Glossary of Health Insurance Terms
On March 23, 2010, President Obama signed the Affordable Care Act (ACA) into law. When making decisions about health coverage, consumers should know the specific meanings of terms used to discuss health insurance. Below are definitions for some of the more commonly used terms and how the Affordable Care Act (ACA) impacts their use.
Actuarial Value (AV)
The percentage of total average costs for benefits that a plan will cover. For example, if a plan has an actuarial value of 70%, on average, you would be responsible for 30% of the costs of all in-network covered benefits. The Actuarial Value is reflected in the metallic levels of coverage, Platinum at approximately 10% insured responsibility, Gold at about 20%, Silver at 30% and Bronze at 40%.
Advance Premium Tax Credit (APTC)
A tax credit that can help you afford coverage bought through the Exchange. Sometimes known as APTC, “advance payments of the premium tax credit,” or premium tax credit. Unlike tax credits you claim when you file your taxes, these tax credits can be used right away to lower your monthly premium costs. If you qualify, you may choose how much advance credit payments to apply to your premiums each month, up to a maximum amount. If the amount of advance credit payments you get for the year is less than the tax credit you're due, you'll get the difference as a refundable credit when you file your federal income tax return. If your advance payments for the year are more than the amount of your credit, you must repay the excess advance payments with your tax return.
Many health insurance plans place dollar limits upon the claims the insurer will pay over the course of a plan year. The ACA prohibits annual dollar limits for essential health benefits.
When you receive services from a health care provider that does not participate in your insurer's network, the health care provider is not obligated to accept the insurer's payment as payment in full and may bill you for unpaid amount. This is known as "balance billing".
The Children's Health Insurance Program (CHIP) provides coverage to low- and moderate-income children. Like Medicaid, it is jointly funded and administered by Nevada and the federal government. It was originally called the State Children’s Health Insurance Program (SCHIP).
Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. COBRA provides certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. The law generally covers health plans maintained by private-sector employers with 20 or more employees, employee organizations, or state or local governments.
A percentage of a health care provider's contracted charge for which the patient is financially responsible under the terms of the policy.
A way of pricing insurance, where every policyholder pays the same premium, regardless of health status, age or other factors.
A dollar amount which a patient must pay when visiting a health care provider.
Health care provider charges for which a patient is responsible under the terms of a health plan. Common forms of cost-sharing include deductibles, coinsurance and co-payments. Balance-billed charges from out-of-network physicians are not considered cost-sharing. The ACA prohibits cost-sharing in excess of $6,850 for an individual and $13,700 for a family. These amounts will be adjusted annually to reflect the growth of premiums.
Cost Sharing Reduction (CSR)
A discount that lowers the amount you have to pay for out-of-pocket for deductibles, coinsurance, and copayments. You can get this reduction if you get health insurance through the Exchange, your income is below 250% of the Federal Poverty Level, and you choose a health plan from the Silver plan category. CSRs are only available at the Silver level. If you're a member of a federally recognized tribe, you may qualify for additional cost-sharing benefits.
A dollar amount that a patient must pay for health care services each year before the insurer will begin paying claims under a policy.
A broad approach to appropriate coordination of the entire disease treatment process that often involves shifting away from more expensive inpatient and acute care to areas such as preventive medicine, patient counseling and education, and outpatient care. The process is intended to reduce health care costs and improve the quality of life for individuals by preventing or minimizing the effects of a disease, usually a chronic condition.
The Employee Retirement Income Security Act of 1974 (ERISA) is a comprehensive and complex statute that federalizes the law of employee benefits. ERISA applies to most kinds of employee benefit plans, including plans covering health care benefits, which are called employee welfare benefit plans.
Essential Health Benefits (EHB)
The ACA requires all non-grandfathered individual and small group plans to include all benefits within Nevada's Essential Health Benefit Benchmark Plan.
Exchanges were set up as part of the ACA to connect individuals and small businesses to a variety of insurance plans from different health insurance companies, as well as offering tools and resources to help you choose the plan that's right for you or your small business. The Nevada exchange is the Nevada Health Link which is the only health insurance resource that can provide you with federal tax credits and subsidies to help cover the cost of your insurance.
The review of a health plan's determination that a requested or provided health care service or treatment is not or was not medically necessary by a person or entity with no affiliation or connection to the health plan. The ACA requires all health plans to provide an external review process that meets minimum standards. In Nevada this is handled by the Nevada Office of Consumer Health Assistance (GovCHA).
A list of prescription drugs that are covered by a specific health care plan.
