Health Benefits Glossary of Health Insurance Terms
The Health Benefits Glossary of Health Insurance Terms is designed to help workers and their families better understand employer and employee organization (such as a union) provided group health benefits and the laws that govern them, especially when they experience changes in their life and work situations–such as marriage, childbirth, job loss or retirement. The Health Benefits Glossary and Health Insurance Terms Glossary provides the specific definitions of commonly used terms.
To use the Health Benefits Glossary of Health Insurance Terms simply click the first letter of the word for which you would like to find information:
A child who is adopted or placed for adoption, as defined by the state in which the adoption takes place.
A period of time that must pass before health insurance coverage provided by an HMO (Health Maintenance Organization) becomes effective. If a group health plan provides coverage to you through an HMO with an affiliation period, the affiliation period cannot be longer than 2 months (3 months for a late enrollee) from your enrollment date, and the plan cannot impose a pre-existing condition exclusion. During the affiliation period, the plan cannot charge you premiums, and the HMO is not required to provide benefits. The affiliation period must run concurrently with any waiting period for coverage under the plan.
Annual Dollar Limit
With respect to benefits under a group health plan or health insurance coverage, a dollar limitation on the total amount of benefits that may be paid with respect to such benefits in a 12-month period under the plan or health insurance coverage with respect to an individual or other coverage unit.
An individual who is licensed under applicable State law to provide maternity or pediatric care and who is directly responsible for providing such care to a mother or newborn child. Therefore, a plan, hospital, managed care organization, or other issuer is not an attending provider. However, a nurse midwife or a physician assistant may be an attending provider if licensed in the State to provide maternity or pediatric care in connection with childbirth. Note: This definition only applies to the elaws section of the Newborns’ and Mothers’ Health Protection Act.
A person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit there under.
Certificate of Creditable Coverage
A written certificate issued by a group health plan or health insurance issuer (including an HMO) that shows your prior health coverage (creditable coverage). A certificate must be issued automatically and free of charge when you lose coverage under a plan, when you are entitled to elect COBRA continuation coverage or when you lose COBRA continuation coverage. A certificate must also be provided free of charge upon request while you have health coverage or within 24 months after your coverage ends. The Department has developed a model certificate that can be used by a group health plan or a health insurance issuer. Correct use of the model will generally assure compliance with the regulatory requirements.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
COBRA is a federal law that provides rights to temporary continuation of group health plan coverage for certain employees, retirees and family members at group rates when coverage is lost due to certain qualifying events.
COBRA Continuation Coverage
The temporary continuation of group health plan coverage available after a qualifying event to certain employees, retirees and family members who are qualified beneficiaries. Those who are eligible may be required to pay for COBRA continuation coverage and are generally entitled to coverage for a limited period of time (from 18 months to 36 months), depending on certain circumstances.
Constructive Dollar Limit
Health plans can generally set the terms and conditions (such as cost-sharing and limits on the number of visits or days of coverage) for the amount, duration, and scope of mental health benefits. However, a plan may not impose a constructive dollar limit on mental health benefits that is lower than that for medical/surgical benefits. A limit on the number of visits coupled with a maximum dollar amount payable per visit by the plan is a constructive dollar limit.
An individual who is (or was) provided coverage under a group health plan that is subject to COBRA because that individual was employed by one or more persons maintaining the group health plan.
Health coverage you have had in the past, such as coverage under a group health plan (including COBRA continuation coverage), an HMO, an individual health insurance policy, Medicare or Medicaid, and this prior coverage was not interrupted by a significant break in coverage. The time period of this prior coverage must be applied toward anypre-existing condition exclusion imposed by a new health plan. Proof of your creditable coverage may be shown by a certificate of creditable coverage or by other documents showing you had health coverage, such as a health insurance ID card.
A plan established or maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches which is exempted from tax under Section 501 of the Internal Revenue Code of 1954
A list of all the medicines that will be covered by your group health plan.
