California Health Insurance Basics

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California Health Insurance Basics
California Health Insurance Basics

What every California Health Insurance Shopper should know!
At Vitality Health Insurance we believe that an informed consumer is one who can participate actively and with confidence and peace of mind in the process of finding the health insurance, Medicare insurance supplemental, disability insurance, and/or long term care insurance that is the right fit for them on a medical needs and financial basis. Helping you make the decisions on these very important building blocks of your family and business financial foundation are what we’re all about and while we are standing by – ready, willing, and able – to personally help each of our clients every step of the way, we think a great first place to start the process is here online: Helping you understand the common terminology that you’ll encounter along the way in your California health insurance decision-making and shopping process be it with the California Blue Cross organization serving our state or another carrier.

While the list of definitions and descriptions you see here related to the subject of California medical insurance is detailed, it is by no means the complete and final word on the subject: We invite all our visitors here at VitalityHealthInsurance.com to reach out and contact us for more information and to ask for further assistance on any topic related to California health insurance, Medicare insurance supplemental, disability insurance, and/or long term care insurance as well California life insurance, California term life insurance or a California annuity: We are here to help and we look forward to meeting your acquaintance and helping you navigate the process of securing the California insurance coverage that’s right for you!

California Insurance Glossary
Annuitant – A person who is covered by an annuity and who will typically receive the proceeds from that annuity.

Annuity – A contract between an insurance company and an individual or couple wherein money is given to the company in either lump sum or installments. The money grows tax deferred and can then be paid back to the annuitant in a variety of ways per the annuitants choice.

ARRA – The Consolidated Omnibus Budget Reconciliation Act of 1985 known commonly as COBRA, is currently benefitting from the American Recovery and Reinvestment Act of 2009 (ARRA) which provides for premium reductions and additional election opportunities for health benefits. Where you once were responsible for up to 102% of the premium your former employer paid for your medical coverage should you elect to continue your coverage after separation from your previous place of employment, ARRA now reduces that cost burden to just 35% through the use of a reimbursed tax credit to your former employer. To qualify under ARRA, an individual must experience a COBRA qualifying event that is the involuntary termination of that covered employee’s employment. This involuntary termination must occur during the period beginning September 1, 2008 and ends on February 28, 2010. The premium reduction applies to periods of (COBRA) health coverage that began on or after February 17, 2009 and lasts for up to 15 months.

Beneficiary – A person or persons selected by the policyholder who will receive the benefits of an insurance policy.

Benefit(s) – In the case of health insurance, the specified health care services which your plan says you are eligible to receive under the terms of your plan. Benefits can also refer to your eligible payouts from California disability insurance, California long term care insurance and so forth.

Blue Plan – a generic term given to a California health plan the insured has purchased from either Blue Cross or Blue Shield. Consumers might also utilize the term California Blue Cross

Cash Surrender Value – The amount of cash that can be made available to the policyholder in the event that a life insurance policy is cancelled or terminated prior to the policy’s payment by virtue of death or maturity.

Certificate of Insurance – A certificate prepared by the insurance company that denotes information such as the insured’s name, the insurance coverage, and the term of that coverage.

Coinsurance – A basic insurance company method of cost sharing: Refers to the amount of money you the policyholder contributes towards medical care and is usually expressed as a percentage.

Also see: Co-payment. Co-payments are typically paid at the time of service/treatment and are usually a flat fee such as “X” number of dollars (i.e. – $15; $20; $25)

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Comprehensive Major Medical insurance – The type of health insurance plan that provides protection/benefits offered by both a basic and major medical health insurance policy. A plan such as this would typically be available from a carrier such as California Blue Cross.

COBRA – A health insurance vehicle that allows a person who leaves their employer to continue to be covered under that employer’s health plan if the employee pays the group health rate that the employer was paying for that employee plus a 2% admin fee. Can be expensive but does ensure continuing medical coverage for up to 18 months when private health insurance might not be an option.

Contingent Beneficiary – The person or persons who receive the benefits of an insurance policy should the primary beneficiary pass away prior to the payout of the benefits.

Cost Sharing – See coinsurance/co-payment. A method used by insurance companies to require the insured to share the cost of their medical services beyond the cost of the insurance premiums.

Covered Services – These are the services which you are eligible to receive and for which your insurance company will cover you for. Per the terms of your California health insurance policy.

Custodial Care – Typically services provided at home or in a nursing facility related to assisting the patient with activities of daily living: Eating, bathing, et al.

Deductible – A cost sharing feature in a California health insurance plan such as one from California Blue Cross that requires the insured to pay a specified dollar amount for covered services before the insurance company will begin making payments to service providers. Example: “I have a $2500 annual deductible which I must meet before the insurance company will begin covering medical expenses I incur….”

Disability Income Insurance – A type of California health insurance, California disability insurance is specifically designed to provide a portion (Typically upwards of 70%) of income the insured would lose due to injury or illness. Payments can be made weekly or monthly for a specified amount of time per the terms of the policy.

Drug Formulary (aka – Prescription Drug Formulary): This is a list of FDA-approved generic and/or name brand prescription drugs that accompany your California health insurance plan. Drugs comprising the drug formulary list are chosen for inclusion based on cost, safety, and efficacy as decided by a panel of doctors, pharmacists, or other medical professionals. Formulary lists can and do vary by plan so please review the formulary if you have a particular prescription that you are committed to and are unwilling or feel unable to accept a substitute.

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Exclusive Provider Organization (EPO) – A California health insurance plan that might come a carrier such as California Blue Cross that allows access to a specific – exclusive – network of health care service providers such as physicians, hospitals, labs without the need for a Primary Care Physician such as in an HMO, no specialist referrals are needed and there are no claim forms but does not provide any out-of-network coverage.

Flexible Spending Account (FSA) – A tax advantaged financial account set up through an employer’s health benefit plan selection. Allows an employee to set aside a portion of pre-tax earnings that can then be used to pay for various qualified medical expenses which might arise at some later point in time.

Gatekeeper Model – Term typically used in managed care system such as a CA health insurance HMO plan. The physician (Can also be a specialist.) who approves all referrals to a specialist in the treatment of illness/injury.

Group Insurance – California medical insurance that is issued to a group such as the employees of a company. Typically called California small group insurance for group of 2 – 50 employees.

Health Maintenance Organization (HMO) – A California health plan that combines the financing and delivery of health care to its members in a given geographical are in exchange for a prepaid fee. Key characteristics of a California HMO Plan is the use of primary care physicians (PCP) to act as gatekeepers, an emphasis of preventative health care practices, and the requirement to use a designated network of medical service providers.

Health Savings Account (HSA) – A tax advantaged savings plan that is linked to the use of a high deductible California health insurance plan to pay for covered medical services which might occur in the future. Balances can be carried over from one year to the next. A carrier such as the California Blue Cross company serving our state can provide an HSA plan to interested consumers.

Long Term Care (LTC) insurance – California long term care insurance which provides coverage for insureds who need care either in their home or an institution due to the effects of illness, injury, declining health due to age and the inability to handle activities of daily living.

Managed Care – Any system put in place by an insurance company to manage the delivery of health care services while controlling costs. Examples of managed care include PPOs, HMOs.

Maximum Out-of-Pocket Costs – This is the maximum amount of money your California health insurance provider will require that you spend on your health care costs during the course of a benefit year.

Medicare Benefits – A federal health care program that pays for covered medical services to those over 65 and to eligible citizens under that age.

Medicare Supplement Insurance – Also known as California Medigap insurance, these are a collection of 12 supplemental health care plans offered by California health insurance companies including the California Blue Cross company serving our state that aim to fill the “gaps” in the coverage eligible Medicare recipients receive.

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Non-Participating Provider/ Out of network – Refers to health service providers who are not participating in your managed care California health insurance plan. Using these providers will typically result in a higher cost burden to the insured.

Outpatient – Health services you receive which do not require an overnight stay in a health care facility such as a hospital.

Partial Disability – The insured becomes unable to perform some, but not all, of the responsibilities/functions of the position they held prior to injury/illness.

Participating Provider – A health services provider who has contracted with your California health insurance company to provide you with medical care at a contractual schedule of fees set up between the provider and the California health insurance company.

Permanent Total Disability (PTD) – A form of disability in which the insured will always be unable to perform the job function they had previous to injury/illness.

Permanent Life Insurance – A generic term given to California life insurance policies that do not expire after a given period of time and will cover the life of the insured to that person’s death or maturation of the policy (Typically to Age 100) at which time the face value of the policy is paid.

Portability – Specifically relates to the ability of an employee to transfer their health insurance from a group setting to an individually owned setting at the time of a change in employment status. Reference Health Insurance Portability and Accountability Act (HIPPA)

Point of Service Plan (POS) – The Point of Service plan or POS is a type of managed California health insurance plan. It likewise combines features of the HMO and PPO models in that you choose a primary care physician from within a given network. This PCP then becomes your “point of service” who then can make referrals to specialists or other health care providers either in or out of network (Out of network will results in lower compensation from your California health insurance company.). With a POS plan in network treatment paperwork is handled on your behalf. Out of network paperwork becomes the insured’s responsibility.

Preferred Provider Organization (PPO) – A California health insurance plan that provides a network of healthcare providers who will charge less for the services. If the patient stays within network they pay a lower portion for their healthcare. Go outside of network, they pay a higher portion of the cost. Typically doesn’t require referrals to specialists but check if pre-authorizations or pre-certifications are necessary.

Premium – In insurance, a specified amount of money a California insurance company charges in exchange for the coverage provided by a California health insurance policy; a California disability insurance policy; a California long term care insurance policy; a California life insurance policy, a California term life insurance policy, a California annuity, and so forth. Premiums might be payable monthly, quarterly, semi annually, annually, depending on the terms of your California insurance policy.Â

Pre-existing condition – For individual California health plans, this would typically be an illness or injury which occurs prior to the application for a California health insurance policy that has either been treated or untreated prior to the application. Might result in a decline of coverage, a sub-standard rating and higher premium, or coverage with temporary or permanent exclusion of that condition.

Prescription Drug Formulary – See Drug Formulary

Subscriber – The insurance policy holder.

Supplemental insurance – An insurance policy intended to pay for items or services not covered or included within the primary California medical insurance policies owned by the insured.

Term life insurance – A type of California life insurance policy that provides a death benefit only during the term of coverage. That term can vary depending on contract terms: 1 year, 5 years, 10 years, on up to 30 years. A the conclusion of the term, both parties walk away with no cash value having been accrued as with permanent or whole life California life insurance.

Total Disability – For the purpose of a California disability insurance policy this type of disability refers to the total inability of the insured to perform the responsibilities of that insured’s occupation but could also refer to the insured’s total inability to perform the responsibilities of any type of gainful employment. This is the type of definition that should be understood and is worthy of consultation with your California disability insurance professional at Vitality Health Insurance to avoid confusion or dissatisfaction with the terms of your California disability insurance policy.

Underwriting – The area of responsibility within an insurance company that assesses and classifies the risk exposure presented by applicants for various forms of California health insurance and California life insurance and decides on the viability of accepting those risks. All carriers including the state’s California Blue Cross entry feature an underwriting department.

Workers’ Compensation – United States government mandated insurance that provides a range of benefits to employees who suffer job related injuries, disease, or death.