Content Introduction Making Sense of Health Insurance Managed Care Self-Insured Plans Appropriate Care What Happens to My Insurance if I Lose My Job? Frequently Asked Questions Comparing Plans Other Forms of Health Insurance Final Word Glossary of Health Insurance Terms More Resources on Health Care Financing in Africa

Introduction

What is health insurance?

Health Insurance is a social device for pooling the health risks and costs of an exposure unit (individuals, group or population) in such a manner as to make these risks and costs predictable.

Health Insurance makes it possible to substitute a small but certain cost (the premium paid) for a large but uncertain loss (the cost of care) under a situation in which the healthy majority subsidizes the cost of care of the unfortunate ill minority.

If you have ever been sick or injured and you have little or no money to pay out-of-pocket for your health care, you know how important it is to have health coverage.

Many people in Africa have been known to die either at home or in private and public hospitals because they did not have enough money to pay for their health care at time of need.

To solve this problem, it is advisable that most people and indeed governments in African countries embrace the concepts of health insurance and buy health coverage.

What types of health coverage may you need and what may be available on your locality?

If your employer offers you a choice of health plans, what should you know before making a decision? In addition to coverage for medical expenses, do you need some other kind of insurance?

These are questions that today's African health consumers must ask themselves; and to the uninitiated, these questions aren’t necessarily easy to answer.

This guide should help.

It discusses the basic forms of health coverage and includes a checklist to help you compare plans that may be presented to you by vendors of health insurance. It answers some commonly asked questions and also includes thumbnail descriptions of other forms of health insurance, including hospital-surgical policies, specified disease policies, catastrophic coverage, hospital indemnity insurance, and other types of supplementary insurance coverage.

While this guide can’t answer all your questions, it should help you make the right decisions for yourself, your family, and even your business.

Making Sense of Health Insurance

The term health insurance refers to a wide variety of insurance policies. These range from policies that cover the costs of doctors and hospitals to those that meet other specific need, such as paying for long-term care. Even disability insurance—which replaces lost income if you can’t work because of illness or accident—is considered health insurance, even though it’s not specifically for medical expenses.

But when people talk about health insurance, they usually mean the kind of insurance offered by employers to employees, the kind that covers medical bills, surgery, and hospital expenses. You may have heard this kind of health insurance referred to as comprehensive or major medical policies, alluding to the broad protection they offer. But the fact is, neither of these terms is particularly helpful to the consumer.

Today, when people talk about broad health care coverage, they are more likely to refer to terms like fee-for-service or managed care. These terms apply to different kinds of coverage or health plans.

Health plans are offered by different types of organizations called managed care plans/organizations like: health maintenance organizations or HMOs, preferred provider organizations or PPOs, and point-of-service or POS plans.

While fee-for-service and managed care plans differ in important ways, in some ways they are similar. Both cover an array of medical, surgical, and hospital expenses. Most will offer partial or full coverage for prescription drugs, and some include coverage for dentists and other providers. But there are many important differences that will make one or the other form of coverage the right one for you.

The section below is designed to acquaint you with the basics of fee-for-service and managed care plans. But remember: The detailed differences between one plan and another can only be understood by careful reading of the materials provided by insurers, your employee human resources administrator, or your agent or broker.

Fee-for-Service

This type of coverage generally assumes that the medical provider (usually a doctor or hospital) will be paid a fee for each service rendered to the patient—you or a family member covered under your policy. With fee-for-service insurance, you go to the doctor of your choice and you or your doctor or hospital submits a claim to your insurance company for reimbursement. You will only receive reimbursement for "covered" medical expenses, the ones listed in your benefits summary.

