Administrative costs: In providing health care coverage, health plans must pay claims, arrange for online and telephone customer service centers, coordinate enrollment, and perform many more day-to-day tasks and business functions. Employers pay for these administrative services on behalf of covered employees.

Alcohol abuse/dependency: See Substance abuse.

Alternative medicine: Practices that generally are not accepted by the U.S. medical community as standard, proven, or conventional. Examples include massage therapy, herbal supplements, and acupuncture.

Authorization: For some treatments, and within some types of health plan products, members and their doctors are required to work with the plan to obtain authorization before services are provided.

Behavioral health: A broad term that refers to various areas of mental health care such as substance abuse, child development, crisis intervention, anger management, counseling, and psychiatry.

Board-certified: A board-certified doctor has completed postgraduate work and passed examinations given by a medical specialty board (e.g. cardiology).

Body Mass Index (BMI): BMI is the measure of an adult's weight in relation to height, specifically the adult's weight in pounds divided by the square of his or her height in feet and inches. Simplified BMI charts offer an at-a-glance summary to show "underweight," "normal," "overweight" and "obese," according to height and weight classifications.

Brand-name drug: A brand-name drug is a drug marketed by the original drug maker or manufacturer. When a new drug is developed, the makers get a patent for the drug giving them the right to make that drug without any competition. A brand-name drug is usually known by its trade name (example, "Advil") rather than its chemical or generic name (example, "ibuprofen").

Capitation: A method of paying for health services that is based on the number of patients who are covered for certain services for a set period rather than by the number or cost of services actually provided.

Carve-out: Separating a medical service or set of services from a basic set of benefits. For example, prescription drug benefits may be "carved-out" and managed separately from the basic health plan by a pharmacy benefit manager (PBM).

Chemical abuse/dependency: See Substance abuse.

Chronic condition: The clinical identification of one or more medical conditions that persist for a long period or for a lifetime (e.g. diabetes).

Claim: Information submitted by a provider or patient to establish that medical services were provided to a covered person. Claims are used by the health plan claims administrator for processing payments.

Claim payment: Payment for services, supplies and procedures in accordance with the provisions of the customer's plan(s) of benefits or summary plan description (SPD)

Coinsurance: A method of cost sharing that requires members to pay a certain percentage of all remaining eligible medical expenses after the deductible amount has been paid (e.g. 20%)

Condition Management (also called disease management): A coordinated system of identifying, educating and counseling patients who have or are at risk for a specific chronic condition or medical illness to promote condition management with an emphasis on self-care and positive lifestyle change.

Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA): This federal act requires each group health plan to allow certain employees and their dependents to continue under group coverage for a stated period following a qualifying event that causes the loss of that coverage. Qualifying events include reduced work hours, death or divorce of a covered employee, and termination of employment that is nondisciplinary.

Coordination of Benefits (COB): When a member is covered under more than one group health plan (e.g. such as a spouse's employer-provided plan) or is receiving additional health care coverage, for example, that is related to a car accident or workers' compensation, benefit payments are coordinated so duplicate payments for related services do not occur.

Copayment (also copay): A method of cost sharing that requires members to pay a set amount for a specific service, such as $15 for any physician's office visits.

Covered Expenses: Health care products or services that are covered by a health plan.

Credentialing: The review and verification process used to determine the current clinical competence of a provider and whether the provider meets the health plan's or managed care company's established criteria for participation in the network. See In-network.

Deductible: A flat amount a member must pay before the insurer, employer or plan administrator will make any benefit payments.

Disease management: See Condition management.

Drug abuse/dependency: See Substance abuse.

Drug formulary: Each health plan develops its own preferred list of FDA-approved generic and brand-name drugs, called a drug formulary. These drugs generally have the lowest out-of-pocket cost to members. The formulary is chosen by a committee of doctors, pharmacists and other medical experts who consider many cost and quality issues as they make their decisions.

Eligible health care expenses (or health care costs): (See Eligible medical expenses)

Eligible medical expenses: Health services and supplies that are covered under a health plan. Items and services covered are detailed in a plan's summary plan description or summary of benefits. (Also see Covered Expenses.)

Emergency (medical): A serious and sudden threat to the health or life of a person resulting from injury, sickness or mental illness that requires immediate attention in a hospital or trauma center.

Employee Assistance Program (EAP): Confidential, 24-hour access to trained professional counselors, usually offered to employees and their household members through a toll-free number. Examples of issues that may benefit from the services available through the EAP anxiety are, depression, grief and loss, child or senior care, relationship or marital issues, alcohol or substance abuse, finding colleges, bereavement, financial or legal concerns, parenting challenges, work-related problems and conflict resolution.

Enhanced Case management: Clinical coordination and monitoring (by medical professionals such as nurses) of health plan members who have special or complex medical needs to ensure their care needs are met, for example, coordinating home health care services.

