Talk the Talk: A Glossary of Key Benefit Plan Terms
Knowing how insurance and MSU’s medical plans work is a critical step in taking action to manage costs. Understanding these benefit terms can help you to compare the plans and coverage available to you and to use your benefits wisely.
Brand-Name Drug
A prescription drug marketed under a specific brand name by the company that manufactures it, that meets FDA standards for safety, purity, strength, and efficacy.
Case Management
A process for identifying plan participants with special health care needs, under which a patient’s health care providers, the patient, and insurance company develop a plan of care for coordinating and monitoring the patient’s care. The goal under case management is to achieve the best possible health outcomes in an efficient and cost-effective manner.
Claim
A request by a plan provider or plan participant made to the participant’s insurance company or employer to pay for health care services rendered.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
The law that requires employers to offer extended benefit plan coverage under certain circumstances when coverage otherwise would end (such as at termination of employment or when a dependent child is no longer eligible). More information about
COBRA.
Coinsurance (Fixed Percent Copays)
The plan participant’s share of the cost of an eligible expense after the deductible (if any) is satisfied. Coinsurance is often specified by a percentage. For example, the employer pays 80% of covered charges and the plan participant pays 20%, plus any portion of uncovered expense (if any, e.g., for out-of-network provider services).
Contributions
The plan participant’s share of the premiums for medical plan coverage, typically taken as a deduction from his/her paycheck.
Copayment/Copay (Fixed Dollar Copays)
The flat-dollar amount paid by the plan participant when receiving certain health care services. Copayments are typically due at the time of service.
Deductible
The amount a plan participant must pay out of his/her own pocket each year before plan benefits become payable.
Disease Management
A program for coordinating preventive, diagnostic, and therapeutic measures for plan participants who are at risk for or have specific chronic illnesses or medical conditions (e.g., diabetes, asthma, etc.).
Emergency
In general, a life-threatening situation that if left untreated could result in significant impairment or death.
Electronic Medical Record (EMR)
A collection of a patient’s medical information in a digital (electronic) form that can be viewed on a computer and easily shared by people taking care of the patient.
Episode-of-Care
A term used to describe and measure the various health care services and encounters rendered in connection with an identified injury or period of illness.
Evidence-Based Medicine (EBM)
Evidence-based medicine is the conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients. The practice of evidence-based medicine integrates individual clinical expertise with the best available external clinical evidence from systematic research.
Explanation of Benefits
The plan administrator’s written explanation to a claim, showing the cost of the service, what the employer paid and what the plan participant must pay.
Fully-Insured Plan
A health plan under which an insurer bears the financial responsibility for claim payments and paying for all incurred covered benefits and administration costs.
Generic Drug
A generic prescription drug is produced by one or more manufacturers once the brand name company's patent has run out. A generic equivalent may be produced when, as approved by the FDA, the drug has met the same safety, purity strength and efficacy standards as its brand-name counterpart. Generics have the same active ingredients as brand-name drugs yet may offer significant cost savings for plan participants.
Health Information Technology (HIT)
Health information technology (HIT) refers to an interoperable infrastructure intended to improve the efficiency, cost-effectiveness, quality, and safety of health care as well as provide consumers with the ability to manage their care and safety (e.g., computerized physician order entry).
Health Maintenance Organization (HMO)
An HMO generally pays benefits only if a plan participant’s care is coordinated by a primary care physician (PCP) and/or the participant uses HMO-contracted providers exclusively. Except in emergencies, there is typically no coverage for expenses incurred from non-HMO-contracted providers.
In-Network Care
Care that is provided by a network provider. Benefits for in-network care are usually provided at higher levels than for out-of-network care, resulting in lower costs for plan participants and the employer.
Indemnity Plan
An indemnity plan pays the same level of benefits for most eligible expenses regardless of the provider used. The plan reimburses most eligible expenses at a pre-determined fixed percentage of the reasonable and customary charge. The plan participant pays the balance. The plan participant’s share of the cost is known as coinsurance or the “fixed copayment percentage.” Indemnity plans usually require the plan participant to satisfy an annual deductible.
IPA (Independent Practice Association)
A medical partnership of physicians who practice in private offices.
Lifetime Maximum Benefit
The maximum amount a medical plan will pay in benefits to a plan participant during his/her lifetime.
Network
A group of doctors, hospitals and other health care providers contracted with a medical insurance plan to provide services to plan participants at pre-negotiated (and usually discounted) fees.
Network Provider
A health care provider who has contracted to furnish services or supplies at pre-negotiated (and usually discounted) fees. A network provider is sometimes referred to as a “preferred provider.”
Out-of-Network Care
Care that is not provided by a network provider. Benefits for out-of-network care are usually provided at lower levels than for in-network care, resulting in higher costs for the plan participant. In addition, the benefits paid by the plan are typically based on the “reasonable and customary” charges allowed by the plan. These charges may be substantially higher than the fees negotiated with and charged by in-network providers.
Out-of-Pocket Maximum
The maximum dollar amount you are required to pay in coinsurance toward covered health care expenses during the plan year. Once you meet this maximum, the plan pays 100% of covered expenses.
Outpatient
Specific health care services that do not require an overnight stay in a hospital or inpatient facility. Many medical insurance plans require that certain tests and procedures be performed on an outpatient basis.
Plan Year
The dates during which your plan benefits are in effect. MSU’s medical plans are administered on a “plan year” basis from July 1 through June 30 each year.
Preferred Provider Organization (PPO)
A PPO medical plan gives plan participants direct access to a network of doctors and facilities that charge pre-negotiated (and typically discounted) fees for the services they provide to plan participants. Plan participants may self-refer to any physician/specialist in the network; they are not required to designate a primary care physician (PCP). The benefit level covered through the plan typically depends on whether the participant visits an in-network or out-of-network provider when seeking care.
Primary Care Physician (PCP)
The network physician who is responsible for providing or coordinating all of your care. HMO plans generally require the plan participant to designate a PCP.
Reasonable and Customary
The maximum amount a plan administrator will consider in determining benefits, usually based on the most common charge for a given service in a given geographic area. Reasonable and customary guidelines typically apply only to out-of-network expenses.
Self-Insured Plan
A health plan under which an employer or other group sponsor, rather than an insurance company, is financially responsible for paying the plan’s expenses, including claims and plan administration costs.
