Common Healthcare Terms
Search our glossary of common healthcare terms below to learn more about the insurance, health, and benefits industry. You can either search a term using the dynamic search bar below or click through the alphabetic tabs below to browse the glossary.
A-E
- ACA – Affordable Care Act: A healthcare reform law aimed to expand access to affordable health insurance coverage for millions of Americans through mandates, subsidies, insurance exchanges, and an expansion of Medicaid.
- ACO – Accountable Care Organization: A group of doctors, hospitals, and other health care providers voluntarily come together to provide coordinated, high-quality care to a defined population of patients, to reduce costs while improving health outcomes.
- AD&D – Accidental Death and Dismemberment : A type of insurance provides a lump sum payment or a percentage of the coverage to beneficiaries if the policyholder has an accidental death, loss of limbs, sight, hearing or speech.
- ADA – Americans with Disabilities Act : A comprehensive civil rights law that prohibits discrimination against individuals with disabilities in all areas of public life, including employment, state and local government services, public accommodations, transportation, and telecommunications.
- ADB – Accidental Death Benefit : A provision in some life insurance policies that provides an additional lump sum payment to beneficiaries if the insured’s death is caused by an accident.
- ADEA – Age Discrimination in Employment Act : Prohibits employment discrimination, making it unlawful for employers to make decisions regarding hiring, firing, promotions, compensation, or other terms and conditions of employment based on age.
- ADL – Activities of Daily Living : The basic self-care tasks that are fundamental for independent living, such as bathing, dressing, eating, toileting, and transferring or mobility.
- ADR – Alternative Dispute Resolution : The methods of resolving disputes outside of traditional court litigation, such as mediation, arbitration, and evaluation.
- Aggregate Deductible : The total amount of claims that an employer must pay during a policy period before the stop-loss insurance coverage begins for all employees.
- Aggregate Stop Loss : Protects self-insured employers against total healthcare claims that exceed a predetermined aggregate attachment point or threshold for the entire group during a period.
- Any Occupation : A stricter definition of disability where benefits are paid only if the insured cannot perform the duties of any occupation for which they are suited by education, training, or experience.
- APS – Attending Physician’s Statement : A document completed by the patient’s treating physician providing details about their medical condition and treatment.
- ASO – Administrative Services Only : An arrangement where an employer hires a third-party administrator to process claims and provide other administrative services related to the employer’s self-funded health plan.
- Attachment Point: The dollar amount beyond which the stop-loss insurer will begin to reimburse the employer for claims.
- AWP– Average Wholesale Price : A pricing benchmark that has been widely used in the healthcare industry, particularly for prescription drugs.
- Beneficiary : A person or entity designated to receive the death benefit from a life insurance policy when the insured person dies.
- Benefit Period : The maximum length of time that disability benefits will be paid to an insured person.
- BUCA: Referring to the consolidated Health Insurance carrier network marketplace: BUCA stands for Blues, United, Cigna and Aetna.
- Capitation : A payment arrangement for health care service providers such as physicians, physician assistants, or nurse practitioners. It pays a set amount for each enrolled person assigned to them, per period, whether that person seeks care.
- Cash Value : A feature of permanent life insurance policies is that they provide a savings element that accumulates on a tax-deferred basis over the policy’s life.
- CDHP – Consumer Driven Health Plan : Health insurance plans that combine high-deductible health plans with tax-advantaged personal health accounts like HSAs, FSAs, and HRAs.
- CFR – Code of Federal Regulations : Rules and regulations published by the executive departments and agencies of the federal government.
- CHIP – Children’s Health Insurance Program : A plan that offers low-cost health coverage to children in families that earn too much for Medicaid but cannot afford private insurance.
- Claim: A request for payment that you or your health care provider submits to your health insurer when you get items or services you think are covered.
- Claims Runoff : The period after a stop-loss insurance policy ends during which claims incurred during the policy period can still be submitted for reimbursement.
- CLU – Chartered Life Underwriter : Professional designation for insurance agents who complete extensive training in life insurance and estate planning
- CMS – Centers for Medicare & Medicaid Services (formerly HCFA) : Federal agency that administers the Medicare program and partners with state governments to administer Medicaid
- CMS-1500 – Claim form used by medical professionals : Claim form used by non-institutional healthcare providers and suppliers to bill Medicare carriers and Medicaid agencies when permitted to submit claims on paper instead of electronically.