When referring to health coverage, this means to choose, generally in writing, to participate in a group health plan.
Written notification to each qualified beneficiary of the qualified beneficiary’s rights to COBRA continuation coverage. This notice must include, among many other things, information about the plan, qualifying events, length of COBRA continuation coverage, and how much a qualified beneficiary must pay for coverage and when and to whom the payments are due. This notice should explain how long the qualified beneficiary will have to decide whether or not to elect COBRA continuation coverage. The group health plan must allow at least 60 days from the date of the notice, or from the date coverage ended, whichever is later, for a qualified beneficiary to elect COBRA continuation coverage.
The Department of Labor has developed a model election notice that is intended to assist plan administrators of single-employer group health plans in satisfying the election notice requirement. Use of this model notice is not mandatory. However, in order to use it, a plan administrator must appropriately add relevant information where indicated in the model notice, select among alternative language, and supplement the model notice to reflect applicable plan provisions. Items of information that are not applicable to a particular plan may be deleted. Use of the model election notice appropriately modified and supplemented, will be considered by the Department to satisfy the election notice content requirements of COBRA for single-employer group health plans.
Any individual employed by an employer.
Any labor union or organization of any kind in which employees participate and which exists for the purpose of dealing with employers concerning an employee benefit plan (including group health plans) or other matters involving employment relationships. An employee organization can also be an employee beneficiary association.
ERISA (Employee Retirement Income Security Act of 1974)
ERISA is a federal law that regulates employee benefit plans, such as group health plans, that private sector employers, employee organizations (such as unions), or both, offer to employees and their families.
The first day of coverage or, if there is a waiting period, the first day of the waiting period. If you enroll when first eligible for coverage, your enrollment date is generally the first day of employment. If you enroll as a late enrollee, your enrollment date is the first day of coverage.
There are several types of excepted benefits.
- Certain benefits are always treated as excepted benefits because they are not considered health coverage, such as:
- Accident Only
- Disability Income Insurance
- Workers’ Compensation
- Other benefits are treated as excepted benefits if they are offered separately or are not an integral part of the plan, including:
- Limited-Scope Dental or Vision
- Long-Term Care Benefits
- Moreover, other benefits are treated as excepted benefits if they are offered separately and not coordinated with benefits under another group health plan, including:
- Coverage for a Specific Disease
- Hospital Indemnity or Other Fixed Indemnity
- Finally, other benefits are treated as excepted benefits if they are offered as a separate insurance policy and supplemental to Medicare, Armed Forces health care coverage, or (in very limited circumstances) group health plan coverage.
Exhausted COBRA Coverage
The end of your COBRA continuation coverage because the period of time that this coverage was available to you has lapsed, or for any reason other than your failure to pay premiums on time or for cause (such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with your plan). Additional reasons for exhaustion of COBRA coverage are possible besides the time being up. You have exhausted your COBRA continuation coverage if the coverage ends because your employer failed to pay the premiums on time or you no longer live or work in an HMO service area and there is no similar COBRA coverage available to you. You need not accept a conversion policy at the end of your COBRA coverage in order to exhaust your COBRA coverage.
A written notice describing COBRA rights, which must be provided by the plan administrator to each covered employees and covered spouse within 90 days of their beginning coverage under the plan, or within 90 days of the plan becoming subject to COBRA. However, if a qualifying events occurs and you would be required to provide an election notice before the date the general notice is due, the general notice must be provided at the same time as the election notice. Among other things, the general notice must include a description of the COBRA coverage provided under the plan, who may become qualified beneficiaries, and the types of qualifying events that may give rise to the right to COBRA coverage.
The Department of Labor has developed a model general notice that is intended to assist plan administrators of single-employer group health plans in satisfying the general notice requirement. Use of this model notice is not mandatory. However, in order to use it, a plan administrator must appropriately add relevant information where indicated in the model notice, select among alternative language, and supplement the model notice to reflect applicable plan provisions. Items of information that are not applicable to a particular plan may be deleted. Use of the model general notice appropriately modified and supplemented, will be considered by the Department to satisfy the general notice content requirements of COBRA for single-employer group health plans.
