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Insurance Basics

Health Insurance Definitions

Also referred to as the Allowed Amount, Approved Charge or Maximum Allowable, Usual, Customary and Reasonable Charge. This is the dollar amount typically considered payment-in-full by an insurance company and an associated network of healthcare providers. The Allowable Charge is typically a discounted rate rather than the actual charge. It may be helpful to consider an example: You have just visited your doctor for an earache. The total charge for the visit comes to $100. If the doctor is a member of your health insurance company's network of providers, he or she may be required to accept $80 as payment in full for the visit - this is the Allowable Charge. Your health insurance company will pay all or a portion of the remaining $80, minus any co-payment or deductible that you may owe. The remaining $20 is considered provider write-off. You cannot be billed for this provider write-off. If, however, the doctor you visit is not a network provider then you may be held responsible for everything that your health insurance company will not pay, up to the full charge of $100.

A general term referring to any service (such as an office visit, laboratory test, surgical procedure, etc.) or supply (such as prescription drugs, durable medical equipment, etc.) covered by a health insurance plan in the normal course of a patient's healthcare. 

The annual cycle in which a health insurance plan operates. At the beginning of your benefit year, the health insurance company may alter plan benefits and update rates. Virginia Tech student insurance plan begins August 1, 20xx thru July 31, 20xx. Students must reenroll to renew the policy each year in August. 

A bill for medical services rendered, typically submitted to the insurance company by a healthcare provider.

The amount that you are obliged to pay for covered medical services after you've satisfied your annual $450.00 deductible required by your health insurance plan. Coinsurance is typically expressed as a percentage of the charge or allowable charge for a service rendered by a healthcare provider. For example, if your insurance company covers 80% of the allowable charge for a specific service, you may be required to cover the remaining 20% as coinsurance.

A specific charge that your health insurance plan may require that you pay for a specific medical service or supply, also referred to as a "co-pay." For example, your health insurance plan may require a $25 copayment for an office visit or brand-name prescription drug, after which the insurance company often pays the remainder of the charges.

Any person covered under the plan.

A specific dollar amount that your health insurance company may require that you pay out-of-pocket each year before your health insurance plan begins to make payments for claims. Virginia Tech SHIP plans deductible is $450 per Policy/Benefit year

Health insurance coverage extended to the spouse and unmarried children of the primary insured member. Certain age restrictions on the coverage of children may apply.

The period of time during which an eligible employee or eligible person may sign up for a group health insurance plan.

Specific conditions, services or treatments for which a health insurance plan will not provide coverage.

A statement sent from the health insurance company to a member listing services that were billed by a healthcare provider, how those charges were processed, and the total amount of patient responsibility for the claim.

HMO means "Health Maintenance Organization." HMO plans offer a wide range of health care services through a network of providers that contract exclusively with the HMO, or who agree to provide services to members at a pre-negotiated rate. As a member of an HMO, you will need to choose a primary care physician ("PCP") who will provide most of your health care and refer you to HMO specialists as needed. Some HMO plans require that you fulfill a deductible before services are covered. Others only require you to make a copayment when services are rendered. Health care services obtained outside of the HMO are typically not covered, though there may be exceptions in the case of an emergency.

A "Network" plan is a variation on a PPO plan. With a Network plan you'll need to get your medical care from doctors or hospitals in the insurance company's network if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it's up to you to make sure that the health care providers you visit participate in the network. Services rendered by out of network providers may not be covered or may be paid at a lower level. 

A time period during which eligible persons may opt to sign up for coverage under a student health insurance plan. During an open enrollment period, applicants typically will not be required to provide evidence of insurability. Virginia Tech’s SHIP has open enrollment in Fall, beginning August for coverage beginning August 1, 20xx and terminating July 31, 20xx and January for coverage beginning January 1, 20xx and terminating July 31, 20xx.

An annual limitation on all cost-sharing for which patients are responsible under a health insurance plan. This limit does not apply to premiums, balance-billed charges from out of network health care providers or services that are not covered by the plan. Virginia Tech’s SHIP has an OPM of $6,250 per individual or $12,500 per family.

POS stands for "Point of Service." POS plans combine elements of both HMO and PPO plans. As a member of a POS plan, you may be required to choose a primary care physician who will then make referrals to specialists in the health insurance company's network of preferred providers. Care rendered by nonnetwork providers will typically cost you more out of pocket, and may not be covered at all. 

PPO means "Preferred Provider Organization." Like the name implies, with a PPO plan you'll need to get your medical care from doctors or hospitals on the insurance company's list of preferred providers if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it's up to you to make sure that the health care providers you visit participate in the PPO. Services rendered by out of network providers may not be covered or may be paid at a lower level. A broad variety of PPO plans are available, many with low monthly premiums. The Virginia Tech SHIP is a PPO plan.

Generally, this term is used in a sense synonymous with Network Provider. However, not all healthcare providers contract with health insurance companies at the same level. Some providers contracting with insurers at lower levels may sometimes be referred to as "participating providers" as opposed to "preferred providers." 

The period of time for which a health insurance policy provides coverage. Virginia Tech SHIP policy term is August 1, 20xx thru July 31, 20xx. Eligible Virginia Tech students must reenroll ever year during the open enrollment period.

A health problem that existed or was treated before the effective date of your health insurance coverage. Most health insurance contracts have a pre-existing condition clause that describes conditions under which the health insurance company will cover medical expenses related to a pre-existing condition. For more information, see also Pre-existing Condition Exclusion.

In some cases, a health insurance company may exclude a patient's pre-existing conditions from coverage under a new health insurance plan. This is more typical with individual and family health insurance plans and less common with group health insurance plans. HIPAA legislation imposes certain limitations on when a health insurance company can exclude coverage for a pre-existing condition. PPACA prohibits preexisting condition exclusions for all plans beginning January 2014 and prohibits pre-existing condition exclusions for all children under the age of 19 in new policies sold on or after September 23, 2010.

The total amount paid to the insurance company for health insurance coverage. Virginia Tech SHIP can be paid in 2 installment payments or in 1 annual payment. Eligible students with an Assistantship of .5 or greater may process their premium payment thru the payroll deduction option.  

A drug that may be obtained only with a doctor's prescription and which has been approved by the Food and Drug Administration.

A qualifying life event is a change in life circumstances that allows you to sign up for a new one, outside of open enrollment periods. Without a qualifying event, you would need to wait until the next open enrollment period before making any changes.

Examples of a QLE: newborn, marriage, loss of coverage, entering the US, court order.

An event such as loss of health insurance, marriage, divorce, birth, or entry to the country, students have 31 days from the QLE to sign up for the SHIP

The process through which a patient under a managed care health insurance plan is authorized by his or her primary care physician to a see a specialist for the diagnosis or treatment of a specific condition. For student to receive the reduced cost for services they must receive a referral from SHC. A new referral must be competed every Policy Term/Benefit Year.

Student Health Insurance Plan

A provider that performs services for health problems that require immediate medical attention but are not life-threatening emergencies. In the New River Valley we now have 3 Urgent Care Providers:

VelocityCare at North End Center, Blacksburg, 540-951-8040 and 434 Peppers Ferry Rd, Christiansburg, 540-382-6000. No appointment Necessary

MedExpress, 100 Spradlin Farm Drive, Christiansburg, 540-381-2745. No appointment Necessary

This refers to the standard or most common charge for a particular medical service when rendered in a particular geographic area.