- Co-insurance : The percentage of costs of a covered healthcare service that the insured person pays after they have paid their deductible.
- Co-pay : A fixed amount paid by a beneficiary for covered services, typically when the service is received.
- COB – Coordination of Benefits : The process by which insurance companies determine the payment responsibility of an individual when there is more than one health insurance plan, ensuring the individual does not pay more than the total cost.
- COBRA – Consolidated Omnibus Budget Reconciliation Act : A federal law that allows qualified employees and their dependents to temporarily extend their employer-sponsored group health coverage after a qualifying event like death, termination, or divorce. While continuing to pay the full premium plus an administrative fee.
- COC – Certificate of Coverage : A document provided by a health insurance plan that verifies an individual’s past coverage dates, deductibles met, and other details needed when transitioning to a new plan.
- COLA – Cost-of-living Adjustments : Annual increases in benefits such as social security or pensions to counteract the effects of inflation and maintain the purchasing power of those benefits over time.
- CPT – Current Procedural Terminology : A code set maintained by the American Medical Association that assigns 5-digit numeric codes to describe medical services and procedures performed by healthcare providers. Used to standardize the billing processes of claims.
- DB – Defined Benefits : Provides a guaranteed benefit plain such as retirement, funded entirely by employer. (i.e. Pensions)
- DC – Defined Contributions : A financial benefit based on employee contributions, where employers will sometimes match contributions. (i.e. 401k)
- DCFSA – Dependent Care FSA : Allows employees to pay for qualified dependent care expenses with pre-tax dollars.
- DCTC – Dependent Care Tax Credit : Tax credit for a percentage of dependent care expenses, such as childcare for eligible taxpayers.
- Deductible : The amount an insured person must pay out-of-pocket for covered healthcare services before the insurance plan starts to pay.
- DFVC Program – Delinquent Filer Voluntary Compliance Program : An IRS program that allows employers to pay reduced penalties for failing to file certain employee benefit plan returns.
- DME – Durable Medical Equipment : Long-lasting medical devices and equipment prescribed by healthcare professionals for home use by patients.
- DOB – Date of Birth : Date patient was born.
- DOL –Department of Labor : Department responsible for enforcing labor laws, promoting job opportunity, workplace standards, and tracking labor market data.
- DOS – Date of Service : Date patient received service.
- DRGs – Diagnostic Related Groups : A patient classification system that groups hospital inpatient stays into categories such as diagnosis, procedures, age, gender, complications, or other factors.
- DX – Diagnosis Code : A standardized way to classify diseases, injuries, symptoms, findings, and external causes of injury or disease.
- EAP – Employee Assistance Program : A program through employers that aids in counseling, referrals, and other services to employees experiencing problems that are impacting their performance.
- EBSA – Employee Benefits Security Administration : A division of the department of labor that oversees ERISA.
- EDI – Electronic Data Interchange : The electronic transfer of structured data between organizations by agreed message standards.
- EEO – Equal Employment Opportunity : Laws that ensure fair treatment in employment practices.
- EEOC – Equal Employment Opportunity Commission: A federal agency responsible for enforcing laws that prohibit employment discrimination
- EFAST – ERISA Filing Acceptance System : An electronic system for receiving annual report filled under ERISA
- EFT – Electronic Funds Transfer : Digitial transfer of funds from one account to another.
- EGWP – Employer Group Waiver Plan : A type of Medicare Advantage plan offered by employers or unions to provide health coverage.
- EIC – Earned Income Tax Credit : A refundable tax credit for low-income working individuals and families.
- Elimination Period : The waiting period between the onset of a disability and when benefits are paid.
- EOB – Explanation of Benefits : A statement sent to health insurers explaining services were covered for medical services.
- EOI – Evidence of Insurability : Patients need to provide proof of good health for certain coverage amounts from insurers.
- EOMB – Explanation of Medical Benefits : A statement provided by health insurers detailing the services covered for a specific medical claim.
