Glossary of Health Care Terms
Actuarial Value: The actuarial value represents the share of health care expenses the plan covers for a typical group of enrollees. As plans increase in actuarial value – bronze, silver, gold, and platinum – they would cover a greater share of enrollees’ medical expenses overall, though the details could vary across plans. For example, the bronze plan pays for 60 percent of the cost of the covered services: the enrollee would be responsible for the remaining 40 percent.
Allowed Amount: Maximum dollar amount on which payment is based. This amount can be subject to deductibles, coinsurance, and copayments.
Ancillary Services: Services provided and billed by a hospital that are not part of the room and board charge, such as diagnostic lab and x-ray, operating room charges, medications, I.V.s, etc.
Assignment of Benefits: Authorization by the patient to pay all insurance benefits directly to the provider of care.
Balance Billing: The difference between the amount the provider charges for a service and the amount allowed by the insurance company/plan.
Carrier: An insurance company.
Centers of Excellence: Providers contracted with to perform specific low-volume, high cost procedures based on their expertise and willingness to provide discounts for increased volume.
Children’s Health Insurance Program (CHIP) : Insurance program jointly funded by state and federal government that provides health coverage to low-income children and, in some states, pregnant women in families who earn too much income to qualify for Medicaid but can’t afford to purchase private health insurance coverage.
COBRA: Acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985, a federal law that allows you to temporarily keep health insurance coverage after you are no longer eligible. If you elect COBRA coverage, you pay 100% of the premiums, including the share the employer used to pay, plus an administrative fee.
Coinsurance: Your share of the costs of a covered health care service, calculated as a percent of the allowed charge for the service. You would pay this amount plus any deductibles you owe. For example, your plan has a $1,500 deductible and your coinsurance is 20 percent. You would be responsible for paying 100 percent of your covered health care charges until you reach $1,500. At that point and for the remainder of the policy year your insurance company/heath plan would pay 80 percent of the covered/allowed charges and you would be responsible for the remaining 20 percent.
Collectively Bargained Health Plans: A Taft-Hartley multiemployer health and welfare trust fund is established and governed by a board of trustees with equal employer and union representation. Representatives from the health and welfare fund bargain with employers for a fixed amount per hour worked to be contributed to the trust to provide health benefits for covered workers.
Coordination of Benefits (COB): A provision that prevents patients from profiting from having more than one health insurance plan. Benefits are usually coordinated between the two plans so that in many cases the entire allowed charge is covered.
Copayment: A fixed amount you would pay for a covered health care service. The amount can vary by the type of covered health care services. In most cases, copayments do not count towards your deductible. For example, your plan has a flat $30.00 copayment for doctor’s office visits. You would pay the first $30.00 for each visit and your insurance company/plan would pay the balance of the covered charge for the service.
Cost-sharing Subsidies: A discount that lowers the amount you have to pay out-of-pocket for deductibles, coinsurance and copayments. You can get this reduction if you get health insurance through the Marketplace, your income is below a certain level, and you choose a health plan from the Silver plan category.
Deductible: The amount you owe for health care services your health insurance covers before your health insurance begins to pay. The deductible may not apply to all services.
Effective Date: The date coverage goes into effect under your health plan. If there is a waiting period or eligibility requirements, the effective date follows these requirements.
Employee Assistance Program (EAP): Can also be called a member assistance program (MAP). A program designed to help workers deal with problems that can not only result in poor job performance but can also lead to medical complications. Programs typically address alcoholism and drug abuse as well as work-related stress, marital and personal relationships, and legal issues.
Essential Health Benefits (EHB): A set of health care service categories that must be covered by certain plans, starting in 2014 under the ACA. This comprehensive package of items and services include the following: ambulatory patient services (outpatient care you get without being admitted to a hospital), emergency services, hospitalization (including surgery and overnight stays), pregnancy, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management and pediatric services (including oral and vision care).
Excepted Benefits: Benefits not subject to the requirements HIPAA and the ACA.
