Health care is full of terms we don't use in our everyday lives. Here are some key terms you may come across as you read about health care coverage.
Actuarial value - an estimate of total average costs for covered benefits that a plan will cover. For example, if a plan has an actuarial value of 70 percent, on average, a consumer would be responsible for 30 percent of the costs of all covered benefits. Your own costs may be more or less, depending on how much care you need.
Administrative costs - expenses relating to operating a health plan, such as marketing, salaries and agent commissions.
Affordable Care Act - known as the health care law or Obamacare, passed in March 2010. It puts in place strong consumer protections, provides coverage options and has tools to help you make informed choices about your health coverage.
Annual dollar limit - previously, the total amount your health plan would pay for covered services in a year while you were enrolled. Under the health care law, health plans bought through the Health Insurance Marketplace and employer coverage can no longer set annual dollar limits on how much they will pay for covered services you receive.
Annual wellness visit in Medicare - part of a preventive visit to a health care professional that is now covered by Medicare Part B. The visit is offered once every 12 months and is an opportunity to update your personalized prevention plan.
Approval - permission from a health plan before you receive a service covered by the plan.
Assisters - under the health care law, assisters and navigators will help people understand health coverage options, give them information on how to enroll and help them select a plan. They will work closely with the Health Insurance Marketplace and the Small Business Health Options Program or SHOP, but will also know about other coverage options, such as Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).
Association health plan - an insurance plan that is sponsored by a business association or other membership organization to offer coverage to small employers and self-employed individuals. These plans may not provide the same protections and benefits as a plan sold directly to individuals and small employers through the marketplace.
Balanced billing - when a provider bills you for the difference between the provider’s charge and the amount your insurer will pay. 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.
Benefits - health care items or services covered under a health plan. Benefits are defined in a health plan's coverage documents.
Care coordination - the management of your treatment across several health care providers.
Catastrophic plan - a plan that covers only certain types of expensive care, such as hospital visits. This term can also mean a plan that has a high deductible, so that your plan begins to pay only after you've first paid up to a certain amount for covered services.
Clinical trials - studies done to test medical products or procedures with people after research has been done on safety and effectiveness.
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 coinsurance plus any deductibles you owe. For example, if the plan’s allowed amount for an office visit is $100, and you’ve met your deductible, your coinsurance payment of 20 percent would be $20. The health plan pays the rest of the allowed amount.
Copayment - 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 subsidy - For plans sold through the Health Insurance Marketplace, low- and moderate-income families may be eligible for financial help to pay for some of their health care costs. Cost-sharing subsidies will help lower the deductible, copayments and coinsurance for people who qualify for this help.
Coverage tiers - Plans bought through the Health Insurance Marketplace are offered in four different tiers, sometimes called “metal levels,” so it’s easier to make “apples-to-apples” comparisons among plans. The tiers—bronze, silver, gold and platinum—are based on how generous the plan is for the benefits and services covered. Bronze plans will have the lowest premiums, but the individual’s share of costs, such as deductibles and copayments, will be higher. Platinum plans will have the highest premiums, but fewer additional costs for consumers.
Coverage/health coverage - health care items or services that a health plan agrees to provide for people in the plan.
Deductible - the amount you owe for health care services your health plan covers before your health plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything 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.
Denial - a decision by a health plan that it won't pay for an item or service. Health plans bought through the Health Insurance Marketplace cannot issue you a denial of services for health problems just because you had them before your coverage started (known as pre-existing conditions). The health care law strengthens consumers’ rights to appeal a health plan’s denial of services.
Dependent - a family member, such as a spouse, partner or child, who receives coverage through the policyholder's health plan.
Disability - an impairment that limits one or more major life activities, such as seeing, hearing, walking or tasks needed for a person to work. Health plans may have different disability standards.
Doughnut hole or Medicare Part D Coverage Gap - a coverage gap in Medicare Part D prescription drug plans, also known as a doughnut hole. Before the health care law was passed, when your total spending on prescriptions reached a certain limit, you had to pay for all of your prescription drug costs on your own. After paying a certain amount on your own, your prescription drug plan would help pay for prescriptions again. Now, because of the health care law, the coverage gap is slowly closing. The gap will disappear in 2020.
Dual-eligible - someone who receives benefits from both Medicare and Medicaid.
Employer-sponsored health insurance - health coverage an individual gets through his or her (or a spouse’s) job, as either an active or retired employee.