- EPO – Exclusive Provider Organization : A type of managed care health plan where services are covered only if received from providers within the plan’s network, except in emergencies.
- ERISA – Employee Retirement Income Security Act : A federal law sets minimum standards for voluntarily established retirement and health in private industry to protect individuals in these plans.
- ESRD – End Stage Renal Disease plans : A medical condition in which a person’s kidneys cease functioning on a permanent basis leading to the need for a regular course of long-term dialysis or a kidney transplant to maintain life.
F-J
- FEHBP – Federal Employees Health Benefits Program : Provides comprehensive health insurance coverage for federal employees, retirees, and their eligible family members.
- FICA – Federal Insurance Contributions Act : The law requires employers and employees to pay Social Security and Medicare taxes on wages to fund these programs.
- FLSA – Fair Labor Standards Act : Law establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private and public sector.
- FMLA – Family Medical Leave Act : Entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons.
- Formulary : A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits.
- FSA – Flexible Spending Arrangement (or Account) : Allows employees to set aside pre-tax money for eligible health care and dependent care expenses. This account is only for the specific employer you are with, but it can be used with any type of plan.
- FUTA – Federal Unemployment Tax Act : A payroll tax paid by employers on wages to fund unemployment compensation program benefits for workers who lose their jobs.
- GINA – Genetic Information Nondiscrimination Act : Prohibits discrimination in health coverage and employment based on genetic information.
- Group Life Insurance : Life insurance offered by an employer or another large-scale entity to its workers or members.
- GTL – Group-term Life Insurance: Life insurance coverage offered through an employer for a defined period.
- HCE – Highly Compensated Employee : An employee whose compensation exceeds a certain threshold set by the IRS, which affects certain benefits.
- HCR – Health Care Reform : Commonly refers to the Patient Protection and Affordable Care Act (ACA) of 2010, which aimed to increase access to affordable health insurance coverage.
- HCTC – Health Coverage Tax Credit : A federal tax credit to help pay for qualified health insurance premiums for certain workers who lost their jobs due to foreign trade impacts.
- HDHC – High Deductible Health Coverage : Health plan uses tax-savings accounts like HSA and FSA to cover expenses due to the high deductibles.
- HDHP – High Deductible Health Plan : A health insurance plan with higher annual deductibles than traditional plans, but with lower premiums. Therefore, the plans have less fixed costs and more variable costs.
- HHS – Department of Health and Human Services : The federal agency responsible for protecting the health of Americans and providing essential human services.
- HIAA – Health Insurance Association of America : The federal agency responsible for protecting the health of Americans and providing essential human services.
- HIPAA – Health Insurance Portability and Accountability Act : Federal law that sets national standards to protect individuals’ medical records.
- HMO – Health Maintenance Organization : A type of health insurance plan that provides comprehensive health services for a prepaid amount and usually requires members to receive care from providers within the plan’s network, except in emergencies.
- HRA – Health Reimbursement Arrangement (or Account) : An employer-funded account that reimburses employees for qualified medical expenses.
- HSA – Health Savings Account : A tax-advantaged account that allows individuals with high-deductible health plans, with the flexibility of carrying it over to another employer.
- ICD-10 – International Classification of Diseases (10th edition) : A medical coding system used for classifying diseases and health problems.
- IDEA – Individuals with Disabilities Education Act of 1997 : A federal law ensures that students with disabilities can access free appropriate public education.
- IME – Independent Medical Exam : An evaluation performed by a doctor to assess a person’s medical condition.
- IRA – Individual Retirement Account : A tax advantaged account that allows people to save for retirement with tax-deferred growth.
- IRC – Internal Revenue Code : Domestic part of federal tax law covering income, estate, gift, excise, and employment tax.
- IRO – Independent Review Organization : A third-party entity that provides objective and impartial medical review service to support decision-making in healthcare.
- IRS – Internal Revenue Service : Federal agency for enforcing tax laws in the US.
- JCAHO – Joint Commission on Accreditation of Healthcare Organizations : An organization that established standards for accrediting healthcare organizations in the United States.
K-O
- Laser: A stop-loss insurance practice where a higher deductible is set for specific individuals who are high claimants, this practice offsets the risk from the carrier.
