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.

Actively Marketed
Under the Affordable Care Act a health insurance plan in the individual or small group market may be “offered” for sale yet not advertised or promoted by the insurer.  An insurance carrier is however, still required to accept any individual or employer that applies for coverage on those plans not promoted in their marketing. 

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.

Allowed Amount
This is the maximum payment the plan will pay for a covered health care service. May also be called "eligible expense", "payment allowance" or "negotiated rate."

Ancillary Services
Professional services by a hospital or other inpatient health program. These may include x-ray, drug, laboratory, or other services. 

Annual Limit
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.

A request that your health insurer or plan review a decision that denies a benefit or payment (either in whole or in part).

Balance billing
When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.

Catastrophic Plans
In addition to the metallic level plans (Gold, Silver, Bronze) this plan is available to people under 30 or for any age if you qualify for the hardship exemption.  Catastrophic plans are available both offexchange and at Healthcare.gov.  They typically offer an actuarial value near 60 percent.  A hardship exemption may be applied for on Healthcare.gov.

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).

A request for a benefit (including repaying you for a health care expense you paid) that you or your health care provider make to your health insurer or plan for items or services you think are covered.

COBRA coverage
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.

Your share of the costs of a covered health care service, calculated as a percentage (for example, 20%) of the allowed amount for the service. You generally pay coinsurance plus any deductibles you owe. (For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your coinsurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.)

Community rating
A way of pricing insurance, where every policyholder pays the same premium, regardless of health status, age or other factors.

A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.

Cost Sharing
The general term for the share of costs for services that a plan or health insurance covers that you must pay out of your own pocket (sometimes called “out-of-pocket costs”). Some examples of cost sharing are copayments, deductibles, and coinsurance. Other costs, including your premiums, penalties you may have to pay or the cost of care a plan doesn’t cover usually are not considered cost sharing.

Cost Sharing Reduction (CSR)

Discounts that lower cost sharing for certain services covered by individual health insurance you buy through the Marketplace. You can get these discounts if your income is below a certain level and you choose a Silver level health plan. If you're a member of a federally recognized tribe, which includes being a shareholder in an Alaska Native Claims Settlement Act corporation, you can qualify for cost-sharing reductions on certain services that any Marketplace policy covers and may qualify for other cost-sharing reductions depending upon your income. 

The amount you could owe during a coverage period (usually one year) for health care services your health insurance or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1000, your plan won’t pay anything until you’ve met your $1000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services. 

Diagnostic Test
Tests to figure out what your health problem is. For example, an x-ray is a diagnostic test to see if you have a broken bone.

Disease management
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.

Durable Medical Equipment (DME)
Equipment and supplies ordered by a health care provider for everyday or extended use. DME may include: oxygen equipment, wheelchairs and crutches.

Emergency Medical Condition
An illness, injury, symptom (including severe pain) or condition severe enough to risk serious danger to your health if you didn't get medical attention right away.

Emergency Medical Transportation
Ambulance services for an emergency medical condition. Types of emergency medical transportation may include transportation by air, land, or sea. Your plan or health insurance may not cover all types of emergency medical transportation, or may pay less for certain types.

Emergency Room Care
Services to check for an emergency medical condition and treat you to keep an emergency medical condition from getting worse. These services may be provided in a licensed hospital’s emergency room or other place that provides care for emergency medical conditions.

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.

Excluded Services
Health care services that your plan doesn’t pay for or cover.

Exclusive Provider Organization (EPO)
An EPO plan resembles an HMO in that covered health care is restricted to a defined set of health providers.  The insured must only use providers from the specified network of physicians and hospitals to receive coverage.  Typically, except for emergency situations, there is no coverage for care received from a non-network provider.

Expanded Bronze Plan
For 2018, another version of the Bronze metallic level plan was made available for purchase.  These plans are available both off exchange and on Healthcare.gov, they offer a greater range of the actuarial value allowable (56-65 percent) than other Bronze plans and provide for at least one major essential health benefit to be available prior to meeting the plan’s deductible.

External review
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 (OCHA).

A list of drugs your plan covers. A formulary may include how much your share of the cost is for each drug. Your plan may place drugs at different cost sharing levels or tiers. For example, a formulary may include generic drug and brand name drug tiers and different cost sharing amounts will apply to each tier

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 complaint that you communicate to your health insurer or plan.

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.

Guaranteed issue
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.

Guaranteed Renewability
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.

Habilitation Services
Health care services that help a person keep, learn or improve skills and functioning for daily living. Examples include therapy for a child who isn’t walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings.

Health Insurance
A contract that requires a health insurer to pay some or all of your health care costs in exchange for a premium. A health insurance contract also may be called a “policy” or "plan".

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.

Home Health Care
Health care services and supplies you get in your home under your doctor’s orders. Nurses, therapists, social workers or other licensed health care providers provide these services. Home health care usually doesn’t include help with non-medical tasks, such as cooking, cleaning or driving.

Hospice Services
Services to provide comfort and support for persons in the last stages of a terminal illness and their families.

Hospital Outpatient Care
Care in a hospital that usually doesn’t require an overnight stay.

Care in a hospital that requires admission as an inpatient and usually requires an overnight stay. Some plans may consider an overnight stay for observation as outpatient care instead of in-patient care.

Individual mandate
See "Individual Responsibility Requirement below.

Individual Responsibility Requirement
The duty to be enrolled in health coverage that provides minimum essential coverage. If you don’t have minimum essential coverage, you may have to pay a penalty when you file your federal income tax return. Sometimes called the “individual mandate.”

In-Network provider
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, PPO or EPO). 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.