Essential health care services/benefits - basic health care services that health plans sold to individuals through the Health Insurance Marketplace and some plans sold to small businesses are required to cover. These include doctor visits, hospital visits, emergency room services, maternity and newborn care, mental health, preventive care, and children's services. The term “essential health benefits” is sometimes referred to as EHB.
External review - when a health plan has denied an individual's appeal of a coverage or payment decision, that decision can be appealed to an independent third party reviewer for consideration, known as an external review.
Extra help - a program that helps some people with Medicare who have limited resources/income to pay for prescription drugs.
Family plan or family coverage - a health plan that covers an individual and his or her family. Either these plans are offered by employers, or they are private plans that are not job-based.
Federal poverty level (FPL) - a measure of income level issued annually by the U.S. Department of Health and Human Services. Federal poverty levels are used to determine your eligibility for certain programs and benefits.
Formulary - a list of drugs that a health plan will cover, either fully or in part. Formularies vary by health plan. Also called a preferred drug list (PDL).
Grandfathered plan - health plans that were in place when the health care law was signed on March 23, 2010. They do not have to offer all of the benefits and protections that are part of the health care law. If you have changed your individual plan since then or if your employer makes significant changes to their plan’s benefits or how much members pay, then the plan likely is no longer considered “grandfathered.”
Guaranteed Medicare benefits - health care items and services that are covered by the Medicare program. These may include hospital stays, care in a skilled nursing facility, hospice care and some home health care, under Medicare Part A. They also may include doctor visits, outpatient care, preventive services and other services, under Medicare Part B.
Habilitative 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 therapy and other services for people with disabilities in a variety of inpatient and/or outpatient settings.
Health care fraud - when a health plan is billed for services or supplies never received by an enrollee in the plan.
Health care law - a general term for the major health policy changes put in place by the Affordable Care Act of March 2010. It puts into law strong consumer protections, provides more coverage options and has tools to help you make informed choices about your health coverage. Also known as Obamacare.
Health care sharing ministry - people who enroll in a health care sharing ministry pay a monthly fee, similar to a premium, and can submit health care bills to be considered for "sharing." They typically cover fewer services, particularly for pre-existing conditions, and never guarantee payment, even for health care bills that meet the guidelines for sharing.
Health coverage/health insurance - a contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium.
Health Insurance Marketplace - a way to shop for health coverage. Through the marketplace, you can shop online and get help by phone and in person to find the plan that works for you and your family. The marketplace allows you to compare plans and costs on an “apples-to-apples” basis. You also can find out what kind of financial help you may be able to get to pay for premiums and copayments. (Sometimes referred to as Health Insurance Exchange.)
Health reform/health care reform - a general term for the major health policy changes put in place by the Affordable Care Act of March 2010, and any state laws passed to put it in place.
Household income - the total amount of money or benefits received by all the people in one household. This income may come from a job; self-employment; Social Security; Social Security Income; public assistance; railroad retirement; veterans benefits, pensions, compensation or insurance; state retirement or pension; or another source.
Household size - the total number of parents, guardians, children under age 19 and caretakers who live in one home and are reported on federal income taxes.
In-network - health care providers, such as doctors, hospitals and pharmacies, that agree to provide members of a certain health plan with services and supplies at a set price. In some health plans, care is only covered when provided by in-network doctors, hospitals, pharmacies and other health care providers.
Individual mandate - the Affordable Care Act requirement that nearly everyone have health insurance that meets minimum standards. Beginning in 2019, the mandate will no longer apply for most states.
Lawfully present immigrant - noncitizens who are living in the United States legally.
Lifetime dollar limit - The total amount your health plan will pay for covered services over the life of the policy. Under the health care law, health plans bought through the Health Insurance Marketplace and employer coverage can no longer put dollar limits on the amount of care they will cover in your lifetime.
Long-term care - services that include medical and nonmedical care provided to people who are unable to perform basic activities of daily living, such as dressing or bathing. Long-term supports and services can be provided at home, in the community, or in assisted living or nursing homes. Individuals may need long-term supports and services at any age. Medicare and most health plans don’t pay for long-term care.
Marketplace/Health Insurance Marketplace - a way to shop for health coverage. Through the marketplace, you can shop online and get help by phone or in person to find the plan that works for you and your family. The marketplace allows you to compare plans and costs on an “apples-to-apples” basis. You also can find out what kind of financial help you may be able to get to pay for premiums and copayments. (Sometimes referred to as Health Insurance Exchange.)
Medicaid - a joint federal and state program that helps with medical costs for some people who have limited income and resources. Medicaid programs vary from state to state, but most health care costs are covered at little or no cost.
