit plan.  Claim administrators may be insurance companies or designated claims review organizations, self-insured employers, management firms, third party administrators or other private contractors.
 Claim form Form submitted to the payer by the provider of the service (i.e., facility or physician) for the patient to receive reimbursement for a drug or medical service.
 Coding Process used to provide a uniform language that will accurately describe medical, surgical, diagnostic and treatment procedures and will thereby provide an effective means for reliable nationwide communication among physicians, patients and insurers.
 Commercial insurance company Private insurance company that provides health care coverage to its subscribers.
 Coordination of benefits Special term used to designate the anti-duplication provision designed by the group health insurance industry through the Health Insurance Association of America (HIAA) to limit benefits for multiple group health insurance in a particular case to 100 percent of the expenses covered and to designate the order in which the multiple carriers are to pay benefits.
 Co-payment Payment made under a cost-sharing arrangement whereby an insured or covered person pays a specified amount (usually a percentage) per unit of service or per unit of time and the insurer pays the remainder of the cost.
 Cost-sharing Share of health expenses that a beneficiary must pay, including the deductibles, co-payments and coinsurance amounts.
Coverage Possible payment status of a health service or device for which the insurer might provide. reimbursement.
Covered services Specific services and supplies for which third-party payers may provide reimbursement.
 Deductible Amount the insured or covered person must pay up front for physician services or drugs before being eligible for any benefits.
Denial Refusal of a payer to cover a particular received medical service such as a drug or medical service.
Elective medical treatment Procedures/therapies viewed by insurance companies as not medically necessary or life-threatening such as contraceptives, hearing aids, contact lenses, cosmetic surgery.
Employee Retirement Income Security Act (ERISA)  Federal law establishing minimum participation, vesting, funding and termination standards for employer-sponsored pension plans.
Exclusion (Exception) Specified conditions or circumstances, listed in an insurance policy, for which the policy will not provide benefits.
Group insurance Arrangement for insuring a number of people under a single, master insurance policy.
Health maintenance organizations (HMO) Organization that provides for a wide range of comprehensive health care services for a specified group at a fixed periodic prepayment.
Indemnity contract Insurance against loss or injury.
Major medical plan Health insurance designed to cover the expense of major illness or injury, beginning where basic plans leave off.
Managed care

Those systems that integrate the financing and delivery of appropriate health care services to covered individuals by means of:

  • arrangements with selected providers to furnish a comprehensive set of healthcare services to members;
  • explicit criteria for the selections of healthcare providers;
  • formal programs for ongoing quality assurance and utilization review; and
  • significant financial incentives for members to use providers and procedures associated with the plan.
Medicaid State programs (with federal matching funds provided by Social Security under stipulated conditions) of public health assistance to persons, regardless of age, whose income and resources are insufficient to pay for health care.
Medicare Federally sponsored program under the Social Security Act that provides hospital benefits, supplementary medical care, and catastrophic coverage to elderly persons.
Policyholder Owner of the insurance policy; the insured individual.
Preauthorization Prior approval to perform proposed services, authorizing coverage for those services, given to a provider by an insurer.
Predetermination of benefits Request submitted before treatment from a provider to an insurer for indication of the amount of coverage available for a procedure or procedures.
Preexisting condition Any physical and/or mental condition or conditions of an insured that exist prior to the effective date of coverage.
Preferred provider organization (PPO) Mode of health care delivery through which a sponsoring group negotiates price discounts with providers in exchange for more patients.  The sponsor may be an insurer, employer or third-party administrator.
Premium Periodic insurance payment.
Provider network Facilities and/or physicians with whom a health insurer, HMO or PPO contracts to provide health services.
Reimbursement Payment of the actual charges incurred as a result of an accident or illness but which may not exceed any maximums specified in the plan of insurance.
Rider Document that modifies or amends an insurance contract.
Self-insurance Medical benefit plan established by an employer or employee group (or a combination of the two) that directly assumes the functions, responsibilities, and liabilities of an insurer.
Summary plan description Abridged version of your contract, usually the document provided to you by your employer.
Timely filing deadline Some plans will designate time periods or deadlines after which they will not allow you to file medical claims.