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Allowed Amount – The portion of a medical bill under the plan which is eligible for benefits.
Billed Amount – The amount the provider has charged for services rendered.
Certificate of Creditable Coverage (COCC) – A document which verifies your participation in a health plan. A COCC is needed when you enroll in a new health plan. The COCC tells your new plan if you have had continuous coverage.
Claim – An itemized bill which includes procedure codes, diagnosis codes, charges, number of units, patient name and address as well as provider billing information.
Co-Insurance – A percentage of the allowed charges which the subscriber is responsible for paying. This is usually in addition to the deductible.
Co-Payment – A set amount which a subscriber must pay for certain services. This is usually separate from the deductible and co-insurance.
Deductible – An amount the subscriber is responsible for before the benefit plan benefits apply. Example: The allowed amount is $1,000, the subscriber’s deductible is $500 and the plan calls for a $25.00 payment. The subscriber would pay $525 (co-payment + deductible) and the plan would pay $475.
Exclusion – Services or charges that are not eligible for coverage under the health plan.
Explanation of Payment (EOP) – A statement sent to the provider showing benefit determination.
Flexible Spending Account (FSA/FLEX) – An FSA is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer. An FSA allows an employee to set aside a portion of his or her earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses but often for dependent care or other expenses. Money deducted from an employee’s pay into an FSA is not subject to payroll taxes, resulting in a substantial payroll tax savings.
The most common FSA, the medical expense FSA (also medical FSA or health FSA), is similar to a health savings account (HSA) or a health reimbursement account (HRA). However, while HSAs and HRAs are almost exclusively used as components of a consumer driven health care plan, medical FSAs are commonly offered with more traditional health plans as well. An FSA may be utilized by paper claims or an FSA debit card also known as a Flexcard/Benny card.
Health Reimbursement Account (HRA) – HRAs are Internal Revenue Service (IRS)-sanctioned programs that allow an employer to reimburse medical expenses paid by participating employees, thus yielding “tax advantages to offset health care costs”.
Health Savings Account (HSA) – An HSA is a tax-advantaged medical savings account available for people enrolled in a High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), funds roll over and accumulate year over year if not spent. HSAs are owned by the individual, which differentiates them from the company-owned Health Reimbursement Arrangement (HRA) that is an alternate tax-deductible source of funds paired with HDHPs. Funds may be used to pay for qualified medical expenses at any time without federal tax liability.
Out-of-Pocket – The maximum amount of eligible charges a subscriber is responsible for paying in a plan year. This is usually the deductible and coinsurance combined. Example: The plan deductible is $500 and the maximum out-of- pocket is $1,000. Once the member’s deductible and the amounts paid in coinsurance reach a total of $1,000, the plan would then pay 100% of the allowed charges for the remainder of the plan year.
Preferred Provider Organization (PPO) – An organization that contracts with providers for a discounted rate on claims. A PPO allows a person to see any physician they choose, however, claims are paid at a lower benefit level if the subscriber uses a provider outside the PPO network.
Pre-Certification – Some services may require prior approval. This is referred to as pre-certification or pre-authorization. When a plan requires prior approval, failure to obtain approval may result in a reduction in benefits.
Provider – Doctor, clinic, nurse, pharmacy, hospital or medical equipment supplier.
Third Party Administrator (TPA) – An organization that takes on the administration of health care benefits for a plan, primarily processing claims in accordance with the benefit plan the employer has designed.