Healthcare
Reform Terms

Access
The ability to obtain needed medical care. Access to care may be affected by the availability of insurance, the cost of the care, and the geographic location of providers.
Accountable Care Organization (ACO)
An organization of healthcare providers that band together to provide the full continuum of healthcare services for patients. The network would receive a payment for all care provided to a patient, and would be held accountable for the quality and cost of care. Proposed pilot programs in Medicare and Medicaid would provide financial incentives for these organizations to improve quality and reduce costs by allowing them to share in any savings achieved as a result of these efforts.
Actuarial Equivalent
A health benefit plan that offers similar coverage to a standard benefit plan. Actuarially equivalent plans will not necessarily have the same premiums, cost sharing requirements, or even benefits; however, the expected healthcare spend by insurers for the different plans will be the same.
Actuarial Justification
The demonstration by an insurer that the premiums collected are reasonable, given the benefits provided under the plan or that the distribution of premiums among policyholders are proportional to the distribution of their expected costs, subject to limitations of state and federal law. PPACA requires insurers to publicly disclose the actuarial justifications behind unreasonable premium increases.
Actuarial Value
A measure of the average value of benefits in a health insurance plan. It is calculated as the percentage of benefit costs a health insurance plan expects to pay for a standard population, using standard assumptions and taking into account cost-sharing provisions. Placing an average value on health plan benefits allows different health plans to be compared. The value only includes expected benefit costs paid by the plan and not premium costs paid by the enrollee. It also represents an average for a population, and would not necessarily reflect the actual cost-sharing experience of an individual.
Adjusted Community Rating
A way of pricing insurance where premiums are not based upon a policyholder's health status, but may be based upon other factors, such as age and geographic location. PPACA requires the use of adjusted community rating, with maximum variation for age of 3:1 and for tobacco use of 1.5:1.
Adult Dependent (or Adult Child)
An adult dependent, as referenced in the new law, is defined as a child under the age of 26. Even if the young adult is married, no longer lives with his or her parents, is not a dependent on a parent’s tax return, or is no longer a student, they are still considered an adult dependent for purposes of determining eligibility for a parent’s insurance coverage.
Annual Limit
Many health insurance plans place dollar limits upon the claims the insurer will pay over the course of a plan year. PPACA prohibits restrictive annual limits for essential benefits for plan years beginning after Sept. 23, 2010.
Association Health Plan
Health insurance plans that are offered to members of an association. These plans are marketed to individual association members, as well as small businesses members. How these plans are structured, who they sell to, and whether they are state-based or national associations determines whether they are subject to state or federal regulation, or both, or are largely exempt from regulations.
Balance Billing
When you receive services from a healthcare provider that does not participate in your insurer's network, the healthcare provider is not obligated to accept the insurer's payment as payment in full and may bill you for the remaining balance.
Benefit Package
The set of services, such as physician visits, hospitalizations, prescription drugs that are covered by an insurance policy or health plan. The benefit package will specify any cost-sharing requirements for services, limits on particular services, and annual or lifetime spending limits.
Cadillac Health Plan
“Cadillac,” or high-cost, employer sponsored healthcare plans are defined by the total cost of premiums. Applicable dollar thresholds for health plans to be considered Cadillac plans are greater than $10,200 per year for single coverage or $27,500 per year for family coverage when the tax on these plans goes into effect in 2018.
Capitation
A method of paying for healthcare services under which providers receive a set payment for each person or “covered life” instead of receiving payment based on the number of services provided or the costs of the services rendered. These payments can be adjusted based on the demographic characteristics, such as age and gender, or the expected costs of the members.
Case Management
The process of coordinating medical care provided to patients with specific diagnoses or those with high healthcare needs. These functions are performed by case managers who can be physicians, nurses, or social workers.