Full Time Equivalency (FTE)
The mathematical conversion of all full and part-time employees into a cumulative number of full-time employees for the purpose of determining whether a business falls in the small group (1-50 employees) or the large group (51 and above) market segment. A Full Time Equivalent calculator is available here on healthcare.gov.
A health plan that an individual was enrolled in prior to March 23, 2010. Grandfathered plans are exempted from most changes required by the ACA. New employees may be added to group plans that are grandfathered, and new family members may be added to all grandfathered plans.
Group health plan
An employee welfare benefit plan that is established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement or otherwise.
A requirement that health insurers sell a health insurance policy to any person who requests coverage. The ACA requires that all health insurance be sold on a guaranteed-issue basis.
A requirement that health insurers renew coverage under a health plan except for failure to pay premium or fraud. HIPAA requires that all health insurance be guaranteed renewable.
Health Maintenance Organization (HMO)
A type of managed care organization (health plan) that provides health care coverage through a network of hospitals, doctors and other health care providers. Typically, the HMO only pays for care that is provided from an in-network provider.
Health Savings Account (HSA)
Individuals covered by a qualified high deductible health plan (HDHP) (and have no other first dollar coverage) are able to open an HSA on a tax preferred basis to save for future qualified medical and retiree health expenses. Additional information about HSAs can be found here.
High Deductible Health Plan (HDHP)
A type of health insurance plan that, compared to traditional health insurance plans, requires greater out-of-pocket spending, although premiums may be lower. In 2016, an HSA-qualifying HDHP must have a deductible of at least $1,300 for single coverage and $2,600 for family coverage. The plan must also limit the total amount of out-of-pocket cost-sharing for covered benefits each year to $6,550 for single coverage and $13,100 for families.
A requirement that everyone maintain health insurance coverage. The ACA requires that everyone who can purchase health insurance for less than 8% of their household income do so or pay a tax penalty.
A health care provider (such as a hospital or doctor) that is contracted to be part of the network for a managed care organization (such as an HMO or PPO). The provider agrees to the managed care organization's rules and fee schedules in order to be part of the network and agrees not to balance bill patients for amounts beyond the agreed upon fee.
The review of the insurer's determination that a requested or provided health care service or treatment health care service is not or was not medically necessary by an individual(s) associated with the health plan. The ACA requires all plans to conduct an internal review upon request of the patient or the patient's representative.
Many health insurance plans placed dollar limits upon the claims that the insurer will pay over the course of an individual's life. The ACA prohibits lifetime limits on benefits.
Limited Benefits Plan
A type of health plan that provides coverage for only certain specified health care services or treatments or provides coverage for health care services or treatments for a certain amount during a specified period.
Maximum Out-of-pocket (MOOP)
An annual limitation on all cost-sharing for which patients are responsible under a health insurance plan. This limit does not apply to premiums, balance-billed charges from out of network health care providers or services that are not covered by the plan. The ACA requires out-of-pocket limits that are no greater than $6,850 per individual and $13,700 per family. These amounts will be adjusted annually to account for the growth of health insurance premiums.
A requirement in state or federal law that all health insurance policies provide coverage for a specific health care service.
A joint state and federal program that provides health care coverage to eligible categories of low-income individuals. Rules for eligible categories (such as children, pregnant women, people with disabilities, etc), and for income and asset requirements, vary by state. Coverage is generally available to all individuals who meet these state eligibility requirements. Medicaid often pays for long-term care (such as nursing home care). The ACA extends eligibility for Medicaid for a family of four earning up to $33,465, based on the 2015 Federal Poverty Level.
Medical Loss Ratio (MLR)
The percentage of health insurance premiums that are spent by the insurance company on health care services. The ACA requires that large group plans spend 85% of premiums on clinical services and other activities for the quality of care for enrollees. Small group and individual market plans must devote 80% of premiums to these purposes. Insurers that do not meet these requirements must forfeit excess premiums to their policy holders in the form of a rebate which is calculated annually.
A federal government program that provides health care coverage for all eligible individuals age 65 or older or under age 65 with a disability, regardless of income or assets. Eligible individuals can receive coverage for hospital services (Medicare Part A), medical services (Medicare Part B), and prescription drugs (Medicare Part D). Together, Medicare Part A and B are known as Original Medicare. Benefits can also be provided through a Medicare Advantage plan (Medicare Part C).
An option Medicare beneficiaries can choose to receive most or all of their Medicare benefits through a private insurance company. Also known as Medicare Part C. Plans contract with the federal government and are required to offer at least the same benefits as original Medicare, but may follow different rules and may offer additional benefits. Unlike original Medicare, enrollees may not be covered at any health care provider that accepts Medicare, and may be required to pay higher costs if they choose an out-of-network provider or one outside of the plan's service area.