Information about genes, gene products, and inherited characteristics that may derive from the individual or family member. This includes information regarding carrier status and information derived from laboratory tests that identify mutations in specific genes or chromosomes, physical medical examinations, family histories, and direct analysis of genes or chromosomes.
A plan established or maintained for its employees by the Government of the United States, by the government of any state or political subdivision thereof, or by any agency or instrumentality of the foregoing. A governmental plan also includes any plan to which the Railroad Retirement Act of 1935 or 1937 applies, and which is financed by contributions required under that Act and any plan of an international organization which is exempted from taxation under the International Organizations Immunities Act.
The term “gross misconduct” is not specifically defined in COBRA or in regulations under COBRA. Therefore, whether a terminated employee has engaged in “gross misconduct” that will justify a plan in not offering COBRA to that former employee and his or her family members will depend on the specific facts and circumstances. Generally, it can be assumed that being fired for most ordinary reasons, such as excessive absences or generally poor performance, does not amount to “gross misconduct.”
Group Health Plan
An employee benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care to employees and their dependents directly or through insurance, reimbursement or otherwise.
HMO (Health Maintenance Organization)
Legal entity consisting of participating medical providers that provide or arrange for care to be furnished to a given population group for a fixed fee per person. HMOs are used as alternatives to traditional indemnity plans.
Health Insurance Coverage
Health insurance coverage means benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or HMO contract offered by a health insurance issuer. Health insurance coverage includes group health insurance coverage, individual health insurance coverage, and short-term, limited-duration insurance.
Health Insurance Issuer
An insurance company, insurance service, or insurance organization (including an HMO) that is required to be licensed to engage in the business of insurance in a State and that is subject to State law that regulates insurance.
Hidden Preexisting Condition Exclusion
A plan exclusion which is not designated as a preexisting condition exclusion, but nonetheless satisfies the definition of a preexisting condition exclusion. Examples include a provision that provides coverage for accidental injury only if the injury occurred while covered under the plan; a provision that counts benefits received under prior health coverage against a lifetime limit; and a provision that denies benefits for pregnancy until 12 months after an individual becomes eligible for benefits under the plan.
HIPAA (Health Insurance Portability and Accountability Act)
HIPAA is a federal law that limits pre-existing condition exclusions, permits special enrollment when certain life or work events occur, prohibits discrimination against employees and dependents based on their health status, and guarantees availability and renewability of health coverage to certain employees and individuals.
Benefits under a plan that are guaranteed under a contract or policy of insurance issued by a health insurance issuer. For information on whether your plan is insured, contact your plan administrator or consult your SPD. Plans that do nor meet this definition may be self-insured.
An individual who enrolls in a group health plan on a date other than either the earliest date on which coverage can begin under the plan terms or on a special enrollment date. Under HIPAA, a late enrollee may be subject to a maximum pre-existing condition exclusion of up to 18 months.
Lifetime Dollar Limit
With respect to benefits under a group health plan or health insurance coverage, a dollar limitation on the total amount that may be paid with respect to such benefits under the plan or health insurance coverage with respect to an individual or other coverage unit.
Benefits with respect to medical or surgical services, as defined under the terms of the plan or coverage (as the case may be), but does not include mental health benefits.
Mental Health Benefits
Benefits with respect to mental health services, as defined in the terms of the plan or coverage (as the case may be), but does not include benefits with respect to treatment of substance abuse or chemical dependency.
Mental Health Parity Act (MHPA)
MHPA is a federal law that requires annual or lifetime dollar limits on mental health benefits provided by a group health plan to be no lower than the annual or lifetime dollar limits for medical and surgical benefits offered by that plan. MHPA applies to employers with more than 50 employees.
A plan maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer, to which more than one employer is required to contribute.