Centers for Medicare and Medicaid Services (CMS)
CMS, previously known as the Health Care Financing Administration (HCFA), is a federal agency within the United States Department of Health and Human Services (HHS) that administers the Medicare program and works in partnership with state governments to administer Medicaid, the State Children’s Health Insurance Program (SCHIP), Medicare Advantage, Medicare Part D and health insurance portability standards. In addition to these programs, CMS has other responsibilities, including the administrative simplification standards from the Health Insurance Portability and Accountability Act of 1996 (HIPAA), quality standards in long-term care facilities through its survey and certification process, and clinical laboratory quality standards under the Clinical Laboratory Improvement Amendments.
Children's Health Insurance Program (CHIP)
Enacted in 1997, the Children’s Health Insurance Program (CHIP) provides healthcare coverage to uninsured low- and moderate-income children who are not eligible for Medicaid. Like Medicaid, it is jointly funded and administered by the states and the federal government. It was originally called the State Children's Health Insurance Program (SCHIP).
Chronic Care Management
The coordination of both healthcare and supportive services to improve the health status of patients with chronic conditions, such as diabetes and asthma. These programs focus on evidence-based interventions and rely on patient education to improve patients’ self-management skills. The goals of these programs are to improve the quality of healthcare provided to these patients and to reduce costs.
Co-insurance
A method of cost-sharing in health insurance plans in which the plan member is required to pay a defined percentage of their medical costs after the deductible has been met.
Collective Bargaining Agreement (CBA)
A CBA, in the case of health insurance, is an agreement between one or more employers and employee representatives (usually a labor union) that defines the terms and conditions of the healthcare coverage offered to the employees.
Community Rating
A method for setting premium rates for health insurance plans under which all policy holders are charged the same premium for the same coverage. “Modified community rating “ generally refers to a rating method under which health insuring organizations are permitted to vary premiums based on specified demographic characteristics (e.g., age, gender, location), but cannot vary premiums based on the health status or claims history of policy holders.
Comparative Effectiveness Research
A field of research that analyzes the impact of different options for treating a given condition in a particular group of patients. These analyses may focus only on the medical risks and benefits of each treatment or may also consider the costs and benefits of particular treatment options.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA refers to protections that give most workers who lose their health benefits the right to choose to continue group health coverage benefits during times of voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, and in certain other cases. Under COBRA, the employee or family member may qualify to keep their group health plan benefits for a set period of time, depending on the reason for losing the health coverage. The new law does not change COBRA requirements.
Consumer-Directed Health Plans
Consumer-directed health plans seek to increase consumer awareness about healthcare costs and provide incentives for consumers to consider costs when making healthcare decisions. These health plans usually have a high deductible accompanied by a consumer-controlled savings account for healthcare services. There are two types of savings accounts: Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs).
Co-op Plan
A health insurance plan that will be sold by member-owned and operated non-profit organizations through Exchanges beginning in 2014. PPACA provides grants and loans to help Co-op plans enter the marketplace.
Copayment
The fixed dollar amount you pay for certain medical services or doctor visits at the time you receive care. It varies by plan and company.
Cost Containment
A set of strategies aimed at controlling the level or rate of growth of healthcare costs. These measures encompass a myriad of activities that focus on reducing overutilization of health services, addressing provider reimbursement issues, eliminating waste, and increasing efficiency in the healthcare system.
Cost Sharing
This refers to the portion of costs that are covered by your insurance that you “share” by paying out of your pocket. It doesn’t include your monthly premium, but does include things like copayments and deductibles.
Cost Shifting
When healthcare providers set rates higher than usual to offset losses or lower reimbursement from other payers, such as government payers and the uninsured, or other insurers.
Countercyclical
Medicaid is a countercyclical program in that it expands to meet increasing need when the economy is in decline. During an economic downturn, more people become eligible for and enroll in the Medicaid program when they lose their jobs and their access to health insurance. As enrollment grows, program costs also rise.