When a service is covered under your policy, you or your doctor/hospital can expect to be reimbursed for some, or all, of the cost. How much is paid would depend on the provisions of the policy especially on coinsurance and deductibles. Here’s how it generally works, but remember, variations may obtain from plan ro plan:

• If applicable, the portion of the covered medical expenses you pay is called "coinsurance."
  Although there are variations, fee-for-service policies commonly reimburse doctor bills at 80 percent of the "reasonable and customary charge." (This is the prevailing cost of a medical service in a given geographic area.) while You pay the other 20 percent— as your coinsurance.
  However, if a medical provider charges more than the reasonable and customary fee, you will have to pay the difference. For example, if the reasonable and customary fee for a medical service is say 100 currency units, the insurer will pay 80 currency units.
  If your doctor charged 100 currency units, you will pay 20 currency units. But if the doctor charged 105 currency units, you will pay 25 currency units.
  However, many fee-for-service plans may pay hospital expenses in full rather than the 80/20 level as described above.
• Deductibles are the amount of the covered expenses you must pay each year before the insurer starts to reimburse you ot your doctor/hospital. This is charged per year per individual, or per year per family. Generally, the higher the deductible, the lower the premiums, which are the monthly, quarterly, or annual payments for the insurance. Some fee-for service plans may also not charge deductibles under certain circumstances.
  
• Policies typically have an out-of-pocket maximum. This means that once your expenses reach a certain amount in a given calendar year, the reasonable and customary fee for covered benefits will be paid in full by the insurer. (If your doctor bills you more than the reasonable and customary charge, you may still have to pay a portion of the bill.) This out- of- pocket maximum payment may also be waived in some fee-for-service plans.
  
• There also may be lifetime limits on benefits paid under the policy. Most experts recommend that you look for a policy whose lifetime limit is at least reasonably high as a low lifetime limit may prove to be inadequate.
  

Managed Care

The three major types of managed care plans are health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-service (POS) plans.

Managed care plans generally provide comprehensive health services to their members, and offer financial incentives for patients to use the providers who belong to the plan. In managed care plans, instead of paying separately for each service that you receive, your coverage is paid in advance. This is called prepaid care.

For example, you may decide to join a local HMO where you pay a monthly or quarterly premium or yearly premium. That premium is the same whether you use the plan’s services or not. The plan may or may not charge a co-payment for certain services—for example, 10 currency units for an office visit, or 5 currency units for every prescription. So, if you join this HMO, you may find that you have few out-of-pocket expenses for medical care—as long as you use doctors or hospitals that participate in or are part of the HMO. Your share may be only the small co-payments if applicable. Generally, you will not have deductibles or coinsurance.

One of the interesting things about HMOs is that they deliver care directly to patients. Patients sometimes go to a medical facility to see the nurses and doctors or to a specific doctor’s office. Another common model is a network of individual practitioners. In these individual practice associations (IPAs), you will get your care in a doctor's office.

If you belong to an HMO, typically you must receive your medical care through the plan. Generally, you will select a primary care doctor who coordinates your care. Primary care doctors may be family practice doctors, general practitioners, pediatricians, or other types of doctors. The primary care doctor is responsible for referring you to specialists when needed. While most of these specialists will be "participating providers" in the HMO, there are circumstances in which patients enrolled in an HMO may be referred to providers outside the HMO network and still receive coverage.

PPOs and POS plans are categorized as managed care plans. (Indeed, many people call POS plans "an HMO with a point-of-service option.") From the consumer’s point of view, these plans combine features of fee-for-service and HMOs. They offer more flexibility than HMOs, but premiums are likely to be somewhat higher.

With a PPO or a POS plan, unlike most HMOs, you or your doctor/hospital will get some reimbursement if you receive a covered service from a provider who is not in the plan. Of course, choosing a provider outside the plan’s network will cost you more than choosing a provider in the network. These plans will act like fee-for-service plans and may charge you coinsurance when you go outside the network.

What is the difference between a PPO and a POS plan? A POS plan has primary care physicians who coordinate patient care; and in most cases, PPO plans do not. But there are exceptions!