- LCSW – Licensed Clinical Social Worker : A professional credential for social workers who have education and experience requirements to provide clinical social work services.
- LHSO – Limited Health Service Organization : A type of managed care plan that offers a wide range of healthcare services.
- LTC – Long-term Care : Services designed to meet a person’s health needs over an extended period.
- LTD Plan – Long-term Disability Plan : Provides partial income replacement for employees who become disabled and are unable to work for an extended period due to injury or illness.
- Mail Order Pharmacy : A service that delivers prescription medications directly to patients’ homes, often offering a cost-saving option for maintenance medications.
- MCO – Managed Care Organization : A healthcare provider or insurance company that provides managed care health plans, integrating the delivery and financing of healthcare services.
- Med Supp – Medicare Supplemental Insurance : Plans that help cover some of the gaps in Original Medicare coverage.
- Medical Loss Ratio (MLR): A Medical Loss Ratio (MLR) measures the percentage of premium dollars a health insurer spends on medical claims and quality improvement activities. For example, an 80% MLR means 80% of premiums go to healthcare costs, while 20% covers overhead expenses.
- Medigap – Medicare Supplemental Insurance : Private health insurance policies sold to cover some of the out-of-pocket costs not paid by Original Medicare Parts A and B, such as deductibles, coinsurances, and copayments.
- MERP – Medical Expense Reimbursement Plan: MERP – Medical Expense Reimbursement Plan this includes deductibles, copayments, and other eligible healthcare costs. MERPs are designed to help reduce employees\' overall healthcare expenses, providing tax-free reimbursements within the limits set by the employer.
- MET – Multiple Employer Trust : A set of large-scale surveys of families and individuals, their medical providers, and employers across the United States conducted by the Agency for Healthcare Research and Quality.
- MEWA – Multiple Employer Welfare Arrangement : An employee benefit plan that provides benefits to the employees of two or more employers.
- MHPA – Mental Health Parity Act: A federal law that required large group health plans to provide parity in annual and lifetime dollar limits for mental health benefits compared to medical/surgical benefits.
- MIB – Medical Information Bureau : A non-profit organization that detects and prevents insurance fraud by collecting and sharing coded medical data from insurance companies.
- MSN – Medicare Summary Notice : Quarterly statement sent to Medicare beneficiaries detailing the services received and the amounts paid by Medicare.
- MSP – Medicare Second Payer : When Medicare does not have to pay first for covered services because the other insurance is primary.
- NADAC – National Average Drug Acquisition Cost : A pricing benchmark used by state Medicaid programs to reimburse pharmacies for outpatient drugs dispensed to Medicaid beneficiaries.
- NAIC – National Association of Insurance Commissioners : The U.S. regulatory support organization governed by the chief insurance regulators from the 50 states, District of Columbia, and the five U.S. territories.
- NAMCR – National Association of Managed Care Regulators : An organization focused on promoting consumer protection and state regulation of managed care plans.
- NDC – National Drug Code : A unique 10-digit, 3-segment number that identifies prescription drugs and some over-the-counter products in the United States.
- Network: A group of doctors, hospitals, and other healthcare providers that have agreed to provide medical services to a health insurance plan’s member at negotiated rates.
- NHCE (or Non-HCE) – Non-highly Compensated Employee : Employees whose compensation falls below a certain threshold set by the IRS for certain employee benefit plan rules.
- NICB – National Insurance Crime Bureau : A not-for-profit organization that partners with insurers and law enforcement agencies to detect and prevent insurance fraud and vehicle crimes.
- NMHPA – Newborns’ and Mothers’ Health Protection Act : A federal law requires health plans to provide at least 48 hours of inpatient care following a vaginal delivery and 96 hours following a cesarean section.
- Non-par – Non-Participating provider : A healthcare provider that is not part of a health plan’s network.
- OBRA – Omnibus Budget Reconciliation Act of 1993 : A major budget legislation passed by Congress that includes provisions related to healthcare programs like Medicare and Medicaid.
- OCHI – Office of Consumer Health Insurance : An office within the Wisconsin state government that provided information and assistance to consumers on health insurance issues.
