The following generic glossary provides important terms for anyone exploring current health benefits issues:
 

An insurance policy providing specified benefits in the event of a policyholder’s accidental death or loss of limbs.
Balance Billing – Provider bills a member for amounts that are not considered eligible by the insurer or network. The member is typically not responsible for payment of these amounts if services are obtained from an in-network provider.
 

An expert providing guidance, information and recommendations to clients maneuvering through the processes and management of insurance and health care benefits.
 

A cost-sharing mechanism under which the employee is required to pay a percentage (e.g., 10%) of medical expenses arising after the deductible has been satisfied; the plan pays the balance.
 

A relatively new type of health coverage designed to provide employees with a defined health care dollar allowance and a high deductible health insurance plan. The plan is meant to encourage more efficient health care spending. Members choose how and when they want to spend the allowance. Allowances can be deposited into Health Savings Accounts (HSA) or Health Reimbursement Arrangements (HRA) as selected by the employer. HSAs and HRAs provide additional tax advantages and flexibility for the participants.
 

Amount paid by the insured person at the time specific services, such as office visits, are rendered.
 

A cost-sharing method under which employees are required to assume part of the cost of health care (e.g., $500 per person per year) before direct payment or reimbursement is available from the plan.
 

A list of drugs that have been selected to provide the most appropriate and cost-effective treatment. The list is developed by committees typically comprised of physicians and pharmacists. The formulary list changes periodically (usually on a quarterly basis). Lists are categorized on a tier basis according to the level of cost and benefits are designed by tier. Tier 1 normally represents generics that produce the lowest costs. Some Plans still establish a formulary for brand medications only versus the tier approach which can put generics in a tier other than tier 1. Non-formulary drugs are either excluded under closed formulary plans or covered with more significant member cost sharing.
 

These plans provide behavioral counseling and referral services for members. Benefits are commonly limited to a certain number of visits to a counselor in addition to access to a wide variety of information concerning behavioral issues. These benefits are in addition to those defined by the health plan.
 

Those health care related costs that will be paid on behalf of a plan participant according to the specific benefit schedule of a plan.
 

Additional individual benefits, separate from those offered by an employer’s group plan, that an employee may choose to purchase (for example, additional life insurance, cancer protection, hospital reimbursement). These additional benefits are paid for through deductions from the employee’s paycheck as a service and convenience provided by the employer.
 

Communication from health plan that member receives after a claim is processed; it includes the physician’s name and date of service along with an explanation of what benefit is payable, the amount paid by the plan and the amount for which the member is responsible.
 

A funding mechanism that places all of the risks and rewards upon an insurer in return for a fixed premium usually guaranteed for a defined period of time.
 

Programs providing defined benefits for a specified group of employees managed and accessed in a variety of ways. See, for examples, HMO, PPO, POS, HRA, HSA, TPA, Open Access and Managed Care Organization.
 

An insurance policy providing specified benefits in the event of a policyholder’s death. Such policies often provide the opportunity to convert to an individual life insurance policy, at an additional premium, at a time the covered person changes employers.

Employer-funded medical expense reimbursement plan which can be offered alone or with a high-deductible insurance plan. Unused amounts are carried over for use in the future. An HRA is a benefit plan with medical expenses reimbursed from an employer’s general assets or a bank account set up and owned by the employer.
 

An HSA works like an IRA, except that the money is used to pay health care costs. Participants enroll in a relatively inexpensive, high-deductible insurance plan. Then, a tax-deductible savings account may be opened to cover current and future medical expenses. The money deposited, as well as the earnings, is tax-deferred. The money can then be withdrawn to cover qualified medical expenses tax-free. Unused balances roll over from year to year.
 

An organization of medical care providers that provides a specified range of medical care within a defined network of providers. There is typically no coverage available outside the defined network area unless the service is considered an emergency or if the service is not available within the defined network.
 

A managed care organization may be a physician group, health plan, hospital or health system - i.e., any organization that is accountable for the health of an enrolled group of people. In contrast to organizations that provide services at a discount but do not attempt to coordinate care, managed care organizations actually have responsibility for the health of enrollees and, as a consequence, seek improvements in both the results and cost-effectiveness of the services provided. Most managed care organizations still care for those with traditional indemnity insurance in addition to patients insured under managed care health insurance products.
 

The amount of eligible health plan expenses (typically not including the deductible and copayments) an insured person must pay at a defined coinsurance rate before the plan will pay 100% of medical expenses during a calendar year.
 

A defined group of medical care providers contracted to provide health plan services at a specified contract rate. Network providers are also contractually prohibited from balance billing (attempting to collect more than the specified contract rate). Network providers may collect copays or estimated member costs share at time of service but are required to file their portion of the claim with the claim payor on behalf of the member.
 

  Open access plans allow members to go directly to network specialists without a referral from a primary care physician. They may encourage selection of a primary care physician, but they do not require it.
 

A third party administrator (TPA) and network provider that specializes in prescription drug retail and mail order benefits.
 

A plan that provides for in-network benefits similar to an HMO and also provides reduced benefits for out-of-network providers. POS networks typically have fewer providers to choose from than PPO networks.
 

A network of medical care providers organized by an employer, insurer or a separate entity to provide various medical services to covered employees for specified fees. The covered employees are required or encouraged to go to those preferred providers when they need medical care, on the assumption that the preferred providers will charge less than other providers.
 

A document providing an entity’s benefit specifications and terms which is distributed to appropriate insurers who, in turn, propose benefit plan(s) and their rates to satisfy the entity’s benefits needs.
 

An employer’s practice of paying benefits out of its own assets, but involving a commercial insurance company to share in part of the risk on a specific or aggregate stop-loss basis or both
 

An employer’s practice of paying benefits out of its own assets or funds without involvement of a commercial insurer to lessen the risk through reinsurance.
Stop-Loss Insurance Arrangement – A funding mechanism for self-funded plans under which an employer self-insures the plan benefits, but arranges to have an insurance company pay for claims above a specified level, such as 120 per cent of expected claims (aggregate) or above a specific defined amount per member (specific).
 

A contracted party who provides administrative services for an employer’s self-insured benefit plan. The TPA processes and pays claims, makes benefit determinations, prepares the summary plan description and employee booklets and accounts for the revenue and disbursement of the plan funds.
 

The purpose of these services is to assure health plan expenses incurred are medically necessary, appropriate and performed in the most cost-effective manner. These services typically include the following:

These services are performed by medically-qualified personnel and decisions are based on nationally established best practice patterns to achieve quality outcomes.