Healthcare insurance can be confusing, especially if you are new to it. It almost seems as if insurance companies have a language all their own! Use this glossary to cover the gap.

A

Affordable Care Act (ACA)

Often referred to as “Obamacare,” this is the healthcare reform law that was passed to make healthcare more affordable and accessible to Americans.  It includes mandates for insurance companies, employers, and individuals. Also known by its full name – The Patient Protection and Affordable Care Act (PPACA).

Affordable Coverage

Under the Affordable Care Act, coverage is considered “affordable” when it costs less than 9.56% of an employee’s W-2 wages. Employers subject to the employer mandate can face penalties if their coverage is not affordable.

Allowable Charge

The maximum amount that a health insurance plan will pay for a given covered service or supply. Also called Maximum Benefit Allowance, Maximum Allowance, or Reasonable Charge.

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B

Benefit Period
The period of time for which the plan pays benefits for covered services rendered while the health insurance plan was in effect.

Brand Name Drug

Prescription drugs that are manufactured and marketed under a registered trade name or trademark.

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C

Claim
A request to the insurance carrier to provide payment for healthcare services received. This will usually be sent directly from your healthcare provider to your insurance carrier, but you may need to access a claim form and send it to the carrier to have the service covered.

COBRA 

COBRA, which stands for The Consolidated Omnibus Budget Reconciliation Act, was enacted in 1986. It requires employers with more than 20 employees to offer continuation of health care coverage when an employee loses coverage due to status changes, such as resigning, losing a job, or having hours reduced.

Coinsurance

The percentage you must pay for certain healthcare services after your deductible is met. For instance, the insurance might pay 80% of expenses incurred after your deductible is met, so you would have to pay the remaining 20%. Coinsurance stops when your out-of-pocket maximum is met.

Co-Pay or Co-Payment


For certain types of services (typically office visits), you may only be required to pay a fixed amount, or co-pay, rather than having to meet your deductible. Co-pays can be a dollar amount, such as $20, or a percent, such as 20%. So even if it was the beginning of the plan year and you had not met any of your deductible, you would only pay the co-pay rather than the entire amount for service.

Coordination of Benefits (COB)

The provision which applies when an individual is covered by multiple healthcare plans at the same time. The benefits are coordinated so that the payments by all plans do not exceed 100% of the covered services. The provision also designates the order in which the multiple health plans are to pay benefits. Under a COB provision, one plan is determined to be primary, and its benefits are applied to the claim first. The unpaid balance is usually paid by the secondary plan to the limit of its responsibility. Benefits are thus “coordinated” among all of the health insurance plans.

Covered Services 

Hospital, medical, and other health care services and supplies provided to a plan participant for which benefits are paid under a health insurance plan.

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D

Deductible

The amount you owe for health care services your health insurance plan covers before the plan begins to pay. For example, if your deductible is $1,000, you will pay the full amount for most services until you’ve met your $1,000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services, such as preventative services or office visits in which a co-pay applies.

Dependent

Person (for example a spouse or child) other than the employee who is covered in the employee’s policy.

Drug Formulary

A list of preferred pharmaceutical products developed in consultation with physicians and pharmacists.

Drug Tiers

The way prescription drugs are grouped to determine the co-pay.

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E

Employer Mandate

A provision of the Affordable Care Act that requires employers with 50 or more full-time or “full-time equivalent” employees to provide health coverage to its full-time employees or face penalties.

Exclusions

Specific conditions or circumstances including medical, surgical, hospital, or other treatments for which the program offers no coverage. It is very important to consult the Health Benefit Plan to understand what services are not Covered Services.

Explanation of Benefits (EOB)

A form sent to you after a claim has been processed that explains the action taken on the claim. It may include the amount the insurance carrier will pay, the amount you are responsible for, how much of your deductible has been met, and if applicable, why a claim was denied. You should look closely at any EOBs you receive to ensure you understand what was paid and that it looks correct. If you have questions about any EOB, you should contact your insurance provider at the customer service number on your ID card.

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F

Full-Time Equivalent
Under the Affordable Care Act, employers must add their full-time equivalent (FTE) number to their number of true full-time employees to determine if they fall above or below the 50-employee threshold for the employer mandate.  To determine the FTE number, employers must divide the hours (regular, OT, paid time off, holidays, etc.) of non-full-time employees in a month by 120. The number calculated must be added to the number of actual full-time employees to determine how many employees a company has under ACA.

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G

Generic Drug
Generic equivalents are medications that have the same active ingredients and provide the same clinical benefits as their brand name counterparts. Generic equivalents become available when a brand name drug patent expires. They may look different than their counterpart brand name drugs in size, shape or color, but they meet the same U.S. Food and Drug Administration standards for safety, purity, and potency.

