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Glossary

A-E Glossary

Glossary on everything health insurance and rate review related.

  • Actuarial

    Relating to the mathematics of insurance, including probabilities. Actuarial work involves analyzing data to predict with a reasonable degree of accuracy the amount of claims that will be paid. This work ensures that the risks are carefully evaluated and that the premiums charged are reasonable in relation to the benefits provided.

  • Actuarial Memorandum

    A document prepared as a formal means of conveying the appointed actuary’s professional conclusions and recommendations of an insurance filing. It records and communicates the methods and procedures, it assures that the parties addressed are aware of the appointed actuary’s opinion or findings, and it documents the analysis of the opinion.

  • Actuarial Value

    Actuarial value represents the share of health care expenses the plan covers for a typical group of enrollees. The Patient Protection and Affordable Care Act (ACA) establishes various tiers of health insurance coverage. These tiers are used for three primary purposes: 1) To set the minimum amount of coverage many people must have to satisfy the requirement that they be insured or pay a federal tax penalty beginning in 2014. 2) To establish standardized levels of insurance individuals and small businesses can buy in health insurance purchasing Exchanges or in the outside market. 3) And, as benchmarks for premium and cost-sharing subsidies provided to lower and middle income people buying their own insurance in Exchanges.

    Source: Henry J Kaiser Family Foundation

  • Actuary

    A person who computes premium rates, dividends, risks, etc., according to probabilities based on statistical records. 

    Source: Actuary.org

  • Administrative Expenses

    Administrative expenses include expenses associated with the general administration of the business. Examples include the salaries and fringe benefits of the company president, human resource personnel, accounting, information technology, the depreciation expense for equipment and space used in administration, as well as supplies, utilities, etc.

  • Affordable Care Act (ACA)

    The federal health care reform law enacted in March 2010. The law was passed in two parts: The Patient Protection and Affordable Care Act was signed into law on March 23, 2010 and was amended by the Health Care and Education Reconciliation Act on March 30, 2010. The name “Affordable Care Act" is used to refer to the final, amended version of the law.

  • Age Band

    Range of ages that determine premium amounts for a health plan.

  • Allowed Amount

    Maximum amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance" or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference. 

    Source: MNsure

  • Annual Limit

    A dollar limit placed on the claims that the health plan will pay over the course of a year.

  • Commercial Insurance

    Commercial health insurance is defined as insurance that may be employer-sponsored or privately purchased. Commercial health insurance may be provided on a fee-for-service basis or through a managed care plan.

  • Claim

    A request that you or your health care provider makes to the health plan to pay for a health care service provided to you. Most health plans require claims to be in writing. Health plans require claims to be on a specific standard form. 

  • Community Rating

    Based on the combined medical costs of everyone in that company’s market for a particular age, tobacco use, and geographic area.

  • COBRA

    Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. COBRA provides certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. The law generally covers health plans maintained by private-sector employers with 20 or more employees, employee organizations, or state or local governments. Many states, including Minnesota, have "mini-COBRA" laws that apply to the employees of employers with less than 20 employees.

  • Deductible

    A dollar amount that you must pay for health care services each year under a policy before the insurer will begin paying your claims. Not all plans have deductibles.

  • Effective Date

    The date on which the insurance policy takes effect. Health care you receive before the policy takes effect is not covered.

  • External Review

    The review of a health plan's decision not to cover a service by a person or entity with no affiliation or connection to the health plan. The Affordable Care Act requires all health plans to provide an external review process that meets minimum standards.

F-M Glossary

  • Federal Health Reform

    This term is used to refer to the Affordable Care Act as well as all the associated regulations, rules and other guidance issued by federal agencies in order to implement that Affordable Care Act.

  • Grandfathered Insurance Plan

    A health plan that an individual was enrolled in prior to March 23, 2010. Grandfathered plans are exempted from many of the changes required under health reform. New employees may be added to group plans that are grandfathered, and new family members may be added to all grandfathered plans.

  • Group Plan

    A health plan purchased by an employer or an association, rather than an individual.

  • Health Exchange

    A marketplace that allows individuals and small businesses to compare options for health insurance side-by-side and make an informed purchase.

  • Health Maintenance Organization (HMO)

    A type of managed care organization (health plan) that provides health care coverage through a network of hospitals, doctors and other health care providers. Minn. Statutes, Chapter 62D govern HMOs and are under the jurisdiction of the Minnesota Department of Health.

  • Health Reform

    This is a comprehensive term referring to all the legislation and all the activities by both state and federal agencies to improve the health care system. It includes:

     

    •  changes in federal law such as the Affordable Care Act,

     

    •  changes in Minnesota statutes such as the comprehensive package of reforms passed in 2008, also called “Minnesota’s Vision for a Better State of Health”

     

    •  all regulations, rules and guidance issued by both state and federal agencies to implement the various health reform laws.

