Frequently Asked Questions

Affordable Care Act – The Patient Protection and Affordable Care Act (PPACA) the landmark health reform legislation signed into law by President Barack Obama in March 2010. The legislation includes multiple health-related provisions that would take effect over a matter of years. The key provisions are intended to extend coverage to millions of uninsured Americans, to implement measures that will lower health care costs and improve system efficiency, and to eliminate industry practices that include rescission and denial of coverage due to pre-existing conditions.

Allowed Amount – The most that your insurance will pay for a service. If your provider charges more than the allowed amount, you may have to pay the difference.

Broker – A person licensed by the State to sell insurance coverage with multiple health plans or insurers. The broker represents you and not the insurance companies. The broker helps you shop for the best policy.

Cal-COBRA – Cal-COBRA is a California-specific program that does two things: (1) It extends the federal COBRA coverage to employees of California employers not covered by COBRA (employers with 2-19 employees); (2) It extends COBRA coverage for an additional 18 months (to a total of 36 months) for employees of companies that are covered by federal COBRA (employers with 20 or more employees).

Certificate of Creditable Coverage – A written statement from your last health plan that states when you were covered.

Claim – A request to your insurance company to pay for a health care service you received.

COBRA (Consolidated Omnibus Budget Reconciliation Act) – COBRA allows former employees, retirees, and their dependents to temporarily keep their existing health coverage at group rates. COBRA participants pay the entire premium themselves. You can collect COBRA benefits for up to 18 months which may be extended to 36 months under certain circumstances.

Co-Insurance – Once you have met your deductible, you pay co-insurance for additional medical care. This is your share of cost for a health care service. It is a percentage of the allowed amount for the service. For example, if the charge for an office visit is $150 and your co-insurance is 20%, you pay $30 and your insurer pays $120. It is similar to a co-pay, but it is a percentage instead of a set dollar amount.

Continuation Coverage – Coverage options that allow someone who recently left employment to continue their existing insurance policy as long as they pay the full monthly premiums. See also COBRA, Cal-COBRA.

Co-Pay – A fixed amount (such as $40) that you pay for a service. You usually pay the co-pay when you get the service.

Coverage – The scope of protection provided by an insurance contract which includes any of the listed benefits in an insurance policy.

Covered California – California’s marketplace for purchasing individual/family and small group health coverage. In California, you can only receive a premium subsidy if you purchase individual health coverage through Covered California.

Deductible – The amount you pay before your insurance company covers any costs. For example, if your deductible is $1,000, your plan will not pay anything (except services that are exempt from the deductible such as preventive care) until you have met your $1,000 deductible. You may choose a higher deductible to lower your premium.

Denial – An insurance company’s decision to withhold a claim payment or preauthorization. A denial may be made because the medical service is not covered, not medically necessary, or experimental or investigational.

Discount Health Plans – Discount health plans are not insurance. They are simply organizations that arrange discounts for medical services, often issuing a card to you for that purpose. Note that providers are *not* obligated to accept the discount plan, so not all providers participate. Be very careful when deciding to purchase a discount health plan. Discount health plans do not qualify as minimum essential coverage for purposes of carrying health insurance and the Affordable Care Act.

Drug Formulary – A list of drugs that an insurer will pay for. Drugs that are not on the formulary (“off-formulary”) are sometimes covered but are more expensive. To you, the cheapest drugs are generic drugs that are on the formulary, and the most expensive drugs are name-brand drugs that are off-formulary.

ERISA (Employee Retirement Income Security Act) – The Employee Retirement Income Security Act is a Federal law that sets minimum standards for pension plans and self-insured health plans in private industry.

Essential Health Benefits – These are benefits defined by the State of California that most policies must cover.

Evidence-Based Medicine – In evidence-based medicine, treatment success is measured by a careful study of the outcome, using both the clinical expertise of the provider, as well as the most up-to-date research available. EBM encourages the use of consistent, efficient, scientific guidelines for medical treatment decisions. EBM is used when making determinations of medical necessity for insurance coverage and when filing for an Independent Medical Review (IMR).

Evidence of Coverage – Your policy’s Evidence of Coverage (EOC) can be found in the materials sent to you by your insurer or from your HR department (if you get your coverage through work). The EOC is your guide to what is covered and what is excluded, how much you will pay depending on the circumstances, what your cost sharing will be, and other information about using your coverage. Keep this document handy for when you have questions about your policy.