Exclusive provider organization (EPO): A health care benefit arrangement that is similar to a health maintenance organization (HMO).

Experimental procedures (also called unproven procedures or investigative procedures): Any health care goods or services that a health plan determines are not generally accepted by U.S. health care professionals as effective for treating the condition or illness for which their use is proposed. Generally, these are denied for coverage because there is a lack of scientific evidence supporting their effectiveness and/or safety.

Explanation of benefits (EOB): A statement health plans send to members, listing services provided, billed amounts, amount paid, and any remaining amount the member is responsible for paying. Generally available on-line through your health plan carrier’s secure website as well.

Fee allowance: See Fee schedule.

Fee-for-Service arrangement: A benefit payment system where an insurer reimburses the member or pays the provider directly for each covered medical expense after the expense has been incurred.

Fee schedule (also known as fee allowance): A benefit payment system where a health plan or managed care company determines the fees that are acceptable for procedures or services, and the network physicians agree to accept these fees as full payment.

Flexible spending accounts: See Section 125 plan.

Formulary: See Drug formulary.

Fully-funded (fully-insured) plan: A health plan under which an insurer, health plan, or managed care company bears the financial responsibility of guaranteeing claim payments and paying for all covered benefits and administration. (Most UPS sponsored health plans are self-insured.)

Generic drug (also called generic equivalent or generic substitute): A drug that is the generic, biological equivalent of a brand-name drug. Generic drugs must contain the same active ingredients as the brand name, and must deliver the same amount of medicine into the body in the same way.

Generic equivalent: See generic drug or generic substitute.

Generic substitute: See generic drug or generic equivalent.

Health assessment (also called health risk appraisal or health risk assessment): A survey-like tool used to gather information about a member's health status, personal and family health history, and health-related behaviors to assess the member's risk factors and long term likelihood of experiencing specific illnesses or injuries.

Health care costs: See Eligible medical expenses.

Health improvement programs: See Health promotion programs.

Health Insurance Portability and Accountability Act of 1996 (HIPAA): HIPAA mandates changes in the legal and regulatory environments governing the provision of health benefits; the delivery and payment of health care services; and the security and confidentiality of individual, protected health information. HIPAA makes it easier for individuals and small businesses to get and keep health insurance. To reduce the cost of health insurance, HIPAA includes an "administrative simplification" section to encourage electronic transactions. Because of electronic transactions, HIPAA also has new regulations to ensure the security and privacy of electronically shared and stored medical data.

Health maintenance organization (HMO): A health care system that assumes or shares both the financial risks and the delivery risks associated with providing access to in-network medical services to members in a particular geographic area, usually in return for a fixed, prepaid fee.

Health plan (also called plan of benefits): An employee welfare benefit plan, including insured and self-insured plans, to the extent that the plan provides, or pays for the cost of, medical care, including items and services paid for as medical care, to employees or their dependents directly or through insurance reimbursement or otherwise.

Health promotion programs (also called health improvement or wellness programs): Preventive care programs designed to educate and motivate members to prevent illness and injury by modifying their lifestyle with such things as smoking cessation and making healthy diet changes.

Health risk appraisal: See Health assessment.

Home Delivery Pharmacy Services: If medication is necessary on an ongoing basis or for maintenance prescription drug needs, you can meet your long-term needs by getting up to a 90-day supply per prescription, plus refills, through a home delivery program. For people who are on maintenance medications, this is a convenient, cost-saving option.

Hospice: Specialized health care services that provide clinical and emotional support to terminally ill patients and their families.

Indemnity plan: If you live outside the network area, you participate in an option that provides indemnity benefits. With an indemnity benefit, covered services and supplies may be provided by any doctor or health care provider you select. Benefits are paid per a schedule once an annual deductible is met. All covered expenses must be medically necessary, not investigational/experimental and within reasonable and customary all of which are determined by the claims administrator.

Ineligible health care expenses (or ineligible health care costs): See Ineligible medical expenses.

Ineligible medical expenses: Services, supplies and procedures not covered under a health plan. Items and services not covered are usually listed under "Exclusions" in a plan's summary plan description or summary of benefits.

In-network: A doctor, hospital, clinic, pharmacy or other health care professional or facility considered to be a member of a health care organization or system that has contracted with a member's health plan to provide services based on a specific set of criteria and fee structures. (See Participating provider.)

Inpatient: A patient who is formally admitted to the hospital and is receiving care under a doctor's guidance for at least 24 hours.

Investigative procedures: See Experimental procedures.

Length-of-stay guidelines: The average inpatient length of stay based on a patient's diagnosis, the severity of the condition, and the type of services and procedures prescribed.

Maintenance medications: These are drugs that are taken for ongoing treatment over an extended period. Examples include cholesterol lowering agents, anti-depressants, and insulin.