Deductible
A dollar amount that a patient must pay for healthcare services each year before the insurer will begin paying claims under a policy. PPACA limits annual deductibles for small group policies to $2,000 for policies that cover an individual, and $4,000 for other policies. These amounts will be adjusted annually to reflect the growth of premiums.
Disease Management
A coordination of the entire disease treatment process that often involves appropriate shifting from more expensive inpatient and acute care to preventive medicine, patient counseling and education, and outpatient care. The process is intended to reduce healthcare costs and improve the quality of life for individuals by preventing or minimizing the effects of a disease, usually a chronic condition.
Disproportionate Share Hospital (DSH) Payments
Payments made by a state’s Medicaid program to hospitals that the state designates as serving a “disproportionate share” of low-income or uninsured patients. These payments are in addition to the regular payments such hospitals receive for providing inpatient care to Medicaid beneficiaries. States have some discretion in determining how much eligible hospitals receive. The amount of federal matching funds that a state can use to make payments to DSH hospitals in any given year is capped at an amount specified in the federal Medicaid statute.
Dual Eligible
A term used to describe an individual who is eligible for Medicare and for some level of Medicaid benefits. Most dual eligibles qualify for full Medicaid benefits including nursing home services, and Medicaid pays their Medicare premiums and cost sharing. For other duals, Medicaid provides the “Medicare Savings Programs.”
Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Services
One of the services that states are required to include in their basic benefits package for all Medicaid-eligible children under age 21. EPSDT services include periodic screenings to identify physical and mental conditions, as well as vision, hearing, and dental problems. Services also include follow-up diagnostic and treatment services to correct conditions identified during a screening, without regard to whether the state Medicaid plan covers those services for adult beneficiaries.
Effective Date
The effective date is the date on which an agreement, such as an insurance coverage, takes effect and is the first day of active benefits under a policy.
Effectiveness
Effectiveness relates to how well a treatment works in practice.
Efficacy
Efficacy measures or indicates how well an intervention or solution works in a controlled environment such as clinical trials or laboratory studies.
Electronic Health Record / Electronic Medical Records
Computerized records of a patient’s health information including medical, demographic, and administrative data. This record can be created and stored within one healthcare organization or it can be shared across healthcare organizations and delivery sites.
Employee Retirement Income Security Act of 1974 (ERISA)
Legislation enacted in 1974 to protect workers from the loss of benefits provided through the workplace. ERISA does not require employers to establish any type of employee benefit plan, but contains requirements applicable to the administration of the plan when a plan is established. The requirements of ERISA apply to most private employee benefit plans established or maintained by an employer, an employee organization, or both.
Employer-Based Healthcare
Employer-based healthcare refers to health plans that are offered at the workplace for employees as part of a benefit package.
Employer Health Care Tax Credit
An incentive mechanism designed to encourage employers, usually small employers, to offer health insurance to their employees. The tax credit enables employers to deduct an amount, usually a percentage of the contribution they make toward their employees’ premiums, from the federal taxes they owe. These tax credits are typically refundable so they are available to non-profit organizations that do not pay federal taxes.
Employer Mandate
An approach that would require all employers, or at least all employers meeting certain employee size thresholds, to offer health benefits that meet a defined standard, and pay a set portion of the cost of those benefits on behalf of their employees.
Employer Pay-or-Play
An approach that would require employers to offer and pay for health benefits on behalf of their employees, or to pay a specified dollar amount into a designated public fund. The fund would provide a source of financing for coverage for those who do not have employment-based coverage.
Enactment Date
The enactment date is the date the Patient Protection and Affordable Care Act (PPACA) was signed into law – March 23, 2010.
Entitlement Program
Federal programs, such as Medicare and Medicaid, for which people who meet eligibility criteria have a federal right to benefits. Changes to eligibility criteria and benefits require legislation. The Federal government is required to spend the funds necessary to provide benefits for individuals in these programs, unlike discretionary programs for which spending is set by Congress through the appropriations process. Enrollment in these programs cannot be capped and neither states nor the federal government may establish waiting lists.