Exclusions, Excluded Services – Services that your insurer does not pay for. These are spelled out in the Evidence of Coverage that you receive when you purchase your policy.

Exclusive Provider Organization (EPO) – An EPO is a managed care plan where services are covered only if you go to doctors, specialists, or hospitals who are part of the EPO’s network (except in an emergency). In other words, you cannot go “outside” the network for medical care.

Explanation of Benefits – Each time your insurer pays for a service you use, they send you an Explanation of Benefits (EOB). The EOB is your insurance company’s written explanation for that claim, showing the name of the provider that covered the service and date(s) of service. The insurer is also required to send you a clear explanation of how they computed your benefits. This may include the amount billed, the allowed amount, what the insurer paid, and/or your share of the cost (if any). If any claims are denied or denied in part, you will receive a written explanation of the reason(s) for the denial.

FMLA (Family Medical Leave Act) – If your employer has 50 or more employees, you may be eligible for FMLA. The FMLA guarantees employees up to 12 work weeks of unpaid leave during any 12 month period for reasons like the birth of a child (“maternity leave”), taking care of sick immediate family members, or for your own serious health condition. In order to obtain FMLA leave, you must notify your employer 30 days in advance of taking the leave. If it is an emergency, you must notify your employer as soon as possible. You must also be an employee of your current employer for at least 12 months before taking FMLA leave.

While taking FMLA leave, your employer must continue the same group health insurance coverage for you as for similar other employees. If you already pay a premium, you must continue to pay it. Your employer can help you to make arrangements to do so.

Generic Drug – A drug that is similar to a name brand drug but not covered by original patents and therefore cheaper. For example, the generic for the name brand “Vicodin” is “hydrocodone.” If you buy a generic drug, you usually pay less co-pay.

Grandfathered Plans – Grandfathered plans are health plans that were in place before March 23, 2010, when the Affordable Care Act was signed into law. These plans are allowed to offer the coverage they did before the Affordable Care Act. Plans or policies may lose their “grandfathered” status if they make certain significant changes that reduce benefits or increase costs to consumers.

Group Health Coverage – When small and large employers, unions, and retirees cover their employees and members under one insurance contract. These contracts are sold in two categories: Small group policies for small employers with less than 100 employees and large group policies for employers with 100 or more employees.

Health Insurance Portability and Accountability Act (HIPAA) – HIPAA is a Federal law that does three things:

1. It makes it easier to take your health information with you when you change employers,
2. It sets very strict rules about the privacy of your medical records, and
3. It gives you the right to purchase individual health insurance after you’ve used up your COBRA benefits (see “COBRA”).

Health Maintenance Organization (HMO) – An HMO is a collection of hospitals, doctors, and other health services all organized under one network. By managing care and contracting with the providers, HMOs keep costs down while providing a full range of health services. You usually pay only small co-pays when using services, no matter how many or what kind of services you use. In return, you must usually use the hospital(s), doctors, and other health providers in the HMO’s network. In an HMO, you select a primary care physician. If you need a specialist, the primary care physician must first refer you to that specialist before you can see them.

Individual/Family Health Coverage – A form of health insurance designed to cover one person or immediate family members, as opposed to someone covered by a group plan.

Insurance Company – An insurance company must be licensed by the Department of Insurance to sell health insurance. The insurer issues policies which outline coverage. An insurance policy is a contract between the insured and the insurance company. You pay premiums to an insurance company. They then pay some or all of your medical provider’s bills when you need treatment.

Managed Care Plan – A managed care plan is also known as a Health Maintenance Organization (HMO). In order to contain costs, HMO plans required you to get your health care services from their network of providers (doctors, medical groups, hospitals, and labs). It is most often required that you choose a “primary care physician” from within the HMO’s network who manages your care. If you need to see a specialist, get a test, or be hospitalized, your primary care doctor and the medical group must approve the service.

Medi-Cal – Called Medicaid in other states. Medi-Cal is California’s version of the federal Medicaid program. This program generally covers lower-income families and single adults. Medi-Cal is mostly provided by Managed Care Organizations and covers an array of medical procedures, office visits, and other health-related expenses. You do not pay for Medi-Cal. Instead, you receive it as a benefit if you qualify for it.

