Assignment of Benefits: The transfer of the right payment of insurance benefits to be paid directly to the health care provider of service.
Birthday Rule (COB): Used to determine primary and secondary coverage for children. The word “birthday” refers only to the month and day in a calendar year, not the year in which the parent was born.
- If the parents are not separated/divorced, the insurance of the parent whose Birthday occurs first in a calendar year is considered the primary insurance while the other parent’s benefits are considered the secondary coverage.
- If the parents have the same birthday, the insurance plan that has been in effect for the longest time is considered the primary insurance.
- If the parents are separated/divorced and there is more than one insurance plan covering the child, the primary insurance is determined in the following order:
- The insurance plan of the parent with legal custody of the child
- The plan of the spouse of the parent with legal custody of the child
- The plan of the parent who does not have legal custody of the child
There can be some exceptions depending on a court decree. If there is no specific terms in the court decree (stating only that the parents share join custody), the benefit determination would be the same as if the parents are not separated or divorced, the insurance of the parent whose birthday occurs first in a calendar year is considered the primary insurance while the other parent’s benefits are considered the secondary coverage.
Co-insurance: The percent of your medical bill benefits you are expected to pay as determined by your health insurance carrier.
Contractual adjustment: The difference between the insurance company’s contracted rate of payment with the provider and the amount of the charge.
Coordination of Benefits (COB): A group policy provision which helps determine the primary carrier in instances where the patient is covered by more than one insurance policy.
Co-payment: The amount you are expected to pay (such as amount for each physician visit or prescriptions) as determined by your health insurance policy.
Deductible (DED): The amount the insurance company assigns as patient liability prior to their calculation of the insurance payment amount.
Explanation of Benefits (EOB): An explanation of insurance payment, adjustments and any residual balance of claim processing sent to the insured and provider of service by the insurance company.
Guarantor: The person financially responsible for paying out the patient’s medical bills.
Health Maintenance Organization (HMO): Health care plans where the member is assigned or chooses a PCP who manages their health care. The PCP must provide the care or authorize any specialty services in order for the services to be paid. Under these plans, the patient is typically responsible for only their co-pays as long as the services are PCP approved.
Managed Care: Insurance managed medical delivery system that manages the quality and cost of medical services.
Medicare: A federal insurance program for individuals age 65 and older, as well as younger disabled or dialysis patients. Medicare Part A covers in-patient hospital services, nursing home, home health and hospice care. Part B covers out patient hospital services, physicians’ services, medical equipment and supplies and other health services and supplies.
Medicare Supplement: A private insurance policy to help pay the balance of covered charges after the Medicare benefits payment.
Non-covered services: Charges/services that the insurance company determines is a cost that they do consider for payment. These charges/services are normally the responsibility of the patient/guarantor to pay.
Out-of-Network (OON): Most managed care insurance plans are contracted with a specific group of health care providers of service. If a patient requests health care outside this specific provider group with a provider not contracted to provide care, the patient/guarantor may be financially responsible for some or all of the cost of the care received, depending on the determination made by the insurance carrier. Normally, exception is made to this rule for emergency medical care.
Preferred Provider Organization (PPO): Health care plans that allow the patient to direct his/her own healthcare. The patient can self-refer within the network of contracted providers. He will be responsible for deductible and normally a percentage of the allowable benefit amount. The patient may choose to go outside the PPO network to receive care and be responsible for higher deductibles and out-of-pocket amounts. The patient is also responsible for obtaining authorizations for some types of services.
Primary Care Physician (PCP): Many insurance plans require members to choose or be assigned to a PCP, who is responsible for providing or authorizing all medical care for the patient.
Prior Authorization/Pre-certification: Advance formal approval required by the insurance company prior to medical services being rendered. The insurance company approves services based on their determination of medical necessity, appropriateness, and other pertinent factors. Emergency services are not prior authorized, but in most cases must be reported to the insurance company within twenty-four (24) hours.
Referral: A physician’s medical order for consultations/services for the patient with a specialist.
Self-Pay (Private Pay): Patients who do not have insurance or those who are not approved to seek services at a particular health care provider are considered a self-pay patient who is expected to pay for the medical services they receive.
Subscribe/Insured: The person who is enrolled for benefits with the insurance company, either under group plans, private or governmental agencies.
UB04 and 1500 Claim Forms: Federally mandated insurance claim forms used to bill medical bills to insurance payer. The UB04 form is used for hospital/clinic technical charge billing. The 1500 claim form is used for physician professional charge billing.
Labor and Industries: Insurance coverage provided by an employer to pay for health care services resulting from work-related injuries and illnesses.