Insurance Policy Glossary
Some terms that will prove helpful when shopping for vision care plans:
Health Savings Account (HSA): A health savings account, or HAS, is a type of pre-tax account that people with high-deductible health care plans can use to save money to pay for the additional costs of health care. The funds from these plans can be used to pay the high deductible provided under the plan or for services not covered under the high-deductible health care plan, such as vision care.
Flexible Spending Account (FSA): A flexible spending account or FSA is a pre-tax savings plan offered through some employers that allows employees to put away some of their paycheck in a special account to pay for certain, approved healthcare costs. In most cases, vision-care costs can be paid using the funds from a flexible spending account. Unlike a health savings account, a flexible spending account does not have to be matched with a high-deductible health care plan and can be used with traditional medical insurance.
Independent Practice Association (IPA): An independent practice association is a group of independent doctors, or an organization that has a contractual relationship with some independent doctors, that offers medical services to managed-care organizations for some type of fee. HMOs and other managed-care plans can form a contract with the IPA to provide medical care to the patients covered through the healthcare plan for set rates.
Out-of-Network: Most managed healthcare plans, including vision insurance policies, require that goods and services are provided through a network of approved providers. If an individual goes elsewhere-"out-of-network"-he or she may be required to cover all or part of the costs of the vision-care services.
Deductible: The deductible is the portion of any claim that is covered by the insured person before the insurance kicks in. A deductible can be calculated on a per-claim basis or set as an annual amount after which the insurance will pay the costs of the claim. With most insurance products, the higher the deductible, the lower the premium cost for the policy.
Provider: A provider is a person or institution, such as a doctor or a hospital, which provides medical services or goods to a patient. With a vision insurance plan, the term usually refers to an ophthalmologist, an optometrist, or a vendor of eyeglasses and contact lenses. Depending on the terms of the policy, goods and services may only be covered if they are delivered by a provider within a defined network.
Exclusions: Exclusions are provisions of an insurance policy that refer to specific risks, hazards, perils, or occurrences that are not covered by the policy. Exclusions are usually part of the insurance policy form and spell out the details of what is not covered. In some cases, the exclusions can be extremely broad (like "war") and apply to many different types of policies, while in other cases they can be specifically tailored to a certain type of policy. With a vision insurance policy, designer eyeglasses or certain specialty coatings may be excluded from the coverage.
Premium: The premium is the amount of money that the purchaser of an insurance policy pays an insurance company in exchange for insurance coverage through the policy. Premiums can be paid on an annual basis, monthly, or through some other plan. Premiums are determined through underwriting, in which the insurance company assesses the risk presented by a client's liabilities and determines how much money the insurance company needs to charge to adequately provide for taking a gamble by covering those risks.
Rider (Endorsement): A rider or endorsement is a special form that is attached to an insurance policy that alters the policy in some way. One of the common uses for a rider or endorsement is to provide additional insurance coverage that is not provided in the body of the policy. This insurance could include coverage for additional risks, higher limits of insurance, or other changes to the scope of the policy. Insurance policy endorsements can also be used to limit or restrict the insurance coverage in some way, to clarify the way the coverage applies to a specific exposure, or to add other parties or locations to the insurance policy. In general, any changes that a business owner or individual wants or needs made to the basic policy coverage form will be expressed through an endorsement to the policy. Depending on the details of the endorsement, it can either increase or decrease the premium costs of the policy to the insured.
Last Updated: 02/28/2013