HMOs and PPOs have contracts with doctors, hospitals, and other providers. They have negotiated certain fees with these providers—and, as long as you get your care from these providers, they should not ask you for additional payment. (Of course, if your plan requires a co-payment at the time you receive care, you will have to pay that.)

Always look carefully at the description of the plans you are considering for the conditions of payment. Check with your employer, your human resources manager, or your state health insurance supervisory department to find out about laws that may regulate who is responsible for payment.

Self-insured Plans

Your employer may have set up a financial arrangement that helps cover employees’ health care expenses. Sometimes employers do this and have the "health plan" administered by an insurance company; but sometimes there is no outside administrator.

Appropriate Care

HMOs, PPOs, and fee-for-service plans often share certain features, including pre-authorization, utilization review, and discharge planning.

For example, you may be asked to get authorization from your plan or insurer before admission to a hospital for certain types of surgery. Utilization review is the process by which a plan determines whether a specific medical or surgical service is appropriate and/or medically necessary. Discharge planning is an approach that facilitates the transfer of a patient to a more cost-effective facility if the patient no longer needs to stay in the hospital. For example, if, following surgery, you no longer need hospitalization but cannot be cared for at home, you may be transferred to a skilled nursing facility.

Almost all fee-for-service plans apply managed care techniques to contain costs and guarantee appropriate care; and an increasing number of managed care plans contain fee-for-service elements. While the distinctions among plans are growing increasingly blurred, the number of options available to consumers increases every day.

How Do I Get Health Coverage?

Health insurance is generally available through groups and to individuals. Premiums—the regular fees that you pay for health insurance coverage—are generally lower for group coverage. When you receive group insurance at work, the premium usually is paid through your employer.

Group insurance is typically offered through employers, although unions, professional associations, and other organizations also offer it.

As an employee benefit, group health insurance has many advantages.

Much—although not all—of the cost may be borne by the employer.

Premium costs are frequently lower because economies of scale in large groups make administration less expensive. With group insurance, if you enroll when you first become eligible for coverage, you generally will not be asked for evidence that you are insurable. (Enrollment usually occurs when you first take a job, and/or during a specified period each year, which is called open enrollment.)

Some employers would offer employees a choice of fee-for-service and managed care plans. In addition, some group plans offer dental insurance as well as medical.

Individual insurance is a good option if you work for a small company that does not offer health insurance or if you are self-employed.

Buying individual insurance allows you to tailor a plan to fit your needs from the insurance company of your choice. It requires careful shopping, because coverage and costs vary from company to company. In evaluating policies, consider what medical services are covered, what benefits are paid, and how much you must pay in deductibles and coinsurance if applicable. You may keep premiums down by accepting a higher deductible.

Pre-existing Conditions

Many people worry about coverage for preexisting conditions, especially when they change jobs. Insurers may impose 12-month waiting period for any preexisting condition treated or diagnosed in the previous six months. Your prior health insurance coverage will be credited toward the preexisting condition exclusion period as long as you have maintained continuous coverage without a break of more than 62 days. Pregnancy is not considered a preexisting condition, and newborns and adopted children who are covered within 30 days are not subject to the 12-month waiting period.

What Is Not Covered?

While HMO benefits are generally more comprehensive than those of traditional fee-for-service plans, no health plan will cover every medical expense.

Very few plans cover eyeglasses and hearing aids because these are considered budgetable expenses. Very few cover elective cosmetic surgery, except to correct damage caused by a covered accidental injury. Some fee-for-service plans do not cover checkups. Procedures that are considered experimental may not be covered either. And some plans cover complications arising from pregnancy, but do not cover normal pregnancy or childbirth.

Health insurance policies frequently exclude coverage for preexisting conditions.

You should also remember that insurers will not pay duplicate benefits. You and your spouse may each be covered under a health insurance plan at work but, under what is called a "coordination of benefits" provision, the total you can receive under both plans for a covered medical expense cannot exceed 100 percent of the allowable cost. Also note that if neither of your plans covers 100 percent of your expenses, you will only be covered for the percentage of coverage (for example, 80 percent) that your primary plan covers. This provision benefits everyone in the long run because it helps to keep costs down.