Medicare Supplement (Medigap) Insurance
Private insurance policies that can be purchased to fill-in the gaps and pay for certain out-of-pocket expenses (like deductibles and coinsurance) not covered by original Medicare (Part A and Part B).
Minimum Essential Coverage
The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage.
A plan, created by the ACA and overseen by the U.S. Office of Personnel Management (OPM), that is available in Nevada through the Exchange. Anthem's HMO division offers two multi-state plans through the Nevada Health Link. These two plans are identical to two other Anthem HMO offerings except any external appeals on the multi-state plans are handled by OPM rather than GovCHA (see External Review).
Open enrollment period
A specified period during which individuals may enroll in a health insurance plan each year. In certain situations, such as if one has had a birth, death or divorce in their family, individuals may be allowed to enroll in a plan outside of the open enrollment period.
A health care provider (such as a hospital or doctor) that is not contracted to be part of a managed care organization's network (such as an HMO or PPO). Depending on the managed care organization's rules, an individual may not be covered at all or may be required to pay a higher portion of the total costs when he/she seeks care from an out-of-network provider.
Pre-existing condition exclusion
The period of time that an individual receives no benefits under a health benefit plan for an illness or medical condition for which an individual received medical advice, diagnosis, care or treatment within a specified period of time prior to the date of enrollment in the health benefit plan. The ACA prohibits pre-existing condition exclusions for all non-grandfathered plans.
Preferred Provider Organization (PPO)
A type of managed care organization (health plan) that provides health care coverage through a network of providers. Typically the PPO requires the policyholder to pay higher costs when they seek care from an out-of-network provider.
The periodic payment required to keep a policy in force.
Covered services that are intended to prevent disease or to identify disease while it is more easily treatable. The ACA requires insurers to provide coverage for preventive benefits without deductibles, co-payments or coinsurance. The complete set of preventive benefits mandated by the ACA can be found here.
Qualified Health Plan (QHP)
A health insurance policy that is sold through an Exchange, here in Nevada that is the Nevada Health Link. The ACA requires Exchanges certification that qualified health plans meet minimum standards contained in the law. In Nevada that certification is performed by the Nevada Division of Insurance.
Review by the Division of Insurance of proposed premiums and premium increases. During the rate review process proposed premiums are examined to ensure that they are sufficient to pay all claims, that they are not unreasonably high in relation to the benefits being provided, and that they are not unfairly discriminatory to any individual or group of individuals.
The process of voiding a health plan from its inception usually based on the grounds of material misrepresentation or omission on the application for insurance coverage that would have resulted in a different decision by the health insurer with respect to issuing coverage. The ACA prohibits rescissions except in cases of fraud or intentional misrepresentation of a relevant fact.
Group health plans may be self-insured or fully insured. A plan is self-insured (or self-funded), when the employer assumes the financial risk for providing health care benefits to its employees. A plan is fully insured when all benefits are guaranteed under a contract of insurance that transfers that risk to an insurer.
Nevada statue (effective January 1, 2016) refers to the federal definition of a small employer for use in here in Nevada. An employer who employed an average of at least 1 but not more than 50 full-time equivalent employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.
Small Business Health Options Program (SHOP)
The Small Business Health Options Program or SHOP Marketplace helps small businesses provide health coverage to their employees. the SHOP Marketplace is open to employers with 50 or fewer full-time equivalent emplyees (FTEs), including non-profit organizations. You can enroll in SHOP at any point throughout the year. The Small Business Health Care Tax Credit is only available through the SHOP Marketplace.
The ability of a health insurance plan to meet all of its financial obligations. The Division of Insurance carefully monitor the solvency of all health insurance plans and require corrective action if a plan's financial situation becomes hazardous. In extreme circumstances, a state may seize control of a plan that is in danger of insolvency.
Stand Alone Dental Plan (SADP)
A type of dental plan offered through the Marketplace that’s not included as part of a health plan. You may want this if the health coverage you choose doesn’t include dental, or if you want different dental coverage.
Usual, Customary and Reasonable charge (UCR)
The cost associated with a health care service that is consistent with the going rate for identical or similar services within a particular geographic area. Reimbursement for out-of-network providers is often set at a percentage of the usual, customary and reasonable charge, which may differ from what the provider actually charges for a service.
A period of time that an individual must wait either after becoming employed or submitting an application for a health insurance plan before coverage becomes effective and claims may be paid. Premiums are not collected during this period.