Glossary

Affordable Care Act (ACA)

The Patient Protection and Affordable Care Act (PPACA) – also known as the Affordable Care Act or ACA – is the landmark health reform legislation passed by the 111th Congress and signed into law by President Barack Obama in March 2010. The legislation includes a long list of health-related provisions that began taking effect in 2010 and will “continue to be rolled out over the next four years.” Key provisions are intended to extend coverage to millions of uninsured Americans, to implement measures that will lower health care costs and improve system efficiency, and to eliminate industry practices that include rescission and denial of coverage due to pre-existing conditions.
 

Brand-name drug

Prescription drugs marketed with a specific brand name by the company that manufactures it, usually the company which develops and patents it. When patents run out, generic versions of many popular drugs are marketed at lower cost by other companies. Check your insurance plan to see if coverage differs between name-brand and their generic twins.
 

Benefit

Benefit refers to the amount payable by the insurance company to a claimant, assignee, or beneficiary when the insured suffers a loss.
 

Bronze plan

A Bronze health plan – available through state Health Insurance Marketplace created by the ACA – covers 60 percent of the cost of essential benefits, while the patient pays 40 percent – up to an out-of-pocket maximum of roughly $6,000 for an individual or $12,000 for a family.
 

Certificate of insurance

The certificate of insurance is a printed description of the benefits and coverage provisions forming the contract between the carrier and the customer. It discloses what is covered, what is not, and dollar limits.
 

Cobra

COBRA is the Consolidated Omnibus Budget Reconciliation Act of 1985, federal legislation that allows you – if you work for an insured employer group of 20 or more employees – to continue to purchase health insurance for up to 18 months if you lose your job, or your employer-sponsored coverage is otherwise terminated.
 

Coinsurance

Coinsurance refers to money that an individual is required to pay for services, after a deductible has been paid. In some health care plans, co-insurance is called “copayment.” Coinsurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.
 

Copayment

Copayment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some HMOs require a $10 copayment for each office visit, regardless of the type or level of services provided during the visit. Copayments are not usually specified by percentages.
 

Deductible

The deductible is the amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.
 

Employer Mandate

The new health reform legislation requires employers with 50 or more employees to provide health coverage to those employees and sets a minimum baseline of coverage and employer contributions. Employers who do not comply will face annual penalties based on the number of employees in the firm.
 

Employer Tax Credits

Employer tax credits – or Small Business Health Care Tax Credits – provide a tax credit of up to 35 percent of small business premium costs in 2010 – with that rate increasing to 50 percent in 2014. Who’s eligible? Employers with fewer than 25 full-time workers and average annual wages less than $50,000. Read more about the credit.
 

Employer-Sponsored Health Insurance

Of Americans who have health coverage, nearly 60 percent secure that coverage through an employer-sponsored plan, often called group health insurance. Millions take advantage of the coverage for reasons as obvious as employer responsibility for a significant portion of the health care expenses. Group health plans are also guaranteed issue, meaning that a carrier must cover all applicants whose employment qualifies them for coverage. In addition, employer-sponsored plans typically are able to include a range of plan options from HMO and PPO plan to additional coverage such as dental, life, short- and long-term disability. Read more about group health insurance. Read recent news articles about employer-sponsored health insurance.
 

Essential Health Benefits

Beginning in 2014, under the Affordable Care Act, all health insurance policies sold in state health insurance exchanges must cover what physicians and consumer advocates call essential health benefits. The benefits will ensure that 8.7 million Americans will gain maternity coverage, 4.8 million Americans will gain substance abuse coverage, 2.3 million Americans will gain mental health coverage, and 1.3 million Americans will gain prescription drug coverage.
 

Generic Drug

Once a company’s patent on a brand-name prescription drug has expired, other drug companies are allowed to sell the same drug under a generic label. Generic drugs are less expensive, and most prescription and health plans reward clients for choosing generic drugs.
 

Guaranteed Issue

Guaranteed issue refers to health insurance coverage that is guaranteed to be issued to applicants regardless of their health status, age, or income – and guarantees that the policy will be renewed as long as the policy holder continues to pay the policy premium.
 

Health Insurance Exchange

A health insurance exchange – or health insurance marketplace – is a key provision of health reform legislation, established to provide a selection of competing providers, each offering different qualified plans. All qualified plans must meet standards established and enforced by the Health Choices Administration. For instance, participating plans will not be allowed to discriminate against applicants based on health history (pre-existing conditions) or future risk. Competition between the plan providers would, in theory, encourage the providers to improve the quality and pricing of offered plans.
 

Health Insurance Portability and Accountability Act of 1996 (HIPPA)

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also creates the authority to mandate the use of standards for the electronic exchange of health care data; to specify what medical and administrative code sets should be used within those standards; to require the use of national identification systems for health care patients, providers, payers (or plans), and employers (or sponsors); and to specify the types of measures required to protect the security and privacy of personally identifiable health care.
 