Essential Health Benefits
This is the heart of the Affordable Care Act. It mandates a set of 10 benefits that all plans must now include as a way of ensuring that everyone has access to a minimum standard of benefits.
Evidence-Based Medicine
Evidence-based medicine is a method of improving and evaluating patient care. It involves combining the best research evidence with the patient’s values to make decisions about medical care. Looking at available medical studies and literature that pertain to an individual patient or a group of patients helps doctors properly diagnose illnesses, choose the best testing plan and select the best treatments and methods of disease prevention. Using evidence-based medicine techniques for large groups of patients with the same illness, doctors can develop practice guidelines for evaluation and treatment of particular conditions. In addition to improving treatment, such guidelines can help individual physicians and institutions measure their performance and identify areas for further study and improvement.
Exchange
An Exchange is a marketplace of insurance plans run by a government or non-profit agency, to help individuals and small employers obtain health insurance coverage. A provision of the new law is that each state will establish an Exchange by 2014. Plans participating in the Exchanges will be accredited for quality, will present their benefit options in a standardized manner for easy comparison and will use one, simple enrollment form. Individuals qualified to receive tax credits for Exchange coverage must be ineligible for affordable, employer-sponsored insurance or any form of public insurance coverage. Federal support will be available for new non-profit, member run insurance cooperatives, and the Office of Personnel Management will supervise the offering by private insurers of multi-state plans, available nationwide. States will have flexibility to establish basic health plans for non-Medicaid, lower-income individuals may seek waivers to explore other reform options and may form compacts with other states to permit cross-state sale of health insurance.
Experience Rating
A method of setting premiums for health insurance policies based on the claims history of an individual or group.
External Review
The review of a health plan's determination that a requested or provided healthcare service or treatment is not or was not medically necessary by a person or entity with no affiliation or connection to the health plan. PPACA requires all health plans to provide an external review process that meets minimum standards.
Federal Employee Health Benefits Program (FEHBP)
A program that provides health insurance to employees of the U.S. government. Federal employees choose from a menu of plans that include fee-for-service plans, plans with a point-of-service option, and health maintenance organization plans. There are more than 170 plans offered; a combination of national plans, agency-specific plans, and more than 150 HMOs serving only specific geographic regions. The various plans compete for enrollment as employees can compare the costs, benefits, and features of different plans.
Federal Medical Assistance Percentage (FMAP)
The statutory term for the federal Medicaid matching rate—i.e., the share of the costs of Medicaid services or administration that the federal government bears. In the case of covered services, FMAP varies from 50 to 76 percent depending upon a state’s per capita income. On average, across all states, the federal government pays 57 percent of the costs of Medicaid.
Federal Poverty Level (FPL)
The federal government’s working definition of poverty that is used as the reference point to determine the number of people with income below poverty and the income standard for eligibility for public programs. The federal government uses two different definitions of poverty. The U.S. Census poverty threshold is used as the basis for official poverty population statistics, such as the percentage of people living in poverty. The poverty guidelines, released by the U.S. Department of Health and Human Services (HHS), are used to determine eligibility for public programs and subsidies.
Fee-for-Service
A traditional method of paying for medical services under which doctors and hospitals are paid for each service they provide. Bills are either paid by the patient, who then submits them to the insurance company, or are submitted by the provider to the patient’s insurance carrier for reimbursement.
Flexible Spending Accounts (FSA)
A FSA is an account that reimburses employees for specified expenses (for example, healthcare or dependent care) as expenses are incurred. FSAs are usually funded through deductions from employees’ paychecks. If the FSA meets rules under the Internal Revenue Code, contributions are not subject to federal income taxes or employment taxes.
Formulary
The list of drugs covered fully or in part by a health plan.
Full-Time Equivalent Employee (FTE)
A full-time employee is defined as an employee that works an average of at least 30 hours per week.