Exchange: See “Marketplace.”
Excise Tax: The excise tax on high cost employer-sponsored health coverage is also referred to as the “Cadillac tax,” is scheduled to take effect in 2020 under the ACA. Health insurance plans that cost more than $10,200 for individual coverage or $27,500 for family coverage will be subject to the tax, which is 40% of the amount that exceeds those thresholds. For example, if individual coverage costs $12,000, then the employer that offers the plan would owe 40% of $1,800 ($12,000 - $10,200 = $1,800), or $720 for each individual it covers under that plan. If family coverage costs $31,200, then the employer would owe 40% of $3,700 ($31,200 - $27,500 = $3,700), or $1,480 for each family it covers under that plan.
Federal Poverty Level: A measure of income used to determine eligibility for certain programs and benefits, including Medicaid, CHIP and savings on Marketplace health insurance.
Grandfathered Plan: A group health plan that was created, or an individual health insurance policy that was purchased, on or before March 23, 2010. Plans that have grandfather status are exempt from many changes required under the ACA. Plans or policies may lose this status if they make certain significant changes that reduce benefits or increase cost to its consumers.
Individual Mandate: Requirement under the ACA that most individuals have health insurance or pay a penalty.
Marketplace: also referred to as the Exchange or the Health Insurance Marketplace. A resource where individuals, families and small businesses can learn about their health coverage options, compare health insurance plans based on costs and benefits, choose a plan and enroll in coverage.
Maximum Out-of-Pocket (OOP) Limits: The maximum amount of cost sharing you are responsible for annually or during a policy year. Deductible, coinsurance, and copayment amounts that you pay may be included in the OOP maximum. Premiums, balance billing amounts for services by out-of-network providers, and amounts paid for non-covered services do not count toward the OOP maximum.
Medicaid: A state-administered health insurance program for low-income families and children, pregnant women, the elderly, people with disabilities, and in some states, other adults. The Federal government provides a portion of the funding for Medicaid and sets guidelines for the program. States also have control in how they design the program.
Medical Home: The concept that a primary care physician will partner with patients to effectively manage and coordinate all of their care.
Medicare:: A Federal health insurance program for people who are 65 years of age or older and certain younger people with disabilities.
Multiemployer Plan: A collectively bargained health benefit plan maintained by more than one employer within the same or related industries.
Out-of-Pocket Costs: Your expenses for medical care that aren’t reimbursed by insurance. These costs include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren’t covered.
Pharmacy Benefit Manager (PBM): a company that administers managed pharmacy programs, contracting with chain and independent pharmacies to secure discounts and maintaining a network of retail pharmacies and a mail order option, to help control the cost of prescription medications.
Pre-existing Condition: A health problem a person has prior to getting new health coverage.
Preferred Provider Organization (PPO): An organization that arranges contracts with specific groups of health care providers (hospitals, doctors) and heath plans.
Premium:The monthly amount payable for health insurance coverage.
Premium Tax Credits: also referred to as premium subsidies. A new tax credit provided by the ACA that allows individuals to afford health coverage purchased through the Marketplace. Premium tax credits are used to help pay for the monthly premium.
Primary Care Provider (PCP): A health care provider, usually a physician, specializing in internal medicine, family practice, or pediatrics, responsible for providing primary care and coordinating other necessary care for their patients.
Qualified Health Plan (QHP): A health plan sold through the Marketplace (exchange) that meets the minimum benchmark of benefits under the ACA.
Stop Loss Insurance: Insurance that is sold to self-funded health plans to protect against high claims costs. Coverage can be aggregate that protects the plan against catastrophic claims incurred during the policy year by all participants covered under the plan or specific that insures against a single catastrophic claim that exceeds a predetermined dollar amount.
Summary Plan Description (SPD): A published document that provides participants with specific information about the plan including eligibility requirements, covered services, deductibles, coinsurance/copayments, and appeals procedures.