What Happens to My Insurance if I Lose My Job?

If you have had health coverage as an employee benefit and you leave your job, voluntarily or otherwise, one of your first concerns will be maintaining protection against the costs of health care. You can do this in one of several ways depending on the applicable laws in your locality:

• You may be able to negotiate a continuation of your health coverage under the same terms as when you were still in employment.
  
• You may also negotiate continuation of your insurance cover but under different terms usually slightly higher especially as to cost compared to when you were in employment.
  
• You may have to convert your group policy to an individual policy in a fresh contract under completely different terms compared with when you were in employment.
  
• Another possibility is obtaining coverage through an association. Many trade and professional associations offer their members health coverage—often HMOs—as well as basic hospital-surgical policies and disability and long-term care insurance. If you are self-employed, you may find association membership an attractive route.

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Question: What is the first thing I should know about buying health coverage?
Answer: Your aim should be to insure yourself and your family against the most serious and financially disastrous losses that can result from an illness or accident. If you are offered health benefits at work, carefully review the plans’ literature to make sure the one you select fits your needs. If you purchase individual coverage, buy a policy that will cover major expenses and pay them to the highest maximum level. Save money on premiums, if necessary, by taking large deductibles and paying smaller costs out-of-pocket where applicable.

Question: Can I buy a single health insurance policy that will provide all the benefits I’m likely to need?
Answer: Yes and No. Although you can select a plan or buy a policy that covers most medical, hospital, surgical, and pharmaceutical bills, no single policy covers everything. Moreover, you may want to consider additional single-purpose policies like long-term care or disability income insurance.

Question: I’m planning to retire after age 65. Will I be able to get health insurance coverage in retirement?
Answer: This may be possible if you stay with the same insurer as you used while you were in employment. You may however have to convert to an individual plan and expect to pay slightly higher premium.

Question:: I’ve had a serious health condition that appears to be stabilized. Can I buy individual health coverage?
Answer: Depending on what your condition is and when it was diagnosed and treated, you can probably buy health coverage. However, the insurer may do one of three things:

• provide full protection but with a higher premium, as might be the case with a chronic disease, such as diabetes;
• modify the benefits to increase the deductible;
• exclude the specific medical problem from coverage, if it is a clearly defined condition, as long as the insurer abides by state and federal laws on exclusions.

Question: One of my medical bills was turned down by the insurance company (or health plan). Is there anything I can do?
Answer: Ask the insurance company why the claim was rejected. If the answer is that the service isn’t covered under your policy, and you’re sure that it is covered, check to see that the provider entered the correct diagnosis or procedure code on the insurance claim form. Also check that your deductible was correctly calculated.

Make sure that you didn’t skip an essential step under your plan, such as pre admission certification. If everything is in order, ask the insurer to review the claim.

Comparing Plans

Whether you end up choosing a fee-for-service plan or a form of managed care, you must examine a benefits summary or an outline of coverage—the description of policy benefits, exclusions, and provisions that make it easier to understand a particular policy and compare it with others.

Look at this information closely. Think about your personal situation. After all, you may not mind that pregnancy is not covered, but you may want coverage for psychological counseling. Do you want coverage for your whole family or just yourself? Are you concerned with preventive care and checkups? Or would you be comfortable in a managed care setting that might restrict your choice somewhat but give you broad coverage and convenience? These are questions that only you can answer.

Here are some of the things to look at when choosing and comparing health insurance plans.