Fully-Insured
When a group is fully-insured, the health plan uses the group's past benefit costs, or claims experience, to calculate rates for a future contract or policy period. This is usually done annually. This is also called underwritten business by health plans.
Grandfather Clause (or Grandfathered, or Grandfathering)
A grandfather clause is an exception that allows an old rule to continue to apply to some existing situations, while a new rule will apply to all future situations. Persons or group health plans in effect prior to the law’s enactment date of March 23, 2010, will be considered grandfathered unless they make certain changes that would cause the plan to lose its grandfathered status. Changes that would result in a loss of grandfathered status include: increasing deductibles, copayments or out-of-pocket maximums by more than allowed in the Interim Final Regulation related to grandfathering; increasing the coinsurance; or adding or decreasing an annual maximum.
Grandfathered Plan
A health plan that an individual was enrolled in prior to March 23, 2010. Grandfathered plans are exempt from most changes required by PPACA. New employees may be added to group plans that are grandfathered and new family members may be added to all grandfathered plans.
Group Health Insurance
Health insurance that is offered to a group of people, such as employees of a company.
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 offer coverage without regard to health status, use of services, or pre-existing conditions. PPACA requires that all health insurance be sold on a guaranteed-issue basis beginning in 2014. This requirement ensures that no one will be denied coverage for any reason.
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.
U.S. Department of Health and Human Services (HHS)
HHS is the United States' principal agency for protecting the health of all Americans and providing essential human services.
Health Care Cooperative (CO-OP)
A non-profit, member-run health insurance organization, governed by a board of directors elected by its members. Co-ops provide insurance coverage to individuals and small businesses and can operate at state, regional, and national levels.
Health Information Technology
Health information technology (HIT) allows comprehensive management of medical information and its secure exchange between healthcare consumers and providers.
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
The federal law enacted in 1996 made it easier for individuals to move from job to job without the risk of being unable to obtain health insurance or having to wait for coverage due to pre-existing medical conditions.
Health Maintenance Organization (HMO)
A type of managed care organization (health plan) that provides healthcare coverage through a network of hospitals, doctors, and other healthcare providers. Typically, an HMO only pays for care that is provided from an in-network provider. Depending on the type of coverage you have, state and federal rules govern disputes between enrolled individuals and the plan.
Health Reimbursement Account (HRA)
A tax-exempt account that can be used to pay for current or future qualified health expenses. HRAs are established benefit plans funded solely by employer contributions, with no limits on the amount an employer can contribute. HRAs are often paired with a high-deductible health plan, but are not required to be.
Health Savings Account (HSA)
The Medicare bill signed by President Bush on Dec. 8, 2003, created health savings accounts, which are tax-advantaged medical savings accounts available to taxpayers enrolled in a high-deductible health plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), funds roll over and accumulate year-to-year if not spent. Individuals covered by a qualified 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.
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.
High-Risk Pool
A state-subsidized health plan that provides coverage for individuals with pre-existing healthcare conditions who cannot purchase coverage in the private market. PPACA creates a temporary federal high-risk pool program, administered by the states, to provide coverage to individuals with pre-existing conditions who have been uninsured for at least six months.
Household Income
Household income for the law’s purposes, with respect to any taxpayer, is defined as an amount equal to the sum of the modified adjusted gross income of the taxpayer, plus the aggregate modified adjusted gross incomes of all other individuals who were taken into account in determining the taxpayer’s family size. (See also: Modified Adjusted Gross Income).
Individual Insurance Market
The market where individuals who do not have group (usually employer-based) coverage purchase private health insurance. This market is also referred to as the non-group market.
Individual Mandate
A statute of the Affordable Care Act that requires most Americans to have health insurance. It goes into effect on January 1, 2014. If you don’t have health insurance in 2014, you may be subject to a tax penalty.
Individual Market
The market for health insurance coverage offered to individuals other than in connection with a group health plan. PPACA makes numerous changes to the rules governing insurers in the individual market.
