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Terms To Know

Here are simple definitions for some of the complex terms used to talk about health reform and health insurance. Find more terms at JustPlainClear.com.

Benefits

The health care items or services covered under a health insurance plan. Covered benefits and services not covered are defined in coverage documents for the health insurance plan. In Medicaid or CHIP, covered benefits and services not covered are defined in state program rules.

Coinsurance

Your share of the costs of a covered health care service, calculated as a percent (for example, 20 percent) of the allowed amount for the service. You pay co-insurance 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 co-insurance payment of 20 percent would be $20. The health insurance company or plan pays the rest of the allowed amount.

Co-payment

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 share of costs covered by your health insurance plan that you pay out of your own pocket. This term generally includes deductibles, co-insurance and co-payments, or similar charges, but it doesn’t include premiums, balance billing amounts for non-network providers, or the cost of services not covered.

Deductible

The amount you owe 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 $1,000 per year, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health services subject to the deductible for that year. The deductible may not be applied to some services, such as preventive services.

Dependent Coverage

Insurance coverage for family members of the policyholder, such as spouses, children, or partners.

Essential Health Benefits

Benefits that individual and small group health plans must offer under the Affordable Care Act. They include: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including dental and vision care.

Grandfathered Plan

An individual health insurance policy that is exempt from many changes required under the Affordable Care Act because it was purchased on or before March 23, 2010. Plans may lose their “grandfathered” status if they make certain significant changes that reduce benefits or increase costs to consumers.

Health Insurance Marketplace

A new transparent and competitive insurance marketplace where individuals and small businesses can buy qualified health insurance plans. Marketplaces offer you a choice of plans that meet certain benefits and cost standards.

Health Savings Account (HSA)

A bank account that lets people put money aside, pre-tax, to save and pay for health care expenses. The IRS limits who can open and put money into an HSA.

Individual Mandate

Under the Affordable Care Act, starting in 2014, you must be enrolled in a health insurance plan that meets basic minimum standards. If you aren’t, you may be required to pay a penalty. You won’t have to pay a penalty if you have very low income and coverage is unaffordable for you, or if you have other reasons, including your religious beliefs. You can apply for a waiver asking not to pay a penalty if you don’t qualify for the waiver automatically.

Medical Loss Ratio

A basic financial measurement used in the Affordable Care Act to encourage health plans to provide value to enrollees. If an insurer uses 80 cents out of every premium dollar to pay its customers’ medical claims and activities that improve the quality of care, the company has a medical loss ratio of 80 percent. If a company’s medical loss ratio is too low, it must refund some premium dollars to members.

Out-of-Pocket Limit

The most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100 percent of the allowed amount. This limit never includes your premium, balance-billed charges or health care your health insurance or plan doesn’t cover. Some health insurance or plans don’t count all of your co-payments, deductibles, co-insurance payments, out-of-network payments or other expenses toward this limit.

Premium

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

Preventive Care Services

Covered services that are intended to prevent disease or to identify disease while it is more easily treatable. Examples of preventive care services include screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems.

Qualifying Life Event

An event defined by the Internal Revenue Service that allows an individual to change their benefit selections. Examples of events may include marriage, birth of a child or death of a dependent.

Subsidy

A fixed amount of money or a designated percentage of the premium cost provided to help purchase health insurance.

Waiting Period

The time that must pass before coverage can become effective for an employee or dependent, who is otherwise eligible for coverage under an employer’s health insurance plan.