Managed care companies: Companies that integrate the financing and delivery of health care within a "system" whose mission is to manage accessibility, quality of care and cost on behalf of members.

Medicaid: A joint federal and state program that provides hospital and medical expense coverage to low-income populations and certain elderly and disabled individuals.

Medical advisory committee: Managed care companies have committees of business and medical professionals that evaluate practices related to clinical guidelines, provider contracts, procedural changes, new medical technology, and other things related to care delivery.

Medically necessary: Medical services that are appropriate and necessary to meet the basic health needs of patients and that are not related to cosmetic procedures or lifestyle preferences. National medical practice guidelines are used to determine medical necessity.

Medicare: A federal government program established under Title XVIII of the Social Security Act of 1965 to provide hospital expense and medical expense insurance to the elderly and disabled. Medicare Part A is hospital insurance, and Part B is medical insurance. There is no premium required for Part A, but there is a monthly premium for Part B. Medicare Part C, or Medicare + Choice, includes coordinated care plans such as HMOs and PPOs. Medicare Part D plans are private insurance plans that help cover the cost of prescription drugs.

Medicare supplement (sometimes called Medigap): A private medical insurance policy that provides reimbursement for out-of-pocket expenses, such as deductibles and coinsurance payments, or benefits for some medical expenses that have been excluded from Medicare coverage.

Medigap: See Medicare supplement.

Member services (also called customer service): Telephone and online member support offered by health plans and managed care companies to deliver member benefits and to ensure member satisfaction.

Mental health care: See Behavioral health.

Morbid obesity: There are several medically accepted criteria for defining morbid obesity. A person is likely to be morbidly obese if he or she is more than 100 pounds over his or her ideal body weight; has a Body Mass Index (BMI) of over 40 or has a BMI of over 35 and is experiencing severe negative health effects, such as high blood pressure or diabetes, related to being severely overweight; and/or is unable to achieve a healthy body weight for a sustained period, even through medically supervised dieting. See Obesity.

Newborns' and Mothers' Health Protection Act: Group health plans and health insurance issuers generally may not, under federal law, restrict benefits for any hospital length of stay in connection with childbirth for the mother or newborn child to less than 48 hours following vaginal delivery, or less than 96 hours following a cesarean section.

Non-Participating provider: See Out-of-network.

Obesity: Having a very high amount of body fat in relation to lean body mass, or Body Mass Index (BMI) of 30 or higher. A BMI of 30 in most cases means a person is about 30 pounds overweight for a 5'4" person. See Morbid obesity.

Open enrollment and annual enrollment period: The time of year when health plan participants enroll or re-enroll in benefits being offered, usually without evidence of insurability or waiting periods.

Outcome measures: Specific quality indicators that measure whether or not health care services and providers succeed in improving or maintaining satisfaction and patient health.

Out-of-network: A doctor, hospital, clinic, pharmacy or other health care professional or facility considered to be a member of a health care organization or system that has not contracted with a member's health plan to provide services based on a specific set of criteria and fee structures. (See Non-participating provider.)

Out-of-pocket costs or out-of-pocket expenses: The dollar amount(s) a health plan member pays out of his or her pocket for certain health care services during a specific period (usually annually). (See Out-of-pocket maximum.)

Out-of-pocket limit: See Out-of-pocket maximum.

Out-of-pocket maximum (also called out-of-pocket limit): Preset dollar amounts that limit the amount a health plan member must pay out of his or her own pocket for certain health care services during a specific period (usually annually).

Outpatient: A patient who is not admitted to the hospital, but who receives care under a doctor's guidance in a hospital or urgent care treatment center.

Over-the-counter drug: A drug product that does not require a prescription under federal or state law.

Palliative care: The art and science of caring for patients who are facing a life-threatening illness. The goal of this special type of health care is to relieve or reduce suffering and to improve quality of life.

Participating provider: See In-network.

Payer: The organization that pays for or underwrites coverage for health care expenses.

PBM: See Pharmacy benefit manager.

PCP: See Primary care Physician.

Pharmacy and therapeutics committee (P&T committee): The committee within a managed care organization or health plan that develops and updates the drug formulary and regularly reviews reports on clinical trials, drug utilization reports, current and proposed therapeutic guidelines, and economic data on drugs.

Pharmacy benefit manager (PBM): A specialty health care organization that serves thousands of client groups, including managed care companies, insurance carriers, third-party administrators, employers and union-sponsored benefit plans. These organizations specialize in pharmaceuticals and strive to contain the costs of prescription drugs while promoting more efficient, safer drug use.

Plan administrator: The organization that takes responsibility for managing the administrative details of the health or welfare plan, such as enrollment, claim payments, and customer service.

Plan of benefits: See Health plan.

Point-of-care (also called point-of-purchase): The location where health care products or services are actually delivered, such as a doctor's office, hospital or pharmacy.