• Health Insurance Checklist
• Covered medical services
• Inpatient hospital services
  
• Outpatient surgery
  
• Physician visits (in the hospital)
  
• Office visits
  
• Skilled nursing care
  
• Medical tests and X-rays
  
• Prescription drugs
  
• Mental health care
  
• Drug and alcohol abuse treatment
  
• Home health care visits
  
• Rehabilitation facility care
  
• Physical therapy
  
• Speech therapy
  
• Hospice care
  
• Maternity care
  
• Chiropractic treatment
  
• Preventive care and checkups
  
• Well-baby care
  
• Dental care
  
• Other covered services

What types of utilization review, pre authorization, or certification procedures are included?

How much is the premium?

$_____________________________________________

a month a quarter a year

Are there any discounts available for good health or healthy behaviors (e.g., non-smoker)?

__________________________________________________________________

How much is the annual deductible if applicable?

$_________________________________ per person

$_________________________________ per family

What coinsurance or copayments apply (if any)?

_________________________________% after I meet my deductible

$_________________________________co-pay or % co-insurance per doctor's visit (if applicable)

$_________________________________co-pay or % co-insurance for "wellness" care (includes well-baby care, annual eye exam, physical, etc.,) if applicable.

$_________________________________% co-pay or co-insurance for inpatient hospital care, if applicable.

Other Forms of Health Insurance

In addition to broad coverage for medical, surgical, and hospital expenses, there are many other kinds of health insurance.

(a) Hospital-surgical policies, sometimes called basic health insurance, provide benefits when you have a covered condition that requires hospitalization. These benefits typically include room and board and other hospital services, surgery, physicians’ non surgical services that are performed in a hospital, expenses for diagnostic X-rays and laboratory tests, and room and board in an extended care facility.

Benefits for hospital room and board may be a per-day currency amount or all or part of the hospital’s daily rate for a semi-private room. Benefits for surgery typically are listed, showing the maximum benefit for each type of surgical procedure.

Hospital-surgical policies may provide "first-currency" coverage. That means that there is no deductible, or amount that you have to pay, for a covered medical expense. Other policies may contain a small deductible.

Keep in mind that hospital-surgical policies usually do not cover lengthy hospitalizations and costly medical care. In the event that you need these types of services, you may incur large expenses that are difficult to meet unless you have other insurance.

(b) Catastrophic coverage pays hospital and medical expenses above a certain deductible; this can provide additional protection if you hold either a hospital-surgical policy or a major medical policy with a lower-than-adequate lifetime limit. These policies typically contain a very high deductible and a maximum lifetime limit high enough to cover the costs of catastrophic illness.

Specified or dread disease policies provide benefits only if you get the specific disease or group of diseases named in the policy. For example, a policy might cover only medical care for cancer. Because benefits are limited in amount, these policies are not a substitute for broad medical coverage.

(c) Hospital indemnity insurance pays you a specified amount of cash benefits for each day that you are hospitalized, generally up to a designated number of days. These cash benefits are paid directly to you, can be used for any purpose, and may be useful in meeting out-of-pocket expenses not covered by other insurance.

Hospital indemnity policies frequently are available directly from insurance companies by mail as well as through insurance agents. You will find that these policies offer many choices, so be sure to ask questions and find the right plan to meet your needs.

Some policies contain limitations on preexisting medical conditions that you may have before your insurance takes effect. Others contain an elimination period, which means that benefits will not be paid until after you have been hospitalized for a specified number of days. When you apply for the policy, you may be allowed to choose among two or three elimination periods, with different premiums for each. Although you can reduce your premiums by choosing a longer elimination period, you should bear in mind that most patients are hospitalized for relatively brief periods of time.

If you purchase a hospital indemnity policy, periodically review it to see if you need to increase your daily benefits to keep pace with rising health care costs.

(d) Long-term care policies cover the medical care, nursing care, and other assistance you might need if you ever have a chronic illness or disability that leaves you unable to care for yourself for an extended period of time. These services generally are not covered by other health insurance. You may receive long-term care in a nursing home or in your own home.