Internal Review
The review of the health plan's determination that a requested or provided healthcare service or treatment is not or was not medically necessary by an individual associated with the health plan. PPACA requires all plans to conduct an internal review upon request of the patient or the patient's representative.
Interstate Compact
An agreement between two or more states. PPACA provides guidelines for states to enter into interstate compacts to allow health insurance policies to be sold in multiple states.
Large Employer
A large employer is an employer with an average of at least 101 employees during the preceding calendar year and who employs at least one employee on the first day of the plan year.
Lifetime Benefit Maximum
A cap on the amount of money insurers will pay toward the cost of healthcare services over the lifetime of the insurance policy.
Lifetime Limit
Many health insurance plans place dollar limits upon the claims that the insurer will pay over the course of an individual's life. PPACA prohibits lifetime limits on benefits.
Limited Benefits Plan
A type of health plan that provides coverage for only certain specified healthcare services or treatments or provides coverage for healthcare services or treatments for a certain amount during a specified period.
Long-Term Care
Services that include those needed by people to live independently in the community, such as home health and personal care, as well as services provided in institutional settings such as nursing homes. Medicaid is the primary payer for long-term care. Many of these services are not covered by Medicare or private insurance.
Managed Care
A health delivery system that seeks to control access to and utilization of healthcare services both to limit healthcare costs and to improve the quality of the care provided. Managed care arrangements typically rely on primary care physicians to act as “gatekeepers” and manage the care their patients receive.
Mandatory Benefits
Certain benefits or services, such as mental health services, substance abuse treatment, and breast reconstruction following a mastectomy, that state-licensed health insuring organizations are required to cover in their health insurance plans. The number and type of these mandatory benefits vary across states.
Medicaid
A joint state and federal program that provides healthcare 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).
Medicaid Waivers
Authority granted by the Secretary of Health and Human Services to allow a state to continue receiving federal Medicaid matching funds even though it is no longer in compliance with certain requirements of the Medicaid statute. States can use waivers to implement home and community-based services programs, managed care, and to expand coverage to populations, such as adults without dependent children, who are not otherwise eligible for Medicaid.
Medical Home
A healthcare setting where patients receive comprehensive primary care services; have an ongoing relationship with a primary care provider who directs and coordinates their care; have enhanced access to non-emergency primary, secondary, and tertiary care; and have access to linguistically and culturally appropriate care.
Medical Loss Ratio
The percentage of health insurance premiums that are spent by an insurance company on healthcare services. PPACA requires that large group plans spend 85 percent of premiums on clinical services and other activities for the quality of care for enrollees. Small group and individual market plans must devote 80 percent of premiums to these purposes.
Medical Underwriting
The process of determining whether or not to accept an applicant for healthcare coverage based on their medical history. This process determines what the terms of coverage will be, including the premium cost, and any pre-existing condition exclusions.
Medicare
A federal government program that provides healthcare 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), physician 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, 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 healthcare 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 Creditable Coverage
The minimum level of benefits that must be included in a health insurance plan in order for an individual to be considered insured.
Modified Adjusted Gross Income
Modified adjusted gross income for the law’s purposes is defined as adjusted gross income increased by any amount excluded from gross income and any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax.
Multi-State Plan
A plan, created by PPACA and overseen by the U.S. Office of Personnel Management (OPM), that will be available in every state through Exchanges beginning in 2014.
Network Provider
A healthcare 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.
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 healthcare 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 or she seeks care from an out-of-network provider.
Out-of-Pocket Costs
Healthcare costs, such as deductibles, co-payments, and co-insurance that are not covered by insurance. Out-of-pocket costs do not include premium costs.
Out-of-Pocket Limit
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 healthcare providers or services that are not covered by the plan. PPACA requires out-of-pocket limits of $5,950 per individual and $11,900 per family, beginning in 2014. These amounts will be adjusted annually to account for the growth of health insurance premiums.