  • High Risk Pools

    A health plan that provides coverage for individuals who have been denied coverage in the private market, usually due to a pre-existing health condition. Minnesota's high risk pool is the Minnesota Comprehensive Health Association (MCHA). The Affordable Care Act prevents companies from denying coverage for a pre-existing health condition after January 1, 2014.

  • Individual Plan

    A health insurance plan purchased by an individual. This is different than a group plan, which is purchased by an employer or association.

  • Insurance Carrier/ Insurance Company

    A company that has a license issued by one or more states to sell insurance in those states.

  • Managed Care

    A type of health insurance that is involved in the choice of medical care providers and the choice of medical treatments.  This includes HMO coverage and PPO coverage.

  • Medicaid

    A health care program for people who meet certain income and other guidelines. Medicaid is paid for by federal and state dollars. In Minnesota this program is called Medical Assistance.

  • Medical Loss Ratio

    The federal Affordable Care Act requires that at least 80 percent of the premiums that small groups and individuals pay be used to pay for medical care, rather than  administrative cost, surplus, or profit. This relationship between what an insurer pays for medical care and the total premium paid is called the medical loss ratio.

  • Medicare

    A federal government program that provides health care coverage for all eligible individuals age 65 or older or under age 65 with a disability, regardless of income or assets. Eligible individuals can receive coverage for hospital services (Medicare Part A), medical services (Medicare Part B), and prescription drugs (Medicare Part D). Together, Medicare Part A and B are known as Original Medicare. Benefits can also be provided through a Medicare Advantage plan (Medicare Part C). These plans are regulated by the Center for Medicare and Medicaid Services (CMS).

  • MNsure

    Minnesota's health insurance marketplace.

N-P Glossary

  • Network

    A group of health care providers with an HMO or insurer. Your health plan may have a different network depending on the company that provides your coverage and the specific plan you choose.

  • Non-Grandfathered Plan

    If your plan was effective after the Affordable Care Act (ACA) was signed on March 23, 2010, or your plan existed before the ACA, but lost its grandfathered status at renewal, it is a non-grandfathered or “other” plan.

    Source: Washington State Office of the Insurance Commissioner

  • Non-Preferred Provider/Non-Network Provider

    A medical provider that is not in the contracted network. Often, you must pay a higher portion of your health care bill if you use a non-preferred (or non-network) provider.

  • Open Enrollment Period

    A specific period when you may enroll in a health insurance plan each year. Sometimes you may be allowed to enroll in a plan outside of the open enrollment period, such as if you have a baby, or if you get married or divorced. Not all plans have an open enrollment period.

  • Policyholder

    The person who has purchased an insurance policy. For an employer group, this is the employer.  For an individual policy, this is  the member of the covered family that purchased the policy.

  • PPACA (Patient Protection Affordable Care Act)

    Legislation (Public Law 111-148) signed by President Obama on March 23, 2010. One of two laws that make up the Affordable Care Act which are commonly referred to as the federal health reform law.

  • Pre-Existing Condition

    A health condition that has been diagnosed and/or treated before you apply for health insurance.

  • Preferred Provider

    A provider who has a contract with your health insurer or plan to provide services to their insureds.  Usually you pay a lower portion of the bill.

  • Preferred Provider Organization (PPO)

    A type of managed care organization (health plan) that provides health care coverage through a network of providers. Typically the PPO requires the policyholder to pay higher costs when they seek care from an out-of-network provider. 

  • Premium

    The amount that you and/or your employer pay for health insurance.

  • Preventive Care

    Health care that focuses on healthy behavior and providing services that help prevent health problems. This includes health education, immunizations, early disease detection, health evaluations and follow-up care.

  • Private Insurance

    Private insurance plans include all forms of health insurance that are not funded by the government.

  • Provider

    A doctor (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine), other health care professional, or health care facility licensed, certified or accredited as required by state law.

    Source: MNsure

R-Z Glossary

  • Rate

    A rate is the average an insurance company charges for a defined package of health insurance plans.

  • Rate Review

    Review by insurance regulators of proposed premiums and premium increases. During the rate review process, regulators will examine proposed premiums to ensure that they are sufficient to pay all claims, that they are not unreasonably high in relation to the benefits being provided, and that they are not unfairly discriminatory to any individual or group of individuals.

  • Risk Adjustment

    A process through which insurance plans that enroll a disproportionate number of sick individuals are reimbursed for that risk by other plans that enroll a disproportionate number of healthy individuals. The Affordable Care Act requires states to conduct risk adjustment for some non-grandfathered health insurance plans.

  • SBCs

    Summary of Benefits & Coverage

  • SERFF

    System for Electronic Rate and Form Filing

  • Small Group

    An employer that has a group of 2-50 individuals.

  • State Regulator

    State regulators are required to protect consumers by ensuring that insurance companies comply with state law.

  • Usual, Customary, Reasonable (UCR)

    The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount. 

  • Waiting Period

    A period of time that an you must wait either after becoming employed or after applying for a health insurance plan before your plan becomes effective and claims may be paid.

    Source: MNsure