Long-term care can be very expensive. Home care is less expensive, but it still adds up. (Home care can include part-time skilled nursing care, speech therapy, physical or occupational therapy, home health aides, and homemakers.)

Bringing an aide into your home just three times a week—to help with dressing, bathing, preparing meals, and similar chores—easily can cost$1,000 a month, or $12,000 a year. Add in the cost of skilled help, such as physical therapy, and the costs can be much greater.

Most long-term care policies pay a fixed amount a day for each day you receive covered care in a nursing home. The daily benefit for at-home care is usually half the benefit for nursing home care. Because the per-day benefit you buy today may be inadequate to cover higher costs in the future, most policies also offer an inflation adjustment feature.

(e) Disability insurance provides you with an income if illness or injury prevents you from being able to work for an extended period of time. It is an important but often overlooked form of insurance.

There are other possible sources of income if you are disabled. Social Security provides protection if this is available in your country - to those who are severely disabled and unable to work at all; workers’ compensation provides benefits if the illness or injury is work-related; civil service disability covers federal or state government workers; and automobile insurance may pay benefits if the disability results from an automobile accident. But these sources are limited.

Some employers offer short- and long-term disability coverage. If you are self-employed, you can buy individual disability income insurance policies.
Whether you are an employer shopping for a group disability policy or someone thinking of purchasing disability income insurance, you will need to evaluate different policies. Here are some things to look for:

Some policies pay benefits only if someone is unable to perform the duties of their customary occupation, while others pay only if the person can engage in no gainful employment at all. Make sure that you know the insurer’s definition of disability.

Some policies pay only for accidents, but it’s important to be insured for illness, too. Be sure, as you evaluate policies, that both accident and illness are covered.

Benefits may begin anywhere from one month to six months or more after the onset of disability. A later starting date can keep your premiums down. But remember, if your policy only starts to pay (for example) three months after the disability begins, you may lose a considerable amount of income.

Benefits may be payable for a period ranging anywhere from one year to a lifetime. Since disability benefits replace income, most people do not need benefits beyond their working years. But it’s generally wise to insure at least until age 65 since a lengthy disability threatens financial security much more than a short disability.

A Final Word

If you get health care coverage at work, or through a trade or professional association or a union, you are almost certainly enrolled under a group contract. Generally, the contract is between the group and the insurer, and your employer has done comparison shopping before offering the plan to the employees. Nevertheless, while some employers only offer one plan, some offer more than one. Compare plans carefully!

If you are buying individual insurance, or any form of insurance that you purchase directly, read and compare the policies you are considering before you buy one, and make sure you understand all of the provisions. Marketing or sales literature is no substitute for the actual policy. Read the policy itself before you buy.

Ask for a summary of each policy’s benefits or an outline of coverage. Good agents and good insurance companies want you to know what you are buying. Don’t be afraid to ask your benefits manager or insurance agent to explain anything that is unclear.

Glossary of Health Insurance Terms

Benefit: Amount payable by an insurance company to a claimant, assignee or beneficiary when the insured suffers a loss.

Case Management: Case management is a system embraced by employers and insurance companies to ensure that individuals receive appropriate, reasonable health care services.

Claim: A request by an individual (or his or her provider) to an individual's insurance company for the insurance company to pay for services obtained from a health care professional.

Co-Insurance: Co-insurance refers to money that an individual is required to pay for services, after a deductible has been paid. In some health care plans, co-insurance is called "co-payment." Co-insurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.

Co-Payment: Co-payment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some HMOs require a 10 currency unit "co-payment" for each office visit, regardless of the type or level of services provided during the visit. Co-payments are not usually specified by percentages.

Deductible: The amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.

Denial of Claim: Refusal by an insurance company to honor a request by an individual (or his or her provider) to pay for health care services obtained from a health care professional.

Exclusions: Medical services that are not covered by an individual's insurance policy.