Medicare – A Federal program that mainly insures the elderly and disabled. There are four parts to Medicare. Part “A” and “B” comprise the original fee-for-service Medicare plan. Part “A” covers hospitalization. Part “B” covers doctors and other outpatient services. Part “C” also known as Medicare Advantage, is Medicare offered through a network of providers such as HMO (Health Maintenance Organization) or PPO (Preferred Provider Organization). Part “D” covers prescription drugs. You can also pay for private supplemental programs to give you more coverage than Medicare offers (see “Medi-gap insurance”). Medi-gap policies exist for many health care services, but not prescription drugs. Visit the Federal government’s Medicare web site for more information.

Medicare Supplemental Insurance – Sometimes called “Medi-gap”, these are insurance policies that you can purchase to pay for things that Medicare does not cover. The insurance supplements (closes the gap) between what Medicare pays for and what it does not.

Name Brand Drug – A drug sold under a name-brand, and covered by original patents (for example, the name brand for hydrocodone is “Vicodin”). Name-brand drugs are more expensive than generic drugs, and you usually have a higher co-pay for them than generics

Network – The facilities, providers, labs, hospitals, and pharmacies that your health plan has contracts with to provide health care. Going to in-network providers and facilities will save you money on your medical expenses.

Open Enrollment – The annual time period when you can change health plans. This applies to individual/family and group health plans.

Out-of-Pocket Limit – The most you pay during a calendar year before your health insurance company begins to pay 100% of the allowed amount. This limit does not include your premium, balance-billed charges, or the costs for health care your plan does not cover.

Policy – The written contract between an individual or group policyholder and an insurance company. The policy outlines the duties, obligations, and responsibilities of the policyholder and the insurance company. A policy may include an application, endorsement, certificate, or any other document that describes, limits, or excludes coverage benefits under the policy.

Pre-Authorization, Pre-Approval, or Prior Approval – This is a process where your health plan must approve coverage for the service that your doctor or you requests. Your health insurer can require pre-approval for certain services before you receive them, except in an emergency.

Premium – The fee you pay to have insurance. Also called ‘rate’ or ‘premium rate.’ If you get health insurance through your employer, they may pay all or part of your premium. If you buy insurance on the individual market, you may also pay part or all of your premium (if you qualify for a premium subsidy under the Affordable Care Act). The premium is usually paid monthly.

Premium Subsidy – As part of the Affordable Care Act, the Federal government pays for part of your health insurance premium if you qualify financially. The subsidy is paid directly to your insurance company to offset the cost of your premium. In California, you can only receive a premium subsidy if you purchase individual health coverage through Covered California.

Preferred Provider Organization (PPO) – In a PPO, insurance companies contract with doctors, hospitals, and other providers to form a “network.” Depending upon your plan, you can sometimes get health care services outside the network but you will have to pay more. You can usually see a specialist without first being referred by your primary care physician, and you have much more freedom in choosing a doctor or hospital.

Primary Care Physician – Your Primary Care Physician (“PCP”) is the doctor you choose to provide basic health care. In an HMO, your PCP must refer you to a specialist if you need to see one.

Provider – A health professional or organization that provides health care services, such as a doctor, physical therapist, hospital, lab, or clinic. A preferred provider is a provider in your plan’s network.

Rating Factor – Health insurance premiums are calculated using rating factors. In California, the only rating factors allowed are :

• Age: The older you are, the more you might pay.
• Family size: How many people are covered?
• Geographic region: California has 19 regions that companies use when rating. The region you live in can affect your premium.

Self-Insured – A self-insured employer has a large pool of money and uses it to pay for the health care of its employees. The employer most often contracts with insurance companies to manage the health benefits.

Tiered Network – A kind of network with several cost levels. You pay the different amounts to see providers in different tiers.

UCR (Usual, Customary, and Reasonable) – The amount that providers in an area usually charge for the same or similar Service. The allowed amount may be based on the UCR amount.

Utilization Review – Insurance companies and hospitals watch their costs and quality by having medical personnel review selected medical cases. They look at the types and frequency of medical services and the charges associated with them.