Multiple Employer Welfare Arrangement (MEWA)
An employee welfare benefit plan, or any other arrangement (other than an employee welfare benefit plan), which is established or maintained for the purpose of offering or providing any welfare benefits, such as medical, surgical, or hospital care or benefits, to the employees of two or more employers (including one or more self-employed individuals), or to their beneficiaries, except that the term does not include any such plan or other arrangement that is established or maintained under or pursuant to one or more agreements that the Secretary of Labor finds to be collective bargaining agreements, by a rural electric cooperative, or by a rural telephone cooperative association. For more information see MEWA: A Guide to Federal and State Regulation and Filing The M-1 Form – Qs & As.
Newborns’ and Mothers’ Health Protection Act (Newborns’ Act)
The Newborns’ Act is a federal law that prohibits group health plans and insurance companies (including HMOs) that cover hospitalization in connection with childbirth from restricting a mother’s or newborn’s benefits for such hospital stays to less than 48 hours following a vaginal delivery or 96 hours following delivery by cesarean section, unless the attending doctor, nurse midwife or other licensed health care provider, in consultation with the mother, discharges earlier.
Any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.
The plan administrator is a person specifically designated by the terms of the plan. If the plan does not make such a designation, then the plan sponsor is generally the plan administrator. In the case of a plan for which an administrator is not designated and a plan sponsor cannot be identified, the administrator may be a person prescribed in regulations by the Secretary of Labor.
Generally, the employer, the employee organization (such as a union), or both, that establishes or maintains an employee benefit plan, including a group health plan.
An illness or condition that was present before an individual’s first day of coverage under a group health plan.
Pre-existing Condition Exclusion
A limitation or exclusion of benefits for a condition based on the fact that you had the condition before your enrollment date in the group health plan. A pre-existing condition exclusion may be applied to your condition only if the condition is one for which medical advice, diagnosis, care or treatment was recommended or received within the 6 months before your enrollment date in the plan. A pre-existing condition exclusion cannot be applied to pregnancy (regardless of whether the woman had previous coverage), or to genetic information in the absence of a diagnosis. A pre-existing condition exclusion also cannot be applied to a newborn or a child who is adopted or placed for adoption if the child has health coverage within 30 days of birth, adoption or placement for adoption and does not later have a significant break in coverage. If a plan provides coverage to you through an HMO that has an affiliation period, the plan cannot apply a pre-existing condition exclusion. A pre-existing condition exclusion can not be longer than 12 months from your enrollment date (18 months for a late enrollee). A pre-existing condition exclusion that is applied to you must be reduced by the prior creditable coverage you have that was not interrupted by a significant break in coverage. You may show creditable coverage through a certificate of creditable coverage given to you by your prior plan or insurer (including an HMO) or by other proof. The plan can apply a pre-existing condition exclusion to you only if it has first given you written notice. If your plan has both a waiting period and a pre-existing condition exclusion, the exclusion begins when the waiting period begins. In some states, if plan coverage is provided through an insurance policy or HMO, you may have more protections with respect to pre-existing condition exclusions. The Department has developed a model general notice of pre-existing condition exclusion and a model individual notice of pre-existing condition exclusion that can be used by a group health plan or a health insurance issuer. Correct use of the model notices will general assure compliance with regulatory requirements.
Pre-existing Condition Exclusion Period
The period of time that a group health plan can legally limit your access to the health benefits offered by that plan because of a pre-existing condition. Under HIPAA, the maximum pre-existing condition exclusion period that can be applied to an individual is 12 months (18 months for late enrollees).
Generally, qualified beneficiaries include covered employees, their spouses (or former spouses) and their dependent children who are covered under the group health plan on the day before the qualifying event. In certain cases, retired employees, their spouses and dependent children may be qualified beneficiaries. In addition, any child born to, or placed for adoption with, a covered employee during a period of COBRA continuation coverage is a qualified beneficiary. A qualified beneficiary who has elected COBRA coverage should be considered a participant under the plan for purpose of the disclosure requirements under Part I of ERISA (such as, provision of a summary plan description (SPD).