Out-of-Pocket Maximum
A yearly cap on the amount of money individuals are required to pay out-of-pocket for healthcare costs, excluding the premium cost.
Patient Protection and Affordable Care Act (PPACA)
The Patient Protection and Affordable Care Act (PPACA) is a federal statute that was signed into law in the United States by President Barack Obama on March 23, 2010.
Pay for Performance
A healthcare payment system in which providers receive incentives for meeting or exceeding quality, and sometimes cost, benchmarks. Some systems also penalize providers who do not meet established benchmarks. The goal of pay for performance programs is to improve the quality of care over time.
Payment Bundling
A mechanism of provider payment where providers or hospitals receive a single payment for all of the care provided for an episode of illness, rather than per service. Total care provided for an episode of illness may include both acute and post-acute care.
Plan Year
The plan year is the year designated in the ERISA Master Plan document of an employment-based healthcare plan. ERISA plans are employer-established plans that can include a number of benefits. The employer creates a Master Plan Document including several components such as the ERISA plan name, plan year, plan number and plan benefits.
Policy Year
The policy year in the individual health insurance market is the 12-month period designated in the policy documents of the individual health insurance coverage. If there is no designation of a policy year in the policy document (or no such policy document is available), then the policy year is the deductible or limit year used under the coverage. If deductibles or other limits are not imposed on a yearly basis, the policy year is the calendar year.
Portability of Coverage
Rules allowing people to obtain coverage as they move from job to job or in and out of employment. Individuals changing jobs are guaranteed coverage with the new employer without a waiting period. In addition, insurers must waive any pre-existing condition exclusions for individuals who were previously covered within a specified time period. Portable coverage can also be health coverage that is not connected to an employer, allowing individuals to keep their coverage when they have a change in employment.
Pre-Existing Condition
A pre-existing condition is defined for group health plans as any condition, illness, or injury for which medical advice or treatment was recommended or received before a person enrolls in a new medical insurance plan.
Pre-Existing Condition Exclusions
An illness or medical condition for which a person received a diagnosis or treatment within a specified period of time prior to becoming insured. Healthcare providers can exclude benefits for a defined period of time for the treatment of medical conditions that they determine to have existed within a specific period prior to the beginning of coverage.
Pre-Existing Condition Insurance Plan (PCIP)
The Pre-Existing Condition Insurance Plan (PCIP) is a federally funded initiative to provide affordable health insurance coverage to uninsured individuals with pre-existing conditions. The law appropriates $5 billion in federal funds to support the new temporary high-risk pool program. The program will be available in all states, and states may choose whether and how they participate in the program. The program is available July 1, 2010, and end on January 1, 2014, when individual insurance coverage will be available through the Exchanges on a guarantee issue basis without regard to health status and without pre-existing condition provisions.
Premium
The amount paid, often on a monthly basis, for health insurance. The cost of the premium may be shared between employers or government purchasers and individuals.
Premium Subsidies
A fixed amount of money or a designated percentage of the premium cost that is provided to help people purchase health coverage. Premium subsidies are usually provided on a sliding scale based on an individual’s or family’s income.
Preventive Care Services (or Preventative Medicine)
Preventive care services refer to measures taken to prevent diseases or injuries rather than treating the symptoms of disease or injury, or curing the disease or injury after it is present. Examples include immunizations, certain cancer screenings, and well-child visits.
Primary Care Provider
A provider, usually a physician specializing in internal medicine, family practice, or pediatrics (but can also be a nurse practitioner, physician assistant or even a healthcare clinic), who is responsible for providing primary care and coordinating other necessary healthcare services for patients.
Provider Payment Rates
The total payment a provider, hospital, or community health center receives when they provide medical services to a patient. Providers are compensated for patient care using a set of defined rates based on illness category and the type of service administered.