Health Maintenance Organizations (HMOs)

Health maintenance organizations represent “pre-paid” or “capitated” insurance plans in which individuals or their employers pay a fixed monthly fee for services instead of a separate charge for each visit or service. The monthly fees remain the same, regardless of types or levels of services provided. Services are provided by physicians who are employed by, or under contract with, the HMO. HMOs vary in design. Depending on the type of the HMO, services may be provided in a central facility, or in a physician’s own office (as with IPAs.)
 

In-Network

In-network refers to providers or health care facilities that are part of a health plan’s network of providers with which it has negotiated a discount. Insured individuals usually pay less when using an in-network provider, because those networks provide services at lower cost to the insurance companies with which they have contracts.
 

Individual Affordability Credits

Individual affordability credits are included in the health reform legislation to help ensure the goals of the legislation’s individual mandate. Legislation provides premium subsidies on a sliding scale to eligible individuals and families with incomes up to four times the federal poverty level to help them purchase coverage through the health insurance exchanges.
 

Individual Subsidies

Individual subsidies – or individual affordability credits – are included in the health reform legislation to help ensure the goals of the legislation’s individual mandate. Legislation provides premium subsidies on a sliding scale to eligible individuals and families with incomes up to four times the federal poverty level to help them purchase coverage through the health insurance exchanges. Related terms: individual affordability credits, subsidies
 

Medicaid

Medicaid is a health insurance program for low-income individuals who can not otherwise afford Medicare or other commercial health insurance plans. Medicaid is funded in part by the government and by the state where the enrollee lives. Learn more about Medicare benefits and eligibility.
 

Network

A group of doctors, hospitals and other health care providers contracted to provide services to insurance companies customers for less than their usual fees. Provider networks can cover a large geographic market or a wide range of health care services. Insured individuals typically pay less for using a network provider.
 

Obamacare Penalty

Under the individual mandate provision of the Affordable Care Act, Americans will be required to purchase health insurance, starting in 2014. Those who, for whatever reason, decide to not purchase coverage, would face a tax that’s built into the law. Fortunately, all but a small percentage of Americans won’t need to be concerned about the penalty.
 

Out-of-Pocket Maximum

A predetermined limited amount of money that an individual must pay out of their own savings, before an insurance company or (self-insured employer) will pay 100 percent for an individual’s health care expenses.
 
PPO: PPO means "Preferred Provider Organization." Like the name implies, with a PPO plan you'll need to get your medical care from doctors or hospitals on the insurance company's list of preferred providers if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it's up to you to make sure that the health care providers you visit participate in the PPO. Services rendered by out of network providers may not be covered or may be paid at a lower level. A broad variety of PPO plans are available, many with low monthly premiums.
 

Pre-existing condition

A pre-existing condition is a medical condition that is excluded from coverage by an insurance company because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company.
 

Primary care provider (pcp)

A health care professional (usually a physician) who is responsible for monitoring an individual’s overall health care needs. Typically, a PCP serves as a “quarterback” for an individual’s medical care, referring the individual to more specialized physicians for specialist care.
 

Private Health Insurance

Private health insurance – insurance plans marketed by the private health insurance industry – currently dominates the U.S. health care landscape, with approximately two-thirds of the non-elderly population covered by private health insurance. Coverage includes policies obtained through employer-sponsored insurance, with approximately 62 percent of non-elderly Americans receiving insurance provided as a benefit of employment. Another 5 percent of the non-elderly group bought coverage outside of the workplace on the individual health insurance market. Click private health insurance.
 
Related Terms:
Employer-Sponsored Health Insurance, Group Health Insurance, Individual Health Insurance
 

Provider

Provider is a term used for health professionals who provide health care services. Sometimes, the term refers only to physicians. Often, however, the term also refers to other health care professionals such as hospitals, nurse practitioners, chiropractors, physical therapists, and others offering specialized health care services.
 

Short-Term Health Insurance

Short-term major medical health insurance policies were designed to provide coverage for individuals who need temporary health insurance coverage for a short period of time, usually from 30 days to six months. The policies – offered by private health insurance companies – are intended to provide a safety net in the event of a health crisis that might otherwise cause a serious financial hardship.
 

Small Business Health Care Tax Credits

Employer tax credits – or Small Business Health Care Tax Credits – provide a tax credit of up to 35 percent of small business premium costs in 2010 – with that rate increasing to 50 percent in 2014. Who’s eligible? Employers with fewer than 25 full-time workers and average annual wages less than $50,000. Read more about the credit.
 

Stop-Loss

The dollar amount of claims filed for eligible expenses at which point you’ve paid 100 percent of your out-of-pocket and the insurance begins to pay at 100 percent. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.
 

Underwriter

The company that assumes responsibility for the risk, issues insurance policies and receives premiums.

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