Common Insurance Questions
What are Formulary Drugs?
A formulary drug is one that has been thoroughly reviewed by a team
of expert pharmacists and physicians. These drugs have been identified
as safe and beneficial to patients for treating medical conditions.
Drugs listed on a carrier's formulary will generally have a lower
What is HIPAA?
HIPAA is the Health Insurance Portability and Accountability Act
of 1996. Under this federal law (known as HIPAA), group health plans
cannot deny coverage based solely on an individual's health status.
This law also gives employees who change or lose their jobs better
access to health coverage, guarantees renewability and availability
to certain employees and limits exclusions for pre-existing conditions.
For example, under this law, group health plans must credit any employee
the amount of time that they spent on any health plan prior to the
new plan, which is known as "prior credible coverage." A
pre-existing condition will be covered without a waiting period when
an employee joins a new group plan if the employee has been insured
for the previous 12 months with credible health insurance, with no
lapse in coverage of 63 days or more. This means that if an employee
has been insured for 12 months or more, the employee will be able
to go from one job to another and his or her pre-existing coverage
will remain intact -- without additional waiting periods. However,
if an employee has a pre-existing condition and was not covered previously
for 12 months before joining a new plan, the longest the employee
will have to wait for their pre-existing coverage to be covered is
What is an HMO (Health Maintenance Organization)?
An HMO is a health care financing and delivery system that provides
comprehensive health care for subscribing members in a particular
geographic area using managed care techniques. Most HMOs require
that you only utilize physicians within their network, often going
so far as to require you to choose a primary care physician who directs
most courses of your treatment.
What is an MSA (Medical Savings Account)?
A Medical Savings Account is a method of health insurance for self-employed
individuals. An MSA will allow you to build up a tax-free savings
account to pay for routine medical expenses. You build the account
with tax-free dollars, and they remain tax-free while your MSA is
active. An MSA is used in conjunction with a high-deductible health
insurance policy. Using the high-deductible insurance plan, the cost
of an MSA can be kept competitively low.
What is a POS (Point of Service) Plan?
A Point of Service is an HMO plan that also incorporates an indemnity
plan option allowing members to obtain medical care from providers
outside of the HMO network at a reduced benefit and at greater out-of-pocket
What is a pre-existing conditions provision?
A pre-existing conditions provision is a health insurance policy
provision that states that benefits will not be paid for any illness
and/or condition that existed prior to one becoming and insured under
the particular health plan in question, until the insured has been
covered under the policy for a specified period.
What is a PPO (Preferred Provider Organization)?
A PPO is an organization where providers are under contract to an
insurance company or health plan to provide care at a discounted
or negotiated rate. Typically, you can see any doctor in the PPO
network without requiring special approval, and you usually do not
need to choose a primary care physician. Most PPOs will also allow
you to seek care outside of the PPO network; however, the benefits
are usually reduced and the insured has a greater out-of-pocket expense.
What is a Routine Annual Exam?
A routine annual exam is a yearly medical "checkup," during
which your doctor will perform simple medical care such as checking
your height, weight, vision and blood pressure, as well as screening
for problems like colon cancer, cervical cancer, prostate cancer
and high cholesterol.
What is meant by Usual and Customary Fees?
Usual and Customary fees refer to the maximum dollar amount of a
covered expense that is considered eligible for reimbursement under
a major medical policy.
These questions are general in nature and should be used as a guideline
only. Please refer to carrier-specific materials for exact definitions
as described by the carrier.