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Glossary of Insurance Terms & Abbreviations

Insurance Company Abbreviations

These are some insurance company name abbreviations used on this Web site:

CC - ConnectCare

Comm - Commercial

BCBS - Blue Cross/Blue Shield

PPO - Preferred Provider Organization

Insurance Terms

advanced beneficiary notice
A form that lets you know that Medicare may refuse to pay for a procedure or test -- even though your health care provider feels it is necessary in order to offer you the best care. The ABN helps you make an informed decision about whether to obtain the service and pay for it yourself or choose not to receive the service. For more information, see Advance Beneficiary Notice of Non-Coverage on Medicare.gov.

allowed amount
The portion of a fee that an insurance company agrees to pay for a particular service. Often this takes into account any non-covered services, the severity of your condition and medical necessity of the treatment, plus the reasonable and customary charge for that service in your area. This amount may also be a negotiated fee between the insurance company and the health care providers who have agreed to participate in its plans. If your insurance does not have a negotiated contract with the health care provider, you may be responsible for the difference between the charged amount and the allowed amount.

authorization (pre-certification)
An agreement from your insurance company in advance that they will cover certain services and at what level. Many insurance companies require you to get authorization before receiving services such as emergency room care, physical therapy, referrals to specialists, hospital admissions, urgent care, or medical equipment and supplies. In some cases, they will only authorize the service if you have a referral from your primary care provider.

coordination of benefits
Rules that determine the order in which covered charges are reimbursed when two or more plans are paying (for example, if you are covered under your own insurance and a spouse's plan; or your children are covered under both parents' plans; or you have Medicare and supplemental insurance). The plan that pays first according to the rules will pay as if there were no other plan involved. The secondary and subsequent plans may pay the balance due or a portion of the balance, depending on your coverage. 

copay (co-payment)
The portion of covered health care expenses that you are responsible for paying; it may be a percent of the bill, or a fixed dollar amount per visit. You may be asked to pay this amount at the time of service. 

deductible 
A deductible is the initial amount of covered health costs that you must pay before your insurance plan begins reimbursement. A deductible is usually a set dollar amount for the year. For example, on a $500 bill, your deductible might be $150, so you would have to pay the first $150. This leaves a balance of $350. Of that $350, your co-payment might be 20%, meaning you will have to pay an additional $70. Your insurance company will pay the remaining $280. 

explanation of benefits (EOB)
A statement from your insurance company explaining how much of your health expenses they covered, how much you may still owe and why. 

non-covered services or plan exclusions
Services or supplies for which your insurance company does not pay benefits, and which typically do not count toward any deductibles or out-of-pocket maximums. You should be able to obtain a list of these from your insurance company or employer. 

participating provider
A participating provider is a healthcare provider who has a contract with your insurance company and must accept the allowed amount as reimbursement in full. Deductibles, co-payments and fees for non-covered services may still be your responsibility. Typically, going to a participating provider will lower your out of pocket expenses for health care. 

policy holder
The person in whose name the policy is issued. This person and his or her eligible dependents are typically the ones covered under the plan. 

preventive care or services
Preventive care or services are those that help you maintain a healthy state or verify your present health condition, as opposed to direct treatment of a current illness or irregularity. Examples may include annual physical exams, well-child exams, sports physicals and preventive medical counseling. Some insurance companies limit coverage or do not cover preventive services, even though your doctor may consider them necessary in order to provide you with proper care. 

primary insurance
Primary insurance is the insurance company that pays first under coordination of benefits. 

reasonable and customary (or usual and reasonable)
A fee set by your insurance company that varies by geographic area. Insurance companies often use this information to determine their allowed amount, or the portion of a fee that they will cover. If your insurance does not have a negotiated contract with the health care provider, you may be responsible for the difference between the charged amount and the reasonable and customary or allowed amount. 

referral
A referral is a recommendation by a doctor or other health care provider for you to see a specialist or receive a particular health service or supply. Usually the referring physician will also give you specific names of recommended providers. Insurance companies may require a referral from your primary care physician in order to verify that the service is medically appropriate, before they will provide benefits. 

secondary insurance
An insurance company that may reimburse expenses not already covered by the primary insurance under coordination of benefits.

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