KIA Insurance Glossary of Terms

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A

Allowable Expense(s)
Any Medically Necessary health expense, part or all of which is covered under any of the plans covering the Member for whom claim is made. A health care service or expense including deductibles, coinsurance or Copayments that is covered in full or in part by any of the plans covering the Member. This means that an expense or service or a portion of an expense or service that is not covered by any of the plans is not an Allowable Expense. Plan documents will show examples of expenses or services that are or are not allowable.

B

Benefit
Payment received for covered services under the terms of the policy.

Benefit Period
The maximum length of time for which benefits will be paid.

Brand Name Drug
A prescription drug which is protected by trademark registration.

C

Claim
A request for payment of benefits for health care services provided to a member.

Co-Insurance
Co-Insurance is an insurance policy provision under which the Insurer (Insurance Company) and the Insured (Policy Holder or Member/Participant) share the costs that are incurred throughout the plan year. Typically, there is a deductible that is met by the insured, then any charges thereafter are split according to a specific formula or calculation. There are many variables, but for this illustration, lets create a simple and basic policy example: The policy has a $500 deductible and the Co-Insurance is 80/20- (Insurance Company pays 80% and the Insured pays 20%). You (the Insured) incur qualified eligible-medical expenses that equal $1500. First, you will pay (meet) your deductible, in this example it is the first $500. The remaining balance is $1000, which will fall under the co-insurance provision. In our example the Insurance Company will pay 80% of the balance and the Insured will pay the remaining 20%. It is important to make sure you are aware of the specific provisions and limitations. Some plans count your co-pays (for office visits, etc) toward deductibles and co-insurance and some exclude them. Once the deductible is met for the plan year, the co-insurance provision will apply for the remainder of the plan year, until you reach your Annual Out of Pocket Maximum. Once this is met, the Insurance Company will pay 100% until they reach the Policy’s Annual or Lifetime Maximums. Typically an Annual or Lifetime Maximum is a very large figure that most insured's never reach. It is important to check your policy so you know the exact amount of your policy’s maximum obligation. In the extreme case of severe illness or accidents, it is certainly possible for medical bills to reach this figure! The Insurance Company calculates and tracks all of this and reports it to the Insured on an Explanation of Benefits (E.O.B.) As soon as a claim is submitted to the Insurance Company and processed it will become part of the calculations and show up on the E. O. B. Additionally, you may contact your Insurance Carrier at any time to ask about your balances. The staff at KIA is always willing to review these issues with our clients. Please don’t hesitate to call us with questions no matter how specific or general they may be!

Copayment
The specified dollar amount or percentage required to be paid by or on behalf of a Member in connection with benefits.

Covered Benefits or Covered Services
Those medically necessary services and supplies which are covered in whole or in part under the plan, subject to all the terms and conditions of the group agreement or group insurance policy

Custodial Care
Any type of care where the primary purpose of the type of care provided is to attend to the Member's daily living activities which do not entail or require the continuing attention of trained medical or paramedical personnel. Examples of this include, but are not limited to, assistance in walking, getting in and out of bed, bathing, dressing, feeding, using the toilet, changes of dressings of non-infected, post-operative or chronic conditions, preparation of special diets, supervision of medication which can be self-administered by the Member, general maintenance care of colostomy or ileostomy.

H

Health Savings Account (HSA)
A HEALTH SAVINGS ACCOUNT, commonly referred to as an HSA is a BANK ACCOUNT in which you deposit funds for the purpose of paying for medical expenses. The medical expenses are defined in Section 213 (d) of the Internal Revenue Code. The IRS is the governing entity over the use of HSA’s. The account is set-up in CONJUNCTION with a QUALIFIED HIGH DEDUCTIBLE HEALTH INSURANCE PLAN or HDHP. According to the government, a high deductible health plan is a medical plan with a high minimum deductible and certain maximum out-of-pocket levels. Each year these calendar year deductibles and out-of pocket amounts are adjusted according to the Consumer Price Index (CPI). Medical plans can not offer first-dollar benefits (such as office visit co-pays) and only certain preventive-care benefits can be offered without satisfying the deductible. HSA’s provide a tax break and are not only deductible, but also enable consumers to carry forward unused balances from year to year. Additionally, HSA’s are portable, meaning employees can take the account with them when changing employers. Who is eligible for an HSA? Employees, Self-employed individuals and individuals and families who are not self-employed. Who is not eligible for a HSA? Individuals who are enrolled in Medicare, generally those who are age 65 and older. Individuals who may be claimed as a dependent on another person’s tax return. What are the advantages of an HDHP and an HSA? SAVINGS Advantages– Premiums for an HDHP are generally less than those for other plans. This savings difference can be used to help fund deposits to the HSA to pay for expenses not covered by your insurance. TAX Advantages– Contributions to an HSA are either made pre-tax or are tax deductible. An account holder may also qualify for a lower income tax liability at the end of the year. Interest on the money in the HSA grows tax deferred, and any balances in the account are not taxed when spent on qualified medical expenses. How to set up an HSA First, have a qualified High Deductible Health Plan in force. A health insurance representative can assist in determining which plan design and deductible best suit the employer’s and employee’s healthcare needs. Once the plan is in force, an enrolled member can apply for an HSA. There are very specific advantages and limitations to the High Deductible Health Plans and the Health Savings Accounts. It is important to make sure you understand them and that they will meet your needs. Seek advice from your professional health insurance agent and financial advisor when considering these plans.