Internal review
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.

Lifetime limit
Many health insurance plans placed dollar limits upon the total amount of claims that the insurer would pay over the course of an individual's life. The ACA prohibits lifetime limits on essential health 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 (Out-of-Pocket Limit)
The most you could pay during a coverage period (usually one year) for your share of the costs of covered services. After you meet this limit, the plan will usually pay 100% of the allowed amount. This limit helps you plan for health care costs. This limit never includes your premium, balanced-billed charges or health care your health insurance or plan doesn’t cover. Some health insurance or plans don’t count all of your copayments, deductibles, coinsurance payments, out-of-network payments or other expenses toward this limit. Your policy may use the term "Out-of-Pocket Maximum" instead of "Out-of-Pocket Limit."

Mandated benefit
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. 

Medically Necessary
Health care services or supplies needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms, including habilitation, and that meet accepted standards of medicine.

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).

Medicare Advantage
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
Health coverage that will meet the individual responsibility requirement. Minimum essential coverage generally includes plans, health insurance available through the Marketplace or other individual market policies, Medicare, Medicaid, CHIP, TRICARE and certain other coverage.

Minimum Value Standard
A basic standard for how much care a plan pays for. If you're offered an employer plan that meets the minimum value standard and a separate standard that defines what's affordable, you don't qualify for premium tax credits and cost sharing reductions to buy a plan from the Marketplace.

Multi-state plan
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 differ from other Nevada plans in that appeals on the multi-state plans are handled by OPM rather than GovCHA (see External Review).  

The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.

Network Provider
A provider who has a contract with your health insurer or plan who has agreed to provide services to members of a plan. You will pay less if you see a provider in the network. Also called "preferred provider" or "participating provider."

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.

Out-of-network Provider
A provider who doesn’t have a contract with your plan to provide services. You’ll usually pay more to see an out-of-network provider than a preferred provider. Your policy will explain what those costs may be. May also be called “non-preferred” or “non-participating” instead of “out-of-network provider.”

Out-of-Pocket Limit
The most you could pay during a coverage period (usually one year) for your share of the costs of covered services. After you meet this limit, the plan will usually pay 100% of the allowed amount. This limit helps you plan for health care costs. This limit never includes your premium, balanced-billed charges or health care your health insurance or plan doesn’t cover. Some health insurance or plans don’t count all of your copayments, deductibles, coinsurance payments, out-of-network payments or other expenses toward this limit. Your policy may use the term "Out-of-Pocket Maximum" instead of "Out-of-Pocket Limit."

Health coverage issued to you directly (individual plan) or through an employer, union or other group sponsor (employer group plan) that provides coverage for certain health care costs. Also called "health insurance plan", "policy", "health insurance policy" or "health insurance".

A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment (DME) is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost. 

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 plans purchased after March 2010.

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 amount that must be paid for your health insurance or plan. You and/or your employer pay it, usually monthly, quarterly or yearly.

Preventive benefits
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.

Primary Care Provider
A physician, including an M.D. (Medical Doctor) or D.O. (Doctor of Osteopathic Medicine), nurse practitioner, clinical nurse specialist or physician assistant, as allowed under Nevada law and the terms of the plan, who provides, coordinates or helps you access a range of health care services.

Premium Tax Credits
Financial help that lowers your taxes to help you and your family pay for private health insurance. You can get this help if you get health insurance through the Marketplace and your income is below a certain level. You can use advance payment of the tax credit right away to lower your monthly premium.

Prescription Drugs
Drugs and medications that by law require a prescription.

Prescription Drug Coverage
Coverage under a plan that helps pay for prescription drugs. If the plan’s formulary uses “tiers” (levels), prescription drugs are grouped together by type or cost. The amount you'll pay in cost sharing will be different for each "tier" of covered prescription drugs.

Professional Services
Covered services provided or coordinated by a person recognized under your plan to provide health care services and treatment.

An individual or facility that provides health care services. Some examples of a provider include a doctor, nurse, chiropractor, physician assistant, hospital, surgical center, skilled nursing facility, and rehabilitation center. The plan may require the provider to be licensed, certified or accredited as required by state law.

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.

Rate review
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.

Reconstructive Surgery
Surgery and follow-up treatment needed to correct or improve a part of the body because of birth defects, accidents, injuries or medical conditions.

A written order from your primary care provider for you to see a specialist or get certain health care services. In many health maintenance organizations (HMOs), you need a referral before you can get health care services from anyone other than your primary care provider. If you don’t get a referral first, the plan or health insurance may not pay for the services.

Rehabilitation Services
Health care services that help a person keep, get back or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt or disabled. These services may include physical and occupational therapy, speech-language pathology and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.

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.

A type of preventive care that includes tests or exams to look for a disease or condition, usually when you have no symptoms, signs or medical history of that disease or condition.

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.

Skilled Nursing Care
Services performed or supervised by licensed nurses in your home or in a nursing home. Skilled nursing care is not the same as “skilled care services,” which are services performed by therapists or technicians (rather than licensed nurses) in your home or in a nursing home.

Small Employer
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 employees (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.

A physician specialist focusing on a specific area of medicine or a group of patients to diagnose, manage, prevent or treat certain types of symptoms and conditions. A non-physician specialist is a provider who has special training in a specific area of health care.

Specialty Drug
A type of prescription drug that, in general, requires special handling or ongoing monitoring and assessment by a health care professional, or is relatively difficult to dispense. Generally, specialty drugs are the most expensive drugs on a formulary.

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.

Urgent Care
Care for an illness, injury or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.

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.

Waiting period
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.