- OCR – Office for Civil Rights : A federal agency within the Department of Health and Human Services that enforces federal civil rights laws prohibiting discrimination in health and human services programs.
- OHCA – Organized Health Care Arrangement : Clinically integrated care settings in which individuals typically receive health care from more than one provider.
- OOP – Out-of-pocket limit : The portion of healthcare costs that must be paid out of pocket.
- OTC Drug – Over-the-counter Drug : Medication that can be purchased without a prescription
- Own Occupation : A disability insurance policy definition where benefits are paid if the insured cannot perform the duties of their own occupation.
P-T
- P&T – Pharmacy and Therapeutics Committee : A group of healthcare professionals who advise a health plan or PBM on the selection and use of medications, helping to develop and manage the formulary.
- Par – Participating Provider : Healthcare providers who agreed to payment terms and conditions of an insurance policy
- PBM – Pharmacy Benefit Manager : An organization that manages prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers.
- PCE – Pre-existing Condition Exclusion : A clause in health insurance that limits the benefits an insurer will provide for certain medical conditions.
- PCORI Fee – Patient-Centered Outcomes Research Institute Fee : A fee imposed on health insurers and sponsors of self-insured health plans to help fund the Patient-Centered Outcomes Research Institute.
- PCP – Primary Care Physician : A health care physician that practices general medicine.
- PDA – Pregnancy Discrimination Act : A federal law that prohibits discrimination based on pregnancy, childbirth, or related medical conditions in all aspects of employment
- PEO – Professional Employer Organization : An organization that provides comprehensive HR solutions including employee benefits administration for small and mid-sized businesses.
- PFFS – Private Fee for Service (alternative form of Medicare) : A type of Medicare Advantage plan that allows members to receive services from any Medicare-approved provider.
- PHI – Protected Health Information : Information about an individual’s health status, provision of healthcare, or payment for healthcare that can be linked to the individual.
- PHO – Physician Hospital Organization : A legal entity owned and governed by physicians and hospitals to coordinate care delivery and negotiate contracts with payers.
- PMPM – Per Member Per Month : The average cost or revenue per member per month for providing healthcare service.
- POA – Power of Attorney : A legal document giving someone authority to act on another’s behalf.
- Policy Period : The period during which insurance coverage is in effect.
- POP – Premium-only Plan : Allows both employers and employees to pay group insurance premiums with pre-tax dollars, reducing taxable income and payroll taxes.
- POS – Point-of-service : A type of managed care plan that allows members to use out-of-network providers with higher cost-sharing.
- PPA – Preferred Provider Arrangement : A contractual agreement between that insurance company and a health plan or network, considered in-network and preferred providers.
- PPO – Preferred Provider Organization : A type of care plan that works in a network of providers who offer discounted prices.
- Premium : The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly, or yearly.
- Prior Authorization : A decision by your health insurer or plan that a health care service, treatment plan, prescription drug, or durable medical equipment is medically necessary. Sometimes called preauthorization, prior approval, or precertification.
- QHP – Qualified Health Plan : An insurance plan certified by the Health Insurance Marketplace, providing benefits and meeting requirements of the ACA.
- QMB – Qualified Medical Beneficiary : A program that helps pay Medicare premiums, deductibles and coinsurance, copayments for individuals with limited income.
- QMCSO – Qualified Medical Child Support Order : A court order that requires a group health plan to provide coverage for the children, often from instances of divorce.
- QSEHRA – Qualified Small Employer Health Reimbursement Arrangement : A plan that allows eligible small employers to reimburse employees tax-free for qualified medical expenses.
- RBC – Risk Based Capital : The minimum amount of capital an insurance company must maintain based on its risk and business operation.
- Rebate: A return of part of the cost of a drug from the manufacturer to the PBM or payer, usually provided in exchange for favorable formulary placement.
- Residual Disability : A type of disability insurance benefit that provides partial payments to a worker whose injury or illness prevents them from working full-time but allows them to work part-time.
- ROC – Review Oversight Committee : A committee responsible for reviewing certain activities or decisions within an organization.
- RTW – Return to Work (date for disability coverage) : To start working again after a period off from disability or maternity.
