The Pediatric Group PLLC - Insurance Terms

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The information provided by The Pediatric Group, PLLC website is information of a general nature and is intended for informational purposes only. It should not be relied on for personal medical reasons and should not be relied upon as providing specific medical advice or for diagnosis or treatment. All information contained on this website is presented as is, without any warranties of any kind, express or implied.

Please note that visiting this website alone does not establish a physician-patient relationship with any physician engaged by The Pediatric Group, PLLC. You should consult your own physician for specific advice for your own personal situation.

Insurance Terms

Insurance Lingo (terms you might find on an EOB – like EOB!)

Claim - The request for payment that this office sends to your insurance carrier.

Insurance carrier - The company that is responsible for paying the claim.

EOB - Explanation of benefits. The information sent to you by your insurance carrier after they’ve processed our claim. We get a copy, too.

Covered benefit - A medical service that is considered eligible for payment by the plan. A service that is a covered benefit may be applied toward meeting your deductible. The plan sponsor (most often your employer) chooses which benefits will be considered covered by the plan.

Example: On most policies, gallbladder surgery would be considered a covered benefit, but a facelift would not be a covered benefit.

Deductible - The amount that must be paid by the patient/family each year before the insurance begins to pay any claims. Every member of the family has their own deductible. Usually patient copays do not count toward a deductible.

Example: Let’s say you have a $500 deductible. Your child’s sick visit charge is $65.00. Your insurance carrier allowable for that visit is $63.25. You receive an EOB informing you that the $63.25 has been applied to your deductible. This means you must pay us the $63.25. You have $436.75 left to meet on your deductible before your insurance carrier begins to pay any claims.

Family deductible - A total amount (often 3-4 times the individual deductible) that, once met, satisfies the deductible for an entire family.

For example: Mary and John Smith have four children. Each member of the family has a $500 deductible. The total of the individual deductibles is $3,000. However, the family deductible is only $2,000. Once the Smith family meets the $2,000 family deductible, the rest of the individual deductibles are waived.

Allowable - The amount we have negotiated with your insurance carrier or PPO Network to accept as payment in full for a specific level of service.

Insurance discount (also called “contractual adjustment") - The amount we agree to “discount” (or write off) the original amount charged to you for a specific service. In the example above, we have to write off (discount) $1.75 and can only bill you for $63.25, based on our contract.

PPO Network - an organization contracted with health care providers that gives economic incentives to the individual purchaser of a health-care contract to patronize certain physicians, laboratories, and hospitals which agree to supervision and reduced fees. Also called a "preferred provider organization." Important: A PPO Network is not an insurance company.

Example: PPO Oklahoma, PHCS (Private Health Care Systems), Beech Street, Preferred Community Choice, and PPO USA are all PPO networks.

COB (Coordination of Benefits) - The process of determining which of two insurance plans carried by a patient/family is responsible to pay first (and the majority of the claim).

Primary insurance - The insurance plan that is required to pay first (and generally the majority) on a claim.

Secondary insurance – The insurance plan that is responsible to pay after the primary insurance plan has paid their share.

The birthday rule - Rule that determines which insurance plan pays first. The insured person whose birthday falls earliest in the calendar year is considered to be the primary insured. This goes by month of birth, not year of birth.

For example: Johnny is insured under both his mom’s employer group insurance and his dad’s employer group insurance. (Lucky Johnny!) Mom was born on October 12, 1975. Dad was born on April 10, 1976. Thus, dad’s insurance plan is primary (April comes before October). Remember, the year of birth does not matter.

Individual plan - An insurance plan purchased by an individual person for herself and/or her family. Individual plans are not subject to the same regulations and state mandates as employer group plans.

State mandates - State regulations that require insurance plans to cover and/or pay for certain services.

For example, in Oklahoma, it is a state law that fully funded insurance plans must pay for state-required childhood immunizations, without requiring a copay, co-insurance, or applying the immunizations to the patient’s annual deductible.

Fully funded plan - An insurance plan in which the insurance company bears the financial risk.

For example, XYZ Company sends a $6,000 premium to ABC insurance company each month. If payment of all the claims for covered benefits costs the insurance company less than $6,000 that month, they make a profit. But if the payment of claims for covered benefits costs the insurance company more than $6,000, they lose money. The insurance company is taking a risk that it might lose money on a particular employer group.

Self-funded plan - A medical benefit plan in which the employer bears the financial risk.

In a self-funded plan, an employer group’s premium dollars are placed in a separate bank account designated for payment of claims for covered benefits. If payment of the claims for covered benefits costs the employer more than is in the benefit account, the employer is contractually obligated to pay the claims.

Important note: