Glossary of Insurance Terms

Navigating the insurance world can be confusing, so here are some definitions of terms and types of insurance products to help make sense of it all.

Allowable Charges: The maximum dollar amount a benefits plan will pay for a procedure.

Assignment of Benefits: An arrangement by which a patient requests that their health benefit payments be made directly to a designated person or facility, such as a physician or hospital.

Balance Billing: When subscribers are billed for the difference between what the insurer pays and the fee that the provider normally charges.

Calendar Year: The period beginning January 1 through December 31 of the same year.

Capitation: Fees paid to providers based on the number of patients they serve on behalf of a benefits plan.

Contract Provider: A provider who agrees to provide services under special terms, conditions and reimbursement arrangements.

Contract Fee Schedule Plan: A benefit plan in which participating providers agree to accept set fees for treatment.

Effective Date: The date on which benefits under a policy begin.

Eligibility Date: The date on which an individual member becomes eligible to apply for benefits under the benefit plan.

Eligibility Period:
A specified length of time, following the eligibility date during which an individual member will remain eligible to apply for benefits under a benefit plan without evidence of insurability.

Fee for Service: Traditional provider reimbursement in which the doctor is paid according to his or her fee for the service performed.

Fee Schedule: A list of the charges for specific services to which a provider agrees.

In-Network: Providers who have contracts with a benefit plan to provide services at a set rate.

Maximum Allowance: The maximum dollar amount a benefits program will pay toward the cost of a service as specified in the program’s contract provisions, (Usual, Customary, and Reasonable [UCR] Table of Allowances).

Maximum Benefit: The maximum dollar amount a benefit program will pay toward the cost of care for an individual or family in a specific period.

Maximum Fee Schedule: An arrangement in which a participating provider agrees to accept a set amount as the total fee for one or more covered services.

Non-duplication of Benefits:
A part of a contract that relieves a third-party payer of liability for cost of services, if the services are covered under another program. Non-duplication of Benefits is distinct from Coordination of Benefits because reimbursement is limited to the larger benefit allowed by the two plans, rather than a total of 100 percent of the charges. Also referred to as Benefit-Less-Benefit or Carve Out.

Participating Provider: Any provider who is a member of a benefit plan’s network.

Preferred Provider Organization (PPO): PPOs are managed care organizations that offer certain methods to deliver services, such as networks of providers. Under a PPO benefit plan, covered individuals retain the freedom to choose providers but are given financial incentives (e.g., lower out-of-pocket costs) to use the preferred provider network.

Protected Health Information (PHI): Protected Health Information is made up of two components: Health Information and Individually Identifiable Health Information. Health Information is information that relates to the past, present, or future health of the individual; the provision of health care to an individual; or the past, present or future payment for the provision of health care. Individually Identifiable Health Information is information that can be used to identify the individual, such as a name or Social Security number.

Usual, Customary and Reasonable (UCR):
The commonly charged fees for services within a geographic area.

Insurance Types

Business Overhead Expense (BOE): BOE insurance is designed to reimburse a business for overhead expenses in the event a business owner becomes disabled. This is not the same as personal disability insurance which usually pays benefits to age 65. A business overhead expense policy pays a shorter benefit of one to two years after a waiting (elimination) period.

Disability: This policy is designed to protect the income of dentists who can no longer work because of an accident or illness.

Employment Practices Liability: It provides protection for an employer against claims made by employees, former employees or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment and other employment-related allegations.

Flood: Property insurance does not include damage from flood waters, regardless of the source. The National Flood Insurance Program operated by the federal government provides most policies for damage from flooding.

Group and Individual Health: Health plans come in a variety of forms: indemnity, preferred provider (PPO), point of service (POS) and managed care (HMO). Dentists can choose from plans for individuals or include their staff.

Health Savings Accounts (HSAs): HSAs were created in 2003 so that individuals covered by high-deductible health plans could receive tax-preferred treatment of money saved for medical expenses.

Homeowners and Automobile Insurance: These policies provide personal homeowner and automobile insurance to protect your most valuable personal assets.

Life Insurance: This term-life policy offers competitive rates, portability, high maximum benefit amounts and the choice of locking in rates for up to 30 years.

Long-term Care: This policy provides funding for your care if you cannot care for yourself. Coverage helps pay for home-based care or a stay in a nursing home or assisted-living facility.

Office Package: This type of policy provides protection against personal injury or injury to others on the business premises. It also provides replacement-cost coverage on buildings and business personal property, including the property of employees and others under the insured dentists care, custody or control. It also can provide coverage for business interruption to pay ongoing expenses such as rent, utilities and some or all payroll expenses.

Pension/Retirement Plan:
Members and their employees can enroll in a qualified tax-deductible retirement program. The plan offers low expense charges and the flexibility of many investment options.

Professional Liability or Malpractice: A professional liability policy protects dentists against malpractice claims brought against their practices. The policy covers damages for a variety of dental incidents. A policy also can cover hygienists and assistants employed in your office.

Workers’ Compensation:
This policy covers job-related injuries or illness, including medical payments, disability payments and employers liability. Employers must have this coverage if they have one or more employees.