Purchasing Pool
Health insurance providers pool the healthcare risks of a group of people in order to make the individual costs predictable and manageable. For health coverage arrangements to perform well, the risk pooling should balance low and high risk individuals such that expected costs for the pool are reasonably predictable for the insurer and relatively stable over time.
Qualified Health Plan
Also referred to as QHPs, these are plans that meet the criteria and provide the benefits required under the new law.
Rate Review
Review by insurance regulators of proposed premiums and premium increases. During the rate review process, regulators will examine proposed premiums 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.
Reform Law (or the law, or PPACA)
The reform law is the federal statute that was signed into law in the United States by President Barack Obama on March 23, 2010. The law includes a large number of health-related provisions, including expanding Medicaid eligibility, subsidizing insurance premiums, providing incentives for businesses to provide healthcare benefits, prohibiting denial of coverage/claims based on pre-existing conditions, establishing health insurance exchanges, and providing support for medical research.
Reinsurance
Insurance purchased by insurers to limit the total loss an insurer would experience in case of a disaster or unexpectedly high claims. PPACA creates temporary reinsurance programs to stabilize individual markets during the implementation of health reform.
Rescission
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. PPACA prohibits rescissions except in cases of fraud or intentional misrepresentation of a relevant fact.
Risk Adjustment
A process through which insurance plans that enroll a disproportionate number of sick individuals are reimbursed for that risk by other plans that enroll a disproportionate number of healthy individuals. PPACA requires states to conduct risk adjustment for all non-grandfathered health insurance plans.
Risk Corridor
A temporary provision in PPACA that requires plans whose costs are lower than anticipated to make payments into a fund that reimburses plans whose costs are higher than expected.
Section 125 Plan
A section 125 plan allows employees to receive specified benefits, including health benefits, on a pre-tax basis. Section 125 plans enable employees to pay for health insurance premiums on a pre-tax basis, whether the insurance is provided by the employer or purchased directly in the individual market.
Self-Insured Plan
A plan where the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employer sponsored self-insured plans typically contract with a third-party administrator or insurer to provide administrative services for the plan.
Small Employer
A small employer is an employer who employed an average of at least one but not more than 100 employees during the preceding calendar year and who employs at least one employee on the first day of the plan year. States have the option to treat 50 employees as small employers in plan years beginning before January 1, 2016. Currently, in Alabama, a small employer is classified as a company with two to 50 employees.
Small Group Market
The market for health insurance coverage offered to small businesses – those with between two and 50 employees in most states. PPACA will broaden the market to those with between one and 100 employees beginning in 2016.
Solvency
The ability of a health insurance plan to meet all of its financial obligations. State insurance regulators 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.
Tax Credit
Financial assistance that is available to help people pay for their health insurance. Eligibility is based on income level, marital status, family size and other factors.
Tax Deduction
A deduction is an amount that a person/family can subtract from their adjusted gross income when calculating the amount of tax that they owe. Generally, people who itemize their deductions can deduct the portion of their medical expenses, including health insurance premiums, that exceed 7.5% of their adjusted gross income.
Uncompensated Care
A measure of the costs of healthcare services that are provided but not paid for by the patient or by insurance. Healthcare providers incur some of this cost along with the federal government.
Underinsured
People who have health insurance but who face out-of-pocket healthcare costs or limits on benefits that may affect their ability to access or pay for healthcare services.
Underwritten
When a group is part of a health plan's underwritten business, the health plan uses the group's past benefit costs, or claims experience, to calculate rates for a future contract or policy period. This is usually done annually. These groups are also referred to as fully-insured groups.
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.
Wellness Plan / Program
Employment-based program to promote health and prevent chronic disease. Goals of these programs include: reducing healthcare costs, sustaining and improving employee health and productivity, and reducing absenteeism due to illness.
Young Adult Health Plan
Health plans designed to meet the needs of young adults. These plans tend to offer lower premiums in exchange for high deductibles and/or limited benefit packages.