- SAR – Summary Annual Report : Summary of an annual report (Form 5500) on the employee benefits plan that must be distributed to plan participants and beneficiaries, providing information on the plan’s status.
- SBC – Summary of Benefits and Coverage : A standardized document required by the ACA that provides a simple overview of what a plan covers.
- SHOP Exchange –Small Business Health Options Program : Allows small businesses to purchase health insurance coverage through a marketplace.
- SMM – Summary of Material Modifications : Document outlining changes made to an employee benefit plan.
- SNF – Skilled Nursing Facility : A healthcare facility that provides skilled nursing care and rehabilitation services.
- SPD – Summary Plan Description : A document outlining the features of a benefit plan.
- Specialty Pharmacy : A pharmacy that dispenses medications for complex or chronic conditions that require special handling, administration, or monitoring.
- Specific Stop Loss : Provides protection for self-insured employees against catastrophically high medical claims for a single employee or covered dependent.
- Spread Pricing : A practice where the PBM charges a health plan more for a prescription drug than what it reimburses the pharmacy, retaining the difference as profit.
- SSA – Social Security Administration : The federal agency that administers the social security program.
- SSDI – Social Security Disability Insurance : A federal program that provides income supplements to people who are physically restricted in their ability to be employed because of a disability.
- STD – Short Term Disability : Insurance provides income replacement for employees who are unable to work due to a temporary disability.
- Step Therapy : A protocol that requires patients to try one or more specified medications to treat a medical condition before coverage is provided for a different medication prescribed by their healthcare provider.
- Stop Loss Insurance : A type of insurance that provides protection against catastrophic or unpredictable losses. It is commonly used by employers who self-insure their health plans.
- Taft-Hartley Act of 1947 : A piece of legislation that aimed to restrict certain union practices and rebalance labor-management relations.
- Tiered Copay : A structure where drugs are placed in different tiers, each with a different co-payment amount. Generic drugs are on a lower tier with lower co-pays, while brand-name and specialty drugs are on higher tiers with higher co-pays.
- TPA – Third-party Administrator : An organization that processes claims for an insurance plan.
- TPPP – Third Party Prescription Program : A program that manages prescription drug benefits within an insurance plan.
- TRICARE – Triple option benefit plan for military families (formerly CHAMPUS) : Provides healthcare to active-duty military, retirees, reservists, and their families.
U-Z
- U&C (R&C or UCR) – Usual Customary, Reasonable and Customary, Usual Customary and Reasonable : The prevailing fees charged for a medical service in a geographic area.
- UB04 – Billing form used by hospitals : A comprehensive record of medical claims, which are used by payers to determine the reimbursable amount.
- Underwriter : The process by which an insurer determines whether to accept an application for insurance and, if so, on what terms.
- Universal Life Insurance : A type of permanent life insurance that offers the low-cost protection of term life insurance and a savings element invested to provide a cash value build-up.
- UR – Utilization Review : The process of evaluating the appropriateness, necessity, and efficacy of healthcare services
- URAC – Utilization Review Accreditation Commission : An independent organization that accredits healthcare organizations.
- USC – United States Code : The official compilation of the general and permanent federal statutes in the US.
- USERRA – Uniformed Services Employment and Re-employment Rights Act : A federal law that protects the employment rights of members of the uniformed services.
- VEBA – Voluntary Employees’ Beneficiary Association : A type of tax-exempt trust that provides health and welfare benefits to employees.
- VFC – Voluntary Fiduciary Correction Program : A program that allows plan sponsors to correct certain violations of ERISA.
- WHCRA – Women’s Health and Cancer Rights Act : A federal law requires group health plans to cover breast reconstruction after a mastectomy.
- Whole Life Insurance : A type of life insurance that provides coverage for the insured’s lifetime if premiums are paid. It also includes an investment component.
- WP – Waiver of Premium for Disability Benefit : A provision in a disability insurance policy that waives the premium payments if that insured becomes disabled.
- WPHCP – Women’s Principal Health Care Provider : A woman’s ability to seek obstetric or gynecological care directly from a specialist or under health plans.
- YTD – Year-to-date : The period from the first day of the calendar year to the current date.