Point-of-purchase: See point-of-care.

Point-of-service product (POS): A health care option that allows members to choose at the time medical services are needed whether they will go to a provider within the plan's network or seek medical care outside the network, with higher benefit levels available for using in-network providers or services.

Precertification: See Authorization and Prior authorization.

Preferred provider organization (PPO): A health care benefit plan where medical providers agree to offer their services at a discount. In return, the plan offers members incentives to choose these in-network providers. Coverage for services from other health care providers is available, but at a higher out-of-pocket cost to the member.

Preventive Care: The services* you rely on to stay well and catch problems early, when they're easiest to treat. Examples of preventive services include routine physical exams and immunizations, eye exams and annual mammograms. Refer to the Agency for Healthcare Research and Quality website for more information on preventive care.

Primary care physician or PCP: A doctor who has met certain established credentialing criteria for participation in the network and who serves as a group member's first contact with a managed care company's health care system. A PCP usually falls into one of four types of practices: family, general practice, internal medicine, or pediatrics. Many experts agree that it is wise to have one doctor who is responsible for coordinating all care, especially for patients who have complex conditions. (See Participating provider and In-network.)

Prior authorization: A health care plan's requirement that a plan member or the doctor in charge of the case notify the plan, in advance, of a course of care, such as a hospital admission or expensive diagnostic test. (See Authorization and Precertification.)

* Check your UPS-administered plan's summary plan description (SPD) for covered benefit information before scheduling a physician visit for a suggested preventive care service.

Quality assurance: An organization-wide process of measuring and improving the quality of the health care provided by a health plan's or managed care company's participating providers.

Reasonable and customary (R&C): All eligible medical expenses received out-of-network or in an indemnity option are subject to reasonable and customary (R&C) limits—charges within the normal range of fees in your geographic area for similar services and similar supplies, as determined by the network manager or claims administrator. If your doctor charges more than the R&C limit, you're required to pay any amounts considered above the R&C limit. These charges do not count toward your deductible or out-of-pocket maximum. All benefits provided in-network through a point-of-service option are considered reasonable and customary.

Respite care: Respite refers to short-term, temporary care provided to people with disabilities so their families can take a break from the daily demands and stress associated with caring for a seriously ill loved one. Respite services may sometimes involve overnight care for an extended period, allowing families to take short vacations. Respite care is not typically considered to be a covered medical expense.

Retrospective review: A utilization review that occurs after treatment is completed by the clinical team of the health plan in order to authorize payment and to confirm that it was medically necessary and that the course of care was appropriate.

Section 125 plan (also called flexible spending accounts): This reference comes from the section of the Internal Revenue Service code which defines certain plans and states that employee contributions may be made with pretax dollars to an account that can be used to reimburse qualified expenses defined in the IRS code. Health care spending accounts reimburse such expenses as deductible and copayment amounts, over-the-counter drugs and health care expenses not covered by a health plan. Dependent care spending accounts are used to reimburse qualified dependent care expenses.

Self-funded (also called self-insured): The majority of mid- and large-size companies and organizations are self-funded. This means that a health plan sponsored by an employer, rather than a managed care company or insurance company, is financially responsible for paying plan expenses, including claims made by group plan members.

Self-insured: See Self-funded.

SPD: See Summary plan description.

Specialist: A health care professional whose practice is limited to specific procedures, age categories of patients (such as elder care or pediatrics), specific body systems, or certain types of diseases.

Substance abuse: The overindulgence in and dependence on an addictive substance, especially alcohol or a narcotic drug. (See Alcohol abuse/dependency or Chemical abuse/dependency or Drug abuse/dependency.)

Summary plan description (SPD): The legal document given to health plan members of self-funded plans describing the entire benefits package.

Third-party administrator (TPA): A company that administers group benefits, claims and administration for a self-insured group. A TPA does not have the financial responsibility for paying benefits. E.g., Aetna, Inc., Blue Cross Blue Shield, United Health Group.

Tiered copayments or coinsurance: A pharmacy benefit system where a member pays one copayments or coinsurance amount for a generic drug and a higher copayment and conisurance amount for a brand-name drug. There are many variations of tiered copayment and coinsurance designs.

Underwriting: The process of identifying and classifying the risk represented by an individual or group.

Unproven procedures: See Experimental procedures.

Usual and customary: See Reasonable and customary.

Utilization management: Managing the use of medical services to ensure that a patient receives necessary, appropriate, high-quality care in a cost-effective manner.

Utilization review: An evaluation of the medical necessity, appropriateness, and cost-effectiveness of health care services and treatment plans for patients, performed on a case-by-case basis by a clinical review team. See Medically necessary.

Wellness programs: See Health promotion programs.

Workers' compensation: A state-governed insurance program that provides benefits for health care costs and lost wages to qualified employees and their dependents if an employee suffers a work-related injury or disease.