Health Care Decision Counseling: Services, sometimes provided by insurance companies or employers that help individuals weigh the benefits, risks and costs of medical tests and treatments. Unlike case management, health care decision counseling is non-judgmental. The goal of health care decision counseling is to help individuals make more informed choices about their health and medical care needs, and to help them make decisions that are right for the individual's unique set of circumstances.

Health Maintenance Organizations (HMO's): Health Maintenance Organizations represent "pre-paid" or "capitated" insurance plan in which individuals or their employers pay a fixed monthly fee for services, instead of a separate charge for each visit or service. The monthly fees remain the same, regardless of types or levels of services provided, Services are provided by physicians who are employed by, or under contract with, the HMO. HMOs vary in design. Depending on the type of the HMO, services may be provided in a central facility, or in a physician's own office (as with IPAs.)

Indemnity Health Plan/ Fee-for=Service: Indemnity health insurance plans are also called "fee-for-service." These are the types of plans that primarily existed before the rise of HMOs, IPAs, and PPOs. With indemnity plans, the individual pays a pre-determined percentage of the cost of health care services, and the insurance company (or self-insured employer) pays the other percentage. For example, an individual might pay 20 percent for services and the insurance company pays 80 percent. The fees for services are defined by the providers and vary from physician to physician. Indemnity health plans offer individuals the freedom to choose their health care professionals.

Independent Practice Associations: IPAs are similar to HMOs, except that individuals receive care in a physician's own office, rather than in an HMO facility.

Long-Term Care Policy: Insurance policies that cover specified services for a specified period of time. Long-term care policies (and their prices) vary significantly. Covered services often include nursing care, home health care services, and custodial care.

LOS: LOS refers to the length of stay. It is a term used by insurance companies, case managers and/or employers to describe the amount of time an individual stays in a hospital or in-patient facility.

Managed Care: A medical delivery system that attempts to manage the quality and cost of medical services that individuals receive. Most managed care systems offer HMOs and PPOs that individuals are encouraged to use for their health care services. Some managed care plans attempt to improve health quality, by emphasizing prevention of disease.

Maximum Benefit Limit: The maximum amount of money that an insurance company (or self-insured company) will pay for claims within a specific time period. Maximum dollar limits vary greatly. They may be based on or specified in terms of types of illnesses or types of services. Sometimes they are specified in terms of lifetime, sometimes for a year.

Open-ended HMOs: HMOs which allow enrolled individuals to use out-of-plan providers and still receive partial or full coverage and payment for the professional's services under a traditional indemnity plan.

Out-Of-Plan: This phrase usually refers to physicians, hospitals or other health care providers who are considered non-participants in an insurance plan (usually an HMO or PPO). Depending on an individual's health insurance plan, expenses incurred by services provided by out-of-plan health professionals may not be covered, or covered only in part by an individual's insurance company.

Out-Of-Pocket Maximum: A predetermined limited amount of money that an individual must pay out of their own savings, before an insurance company or (self-insured employer) will pay 100 percent for an individual's health care expenses.

Outpatient: An individual (patient) who receives health care services (such as surgery) on an outpatient basis, meaning they do not stay overnight in a hospital or inpatient facility. Many insurance companies have identified a list of tests and procedures (including surgery) that will not be covered (paid for) unless they are performed on an outpatient basis. The term outpatient is also used synonymously with ambulatory to describe health care facilities where procedures are performed.

Pre-Admission Certification: Also called pre-certification review, or pre-admission review. Approval by a case manager or insurance company representative (usually a nurse) for a person to be admitted to a hospital or in-patient facility, granted prior to the admittance. Pre-admission certification often must be obtained by the individual. Sometimes, however, physicians will contact the appropriate individual. The goal of pre-admission certification is to ensure that individuals are not exposed to inappropriate health care services (services that are medically unnecessary).

Pre-Admission Review: A review of an individual's health care status or condition, prior to an individual being admitted to an inpatient health care facility, such as a hospital. Pre-admission reviews are often conducted by case managers or insurance company representatives (usually nurses) in cooperation with the individual, his or her physician or health care provider, and hospitals.

