Page 146 - An Indispensible Resource for Being a Credible Activist

CHAPTER 10

CHECKLIST OF HEALTH INSURANCE TERMS

HR PROFESSIONALS NEED TO KNOW

The U.S. Federal Bureau of Labor Statistics (BLS) indicates that “in February 2002, the Federal
Government’s Interdepartmental Committee on Employment-based Health Insurance Surveys
approved the following set of definitions for use in Federal surveys collecting employer-based
health insurance data. The BLS National Compensation Survey currently uses these defini-
tions in its data collection procedures and publications. These definitions will be periodically
reviewed and updated by the Committee.” It is prudent for HR professionals to review these
periodically and also to be aware of changes to these and any other laws and guidelines
affecting employment whenever there is a new government administration seated. The fol-
lowing information is provided by the U.S. Federal Bureau of Labor Statistics: 1

ASO (Administrative Services Only)—An arrangement in which an employer hires a third
party to deliver administrative services to the employer such as claims processing and
billing; the employer bears the risk for claims. This is common in self-insured health
care plans.
Association Health Plans—This term is sometimes used loosely to refer to any health plan
sponsored by an association. It also has a precise definition under the Health Insurance
Portability and Accountability Act of 1996 that exempts from certain requirements
insurers that sell insurance to small employers only through association health plans
that meet the definition.
Coinsurance—A form of medical cost sharing in a health insurance plan that requires an
insured person to pay a stated percentage of medical expenses after the deductible
amount, if any, was paid. Once any deductible amount and coinsurance are paid, the
insurer is responsible for the rest of the reimbursement for covered benefits up to
allowed charges: the individual could also be responsible for any charges in excess of
what the insurer determines to be “usual, customary and reasonable.” Coinsurance
rates may differ if services are received from an approved provider (i.e., a provider with
whom the insurer has a contract or an agreement specifying payment levels and other
contract requirements) or if received by providers not on the approved list. In addition
to overall coinsurance rates, rates may also differ for different types of services.
Copayment—A form of medical cost sharing in a health insurance plan that requires an
insured person to pay a fixed dollar amount when a medical service is received. The
insurer is responsible for the rest of the reimbursement. There may be separate copay-
ments for different services. Some plans require that a deductible first be met for some
specific services before a copayment applies.

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