Managed Care Insurance

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Managed Care Insurance

Helping You Understand Today's Healthcare System 

Managed Care Insurance Terms

1. Managed Care

is a comprehensive health care system that delivers appropriate health care services to covered individuals through arrangements with participating providers.

2. Health Maintenance Organization (HMO)

  • Primary Care Physician (PCP) manages the total health care of covered individuals.
  • Closed network of providers where a member must always receive referrals from his/her PCP to receive benefits (special situations sometimes exist)
  • Members choose their PCPs who are responsible for coordinating all of their care.
  • Any care not managed by the PCP is not covered under the plan.

3. Open Access HMO

  • Members can visit any in-network specialist without a referral
  • There is no out-of-network coverage except in an emergency/ urgent care situation

4. Preferred Provider Organization (PPO)

  • Members choose from a network of doctors and hospitals who perform services according to a set fee
  • Members are given incentive to use the preferred provider network
  • Members can go outside the network but will pay a higher out-of-pocket expense
    • Network provider: plan pays higher benefit level
    • Non-network provider: plan pays lower benefit level

5. Exclusive Preferred Provider Organization (EPO)

  • Members choose from a network of doctors and hospitals who perform services according to a set fee
  • If a member seeks care from an out-of-network provider, there is no reimbursement

6. Point of Service (POS)

  • Members are encouraged to access health care through a Primary Care Physician
  • Allows freedom of choice by permitting members to select a POS network provider in- or out of network
  • Services performed by in-network provider without a referral from the PCP will be considered out-of-network
  • The benefits received will vary depending on the choice of provider (in network vs. out of network)

7. Open Access (POS)

  • Gives members freedom to visit a specialist without a referral
  • Members are encouraged to choose a Primary Care Physician and network providers but are not required to do so

8. Consumer Directed Health Plan

  • A high-deductible benefit plan which puts the employee/consumer in direct control of managing their own health care decisions, including those relative to treatment and their related costs.
  • Generally, these plans are administered in conjunction with employer-funded Health Reimbursement Accounts (HRA) and/or employee funded Health Savings Accounts (HSA)

9. Health Reimbursement Account (HRA)

  • An HRA is an arrangement that is paid solely with employer’s money and reimburses qualified health expenses, for current, former or retired employees including spouses and dependents.
  • Any unused funds are carried forward to future years allowing employees to build a fund for future use.

 10. Health Savings Account (HSA)

  • An HAS is a tax-favored savings account that allows consumers to deposit tax-deductible funds to cover their medical costs.
  • Deductible: the amount of money a member must pay in covered expenses before the insurer starts to reimburse the member at the coinsurance rate.
  • Coinsurance: the percentage portion of the covered expenses that a member has to pay.
    • Example: If a plan pays 80 percent after the deductible, the plan would pay eligible expenses at 80 percent and the member would be responsible for 20 percent after the deductible has been met.

11. Out of Pocket

The maximum amount that a member has to pay in a calendar year before the insurance plan reimburses the member at 100 percent.

12. Self-funded Plan:

A plan in which the employer assumes partial financial risk for providing health care benefits to its employees

13. Third Party Administrator (TPA):

A third party administrator manages health plans for employers who self-insure their employee medical benefits.


Employee Retirement Income Security Act of 1974 (ERISA) is an American federal statute that establishes minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. Under ERISA, self-insured plans are regulated exclusively at the federal level.


Consolidated Omnibus Budget Reconciliation Act (COBRA) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events.


stands for the Health Insurance Portability and Accountability Act of 1996.

  • It is a law passed by Congress to:
    • Provide consumers with greater access to health care insurance by
      • Allowing a person to keep his/her health insurance when he/she loses or leaves a job (portability)
      • Limiting restrictions that a group health plan can place on benefits for preexisting conditions
    • Promote more standardization and efficiency in the health care industry
  • HIPAA regulations define health information as "any information, whether oral or recorded in any form or medium
    • Is created or received by a health care provider, health plan, public health authority, employer, life insurer, university, or health care clearinghouse"; and
    • Relates to the past, present, or future physical or mental health or condition of an individual; the provision of care to an individual; or the past, present, or future payment for the provision of health care to an individual."

17. Protected Health Information (PHI)

is the term used to refer to individually identifiable health information transmitted or maintained in any form.