Pre-admission Testing: Medical tests that are completed for an individual prior to being admitted to a hospital or inpatient health care facility.

Pre-existing Conditions: A medical condition that is excluded from coverage by an insurance company, because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company.

Preferred Provider Organizations (PPOs): You or your employer receive discounted rates if you use doctors from a pre-selected group. If you use a physician outside the PPO plan, you must pay more for the medical care.

Primary Care Doctor (PCD): A health care professional (usually a doctor) who is responsible for monitoring an individual's overall health care needs. Typically, a PCD serves as a "gatekeeper" for an individual's medical care, referring the individual to more specialized physicians for specialist care.

Provider: Provider is a term used for health professionals who provide health care services. Sometimes, the term refers only to doctors. Often, however, the term also refers to other health care professionals such as hospitals, nurses, physiotherapists, and others offering specialized health care services.

Reasonable and Customary Fees: The average fee charged by a particular type of health care practitioner within a geographic area. The term is often used by medical plans as the amount of money they will approve for a specific test or procedure. If the fees are higher than the approved amount, the individual receiving the service is responsible for paying the difference. Sometimes, however, if an individual questions his or her physician about the fee, the provider will reduce the charge to the amount that the insurance company has defined as reasonable and customary.

Risk: The chance of loss, the degree of probability of loss or the amount of possible loss to the insuring company. For an individual, risk represents such probabilities as the likelihood of surgical complications, medications' side effects, exposure to infection, or the chance of suffering a medical problem because of a lifestyle or other choice. For example, an individual increases his or her risk of getting cancer if he or she chooses to smoke cigarettes.

Second Opinion: It is a medical opinion provided by a second physician or medical expert, when one physician provides a diagnosis or recommends surgery to an individual. Individuals are encouraged to obtain second opinions whenever a physician recommends surgery or presents an individual with a serious medical diagnosis.

Second Surgical Opinion: These are now standard benefits in many health insurance plans. It is an opinion provided by a second physician, when one physician recommends surgery to an individual.

Short-Term Disability: An injury or illness that keeps a person from working for a short time. The definition of short-term disability (and the time period over which coverage extends) differs among insurance companies and employers. Short-term disability insurance coverage is designed to protect an individual's full or partial wages during a time of injury or illness (that is not work-related) that would prohibit the individual from working.

Triple-Option: Insurance plans that offer three options from which an individual may choose. Usually, the three options are: traditional indemnity, an HMO, and a PPO.

Usual, Customary and Reasonable (UCR) or Covered Expenses: An amount customarily charged for or covered for similar services and supplies which are medically necessary, recommended by a doctor, or required for treatment.

Waiting Period: A period of time when you are not covered by insurance for a particular problem.

More resources on health care financing

Criel, B. and Maria-Pia Waelkens: The Social Perception of a Mutual Health Organisation in Guinea-Conakry (West Africa). Acrobat Reader required.

Chaudhuri, A.B. 2002: Community health financing in India: The CARE-India experience.

Danida Health Sector Programme Support: Training of Trainers Manual for Mutual Health Organisations (MHO) in Ghana.

DFID Health System Resource Centre, 2002: Annotated Internet and offline resources on Health Insurance in Africa.

Doherty, J., 1999: Social Health Insurance in South Africa. Chapter 7 SAHR, 2000

Jütting, J., 2001: Health Insurance for the Rural Poor? Community Financing Scheme in Senegal to Protect against Illness

PHR Resource Centre: NGO Sustainability Bibliography.

Precker, A.S. et al., 2002 Effectiveness of community health financing in meeting the cost of illness. Bulletin of the World Health Organisation. 2002, 80; 143-150. Acrobat Reader required.

World Bank Group: Community-based Health Financing Mechanisms in Developing Countries, Key Readings

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