Baxter & Company LLC

Associated-sponsored plans

Professional or trade association-sponsored plans allow small business owners to purchase health insurance for their employees through membership in business, trade, or professional organizations.

COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) is a federal law allowing employees and their dependents to continue participation in an employer-sponsored group health plan for a limited period (generally 18 months) after employment ends. Participants pay the full premiums associated with the plan, plus 2 percent to cover administrative costs.

Coinsurance

Coinsurance is the percentage of a medical bill that an insured person must pay, after deductibles and/or co-pays are met. While coinsurance is commonly 20 percent, it can be as little as zero or as much as 50 percent (for out-of-network services, for example).

Continuous Coverage

Coverage that is not interrupted by a lapse of 63 or more days in a row.

Co-payment

A co-payment, or co-pay, is a fixed-dollar amount insured persons pay each time they seek care of purchase covered items, such as office visits or prescription drugs. Co-pays sometimes apply to inpatient hospital stays. Health plans usually have separate co-pay requirements for prescriptions drugs.

Deductible

A deductible is the amount that insured person must pay for covered services before medical expenses are paid by the health plan. Some plans have separate deductibles for pharmacy benefits.

Employee cost sharing

Employee cost sharing refers to the portion of health insurance costs – above and beyond the premium contribution – that employees are expected to pay out-of-pocket. Employee cost sharing expenses include deductibles, co-payments, and coinsurance.

FSA

A flexible spending account (FSA) is funded by the employee from pre-tax income and is used to pay for medical expenses. The entire annual amount of an FSA must be made available to the employee at the beginning of the year. However, unspent balances must be forfeited to the employer at the end of the year.

Guaranteed issue

Federal law prohibits insurance companies from denying health coverage to small businesses (usually defined as 2 to 50 employees) on the basis of health status of other factors related to the use of health care.

Guaranteed renewability

Federal law prohibits insurance companies form canceling a business' insurance because someone in the firm becomes sick.

High-risks pools

In some states, high-risk pools provide a health insurance option for individuals whose poor health creates a barrier to obtaining employer-based coverage. Premiums in high-risk pools are relatively high, and there is often a waiting period. However, many states have nondiscrimination laws that eliminate the need for these pools.

HIPPAA

The Health Insurance Portability and Accountability Act (HIPPAA) of 1996 is a federal law that includes important health insurance provisions, including nondiscrimination, guaranteed renewability, guaranteed issue and limits to benefit exclusions due to pre-existing medical conditions.

HMO

A health maintenance organization (HMO) is an insurance plan that requires a person to get care from providers who are part of the HMOs network. Usually, a primary care provider coordinates care and controls access to specialists. Most HMOs offer a point-of-service (POS) option for additional fees.

HSA

A health savings account (HSA) is an alternative to traditional insurance coverage. HSAs must be paired with a high-deductible health insurance policy, the contribution to which is tax-deductible. HSA funds may be used to pay out-of-pocket costs (deductibles, coinsurance, co-pays). The employer, the employee or both may fund the plan. HSA accounts are owned by the employee, are fully portable and remaining balances roll over year to year.

HRA

A health reimbursement arrangement (HRA) is an alternative to traditional insurance coverage. HRAs are usually paired with a high-deductible health insurance policy, the contribution to which is tax-deductible. HRA funds may be used to pay out-of-pocket costs, including deductibles, coinsurance, and co-pays. The employer must fund the HRA, and consequently may decide if benefits are portable of if they roll over from year to year.

Maximum out-of-pocket expenditures

This out-of-pocket limit is the maximum amount of cost sharing an insured individual or family would have to pay in a given year. Once a maximum out-of-pocket limit is reached, the insurer pays all additional covered medical expenses for the year, up to the plan's limit.

Medical underwriting

Medical underwriting is a pricing practice used by insurance companies to adjust premiums (usually upward) based on a group's health status or medical claims experience.

Non-discrimination

Neither insurers nor employers are permitted to condition eligibility of employees and their dependents on their health status.

Open access plan

An open access (OA) plan is an HMO or POS plan in which patients are allowed to self-refer to specialists for a higher co-pay.

Point-of-service

A point-of-service (POS) plan is an option added to many HMOs allowing enrollees to seek care outside of the HMO's network for a higher co-pay and, possibly, a higher premium.

PPO

A preferred provider organization (PPO) is an insurance plan that encourages enrollees to get care from providers within the plan's network, but allows access to providers outside the network if one is willing to pay more. Many PPOs do not require the insured person to choose a primary care doctor or get a referral to see a specialist.

Pre-existing medical condition

A Pre-existing medical condition is one for which an individual actually received care, treatment or medical advice during the 6-month period before coverage went into effect. Pre-existing medical conditions, such as asthma , diabetes or cancer, may increase the cost and in some cases, the availability of insurance, subject to federal and state laws and a carrier's policies.

Premiums

The premium is the amount an insurance plan costs per month. Premiums may vary as a function of market conditions, plan types, health status of enrollees, number of enrollees and degree of employee cost sharing. Typically, the employer and employee each contribute to the premium payment.

Provider choice

Different plan types (HMOs, PPOs, POS plans and OA plans) vary with respect to the degree of choice enrollees have as to which doctors or other health care providers they wish to see. HMOs have the least provider choice, as they require participants to see professionals only within the plan's relatively narrow network, whereas PPOs tend to have broader networks of preferred providers and allow access to non-network providers, but at a higher cost.

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