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H

Health Savings Account (HSA) 
A type of spending account designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis. An HSA can be interest bearing. A member must be enrolled in a qualifying High Deductible Health Plan to to contribute to an HSA. Ask a tax professional or visit the IRS website for the latest guidelines on HSA tax benefits. Top Echelon Contracting does not provide HSAs, so you will want to work with your bank or an HSA vendor to set one up if you have a qualifying healthcare plan.

High Deductible Health Plan (HDHP)
A plan which qualifies for health savings accounts and other tax-advantaged programs by virtue of their high deductibles and other features. Top Echelon Contracting has two plans available that are considered HDHPs. Ask a tax professional or visit the IRS website for the latest guidelines on “qualified” HDHP and HSA tax benefits.

HIPAA 
The Health Insurance Portability and Accountability Act allows individuals to obtain health insurance for a certain period of time after losing or dropping other healthcare coverage without being subject to pre-existing health condition exclusions. It also establishes regulations regarding the disclosure of health insurance participants’ private health information.

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I 

In-Network
Refers to the use of providers who participate in the carrier’s provider network. If you use providers who are out of network, you will generally incur larger out-of-pocket expenses.

Individual Mandate
Provision of the 
Affordable Care Act that requires most Americans to carry healthcare insurance starting in 2014 or face penalties.

Inpatient
When a person receives medical treatment in a hospital or other healthcare facility with an overnight stay.

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L

Lifetime Maximum
The maximum amount of benefits a healthcare plan will pay for any member. The Affordable Care Act prohibits plans from applying lifetime maximums in most cases.

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M

Mail Service Pharmacy 
A pharmacy that dispenses and delivers prescription medications directly to a members’ home, work, or other location. These pharmacies typically dispense medications from multiple facilities throughout the United States to ensure the fastest delivery possible and can usually fulfill prescriptions at a lower cost.

Minimum Value
Under the Affordable Care Act, when an health insurance plan pays at least 60% of the covered expenses. Employers subject to the employer mandate can face penalties if their coverage does not provide miniumum value.

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N

Non-Network Provider 
A doctor or facility who has not contracted with a healthcare plan to participate in the network. Also known as a non-participating provider or out-of-network provider. If you use non-network providers, you will generally incur larger out-of-pocket expenses.

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O

Open Enrollment
A period of time each year in which employees can add, change, or cancel any benefit for any reason. Employees are generally not able to make changes during other times of the year unless they experience a “Qualifying Event”

Outpatient
When a person receives medical treatment in a hospital or other healthcare facility without an overnight stay.

Out-of-Pocket Maximum
The maximum amount that a member will generally have to pay in a calendar year for covered services under the plan. Once you have met your out-of-pocket max, there will no longer be any coinsurance, but you will likely still have co-pays, if applicable.

Over-the-Counter Drugs (OTC)
Drugs which may be purchased without a prescription.

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P

Plan Year
The 12-month period the plan has designated as a year. Deductibles and co-pays reset at the beginning of a plan year. Our plan year for our healthcare plans follows the traditional calendar year of January through December, so deductibles and out-of-pocket maximums for the medical insurance reset every January 1st.

Pre-Authorization 
A formal process used to assess the medical necessity and appropriateness of elective hospital admissions and non-emergency care before the services are provided. It requires a healthcare provider to obtain advanced approval to provide specific services or procedures. Prior authorization is required for many services; however, for emergency or out-of-area urgent care service, prior authorization is not required.

Pre-Existing Condition 
A health condition (other than a pregnancy) or medical problem that was diagnosed or treated before enrollment in a healthcare plan.

Premiums
The amount of money charged by the health plan to maintain active coverage. Part of the premium may be paid by an employer, and part may be paid by the member themselves. The employee portion of your premiums will be taken out of the first four weekly paychecks each month.

Premium Tax Credits
These credits are being provided by the state and federal government to help individuals pay their insurance premium for insurance they obtain through The Marketplace. An individual may be eligible for Premium Tax Credits if their income is between 100% and 400% of the federal poverty level (FPL).

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Q

Qualifying Event 
A status change that allows an employee to make a change to their benefits outside the standard open enrollment period. Some common qualifying events include marriage, divorce, the birth or adoption of a child, the change of a spouse’s employment status that causes a loss of coverage, and a dependent ceasing to be a dependent (ages out).

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T

The Marketplace 
Also known as “Exchanges,” this is a key component of the Affordable Care Act. The Marketplace, opened January 1, 2014, is designed to help individuals find and compare healthcare plans online.

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This general summary of law should not be used to solve individual problems since changes in fact situation may require a material variance as to the applicable law.  This article is for information purposes only and should not be construed as legal advice.