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 copay.

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 12 months.

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 expense.

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.