Certain events that would ordinarily cause an individual to lose health coverage. The type of qualifying event will determine who the qualified beneficiaries for the qualifying event are and the length of time COBRA continuation coverage is available.
Second Qualifying Event
Certain events may entitle a qualified beneficiary who is receiving an 18-month maximum period of COBRA coverage to an 18-month extension of COBRA coverage (for a total maximum period of 36 months of COBRA coverage). These events are: the death of the covered employee; the divorce or legal separation of the covered employee and spouse; the covered employee’s becoming entitled to Medicare (Medicare entitlement of a covered employee is not a second qualifying event for a qualified beneficiary unless the Medicare entitlement would have resulted in a loss of coverage under the plan for the qualified beneficiary.); or a loss of dependent child status under the plan. The second event can be a second qualifying event only if it would have caused the qualified beneficiary to lose coverage under the plan in the absence of the first qualifying event.
Significant Break in Coverage
Generally, a significant break in coverage is a period of 63 consecutive days during which you have no creditable coverage. In some states, the period is longer if your plan coverage is provided through an insurance policy or HMO. Days in a waiting period during which you had no other health coverage cannot be counted toward determining a significant break in coverage.
Similarly Situated Non-COBRA Beneficiaries
The group of covered employees, their spouses or dependent children who are covered under a group health plan maintained by the employer or employee organization. This group is receiving their benefits under the group plan and not through COBRA continuation coverage. They are most similarly situated to the circumstances of thequalified beneficiary immediately before the qualifying event.
SPD (Summary Plan Description)
An important document that the plan administrator must automatically provide to participants which explains what coverage the plan offers, how the plan operates and the rights and responsibilities of participants and beneficiaries. A SPD also must be given to participants and beneficiaries upon request. Each plan’s SPD is different. If you need a copy of the SPD, contact your plan administrator.
The opportunity to enroll in a group health plan when certain work or life events occur, regardless of the plan’s regular enrollment dates. Generally, if certain conditions are met, special enrollment is available when you, your spouse or your dependents lose other coverage (including exhaustion of COBRA continuation coverage), when you marry or when you have a new child by birth, adoption or placement for adoption. The plan must give you at least 30 days–from the loss of coverage or from the date of the marriage, birth, adoption or placement for adoption–to request special enrollment. The maximum pre-existing condition exclusion that may be applied to a person upon special enrollment is 12 months (reduced by the person’s prior creditable coverage). However, if enrolled within 30 days of birth, adoption or placement for adoption, children may be exempt from any pre-existing condition exclusion. A description of a plan’s special enrollment rules must be given to the employee on or before the time the employee is offered the opportunity to enroll in the plan. The Department has developed a model special enrollment notice that may be used by a group health plan or health insurance issuer. Correct use of the model will generally assure compliance with the regulatory requirements.
The period that must pass before an employee or dependent is eligible to enroll (becomes covered) under the terms of the group health plan. If the employee or dependent enrolls as a late enrollee or on a special enrollment date, any period before the late or special enrollment is not a waiting period. If a plan has a waiting period and a pre-existing condition exclusion, the pre-existing condition exclusion period begins when the waiting period begins. Days in a waiting period are not counted toward creditable coverage unless there is other creditable coverage during that time. You should try to maintain creditable coverage during a waiting period to reduce any pre-existing condition exclusion that may apply. Days in a waiting period are also not counted when determining a significant break in coverage.
Welfare Benefit Plan
Any plan, fund, or program established or maintained by an employer or employee organization, or by both, to provide participants and their beneficiaries, through the purchase of insurance or otherwise, with certain benefits, including medical, surgical, or hospital care or benefits.
Women’s Health and Cancer Rights Act
The Women’s Health and Cancer Rights Act is a federal law that provides important protections for individuals who have undergone a mastectomy.