Medical Loss Ratio (MLR) - a requirement that helps to make sure your monthly payments (premiums) go further in covering your health care. Health plans sold to individuals and small business employers through the Health Insurance Marketplace must spend at least 80 cents of each premium dollar on health care and just 20 cents on administrative costs. Plans sold to large employers (generally more than 50 employees) must spend at least 85 cents of every premium dollar on health care and just 15 cents on administrative costs.
Medicare - the federal health insurance program for people who are 65 or over, certain younger people with disabilities and people with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). Medicare has four parts, Medicare Parts A, B, C and D, each covering different benefits. Medicare has an annual open enrollment period—from October 15 to December 7 each year—to sign up for Medicare Advantage (Part C) or prescription drug coverage (Medicare Part D).
Medicare Advantage Plan (Part C) - an alternative to Original Medicare, it puts Medicare Parts A and B, and usually prescription drug coverage, under one plan. If you're enrolled in a Medicare Advantage Plan, hospital and doctor services and prescription drug services, if they’re included, are covered through the plan, and aren't paid for under Original Medicare. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans.
Medicare Part A - covers inpatient hospital services, skilled nursing facility, and home health and hospice care.
Medicare Part B - helps pay for doctor visits, outpatient care, home health care, preventive services and other services.
Medicare Part D - Medicare prescription drug coverage. Prescription drug plans have a coverage gap, also known as a doughnut hole. Before the health care law was passed, when your total spending on prescriptions reached a certain limit, you had to pay for all of your prescription drug costs on your own. After paying a certain amount on your own, your prescription drug plan would help pay for medicines again. Now, because of the health care law, the coverage gap is slowly closing. The gap will disappear in 2020.
Medicare Trust Fund - a set of trust fund accounts held by the U.S. Treasury that pay for Medicare. These funds can only be used for Medicare.
Medigap - supplemental coverage sold by private insurers to cover some or all of the deductibles, copayments and coinsurance required under Medicare Parts A and B. Medigap supplemental plans are not sold through the marketplace.
Metal levels/tiers - Plans bought through the Health Insurance Marketplace are offered in four different tiers, sometimes called “metal levels,” so it’s easier to make “apples-to-apples” comparisons among plans. The tiers—bronze, silver, gold and platinum—are based on how generous the plan is for the benefits and services covered. Bronze plans will have the lowest premiums, but the individual’s share of costs, such as deductibles and copayments, will be higher. Platinum plans will have the highest premiums, but fewer additional costs for consumers.
Navigators - people who will help you understand health coverage options, give you information on how to enroll and help you select a plan. They will work closely with the Health Insurance Marketplace and SHOP, but will also know about other coverage options, such as Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).
Network - 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 plan to provide services to you at a discount. Check your policy to see if you can see all network providers or if your health plan has a “tiered” network and you must pay extra to see some providers. Your health plan may have network providers who are also “participating providers.” Participating providers also contract with your health plan, but the discount is usually not as great, and you may have to pay more. Sometimes called a “preferred provider.”
Obamacare - the Affordable Care Act, also known as the health care law, passed in March 2010. It puts in place strong consumer protections, provides coverage options and has tools to help you make informed choices about your health coverage.
Open enrollment (Health Insurance Marketplace) - the period of time each year when you can choose from available plans within the Health Insurance Marketplace. The open enrollment period through the Health Insurance Marketplace begins each year November 1 and runs through December 15, although some states may allow a longer period.
Original Medicare - the traditional fee-for-service program offered directly through the federal government. Under Original Medicare, the government pays directly for the health care services you receive. You can see any doctor that takes Medicare anywhere in the country. Original Medicare is sometimes called “traditional” Medicare. Unless you make another choice, you will have Original Medicare.
Out-of-network - health care providers, such as doctors, hospitals and pharmacies, that are not part of the network. Some health plans require that you obtain approval before seeing an out-of-network provider. In many cases, there are additional costs for using an out-of-network provider or facility.
Out-of-pocket costs - health care or prescription drug costs that you must pay yourself because they are not covered by Medicare or other insurance. Out-of-pocket costs include deductibles, coinsurance and copayments for covered services. They also include costs for services that are not covered by a health plan.
Out-of-pocket limit - the most you pay during a policy period (usually a year) before your health plan begins to pay 100 percent of the allowed amount. This limit doesn't include your premium, balance-billed charges or health care your health plan doesn’t cover. It often excludes costs for out-of-network care as well. Not all plans will have the same limit.
Penalty - the fee if you don’t have a health plan that qualifies as minimum essential coverage for 2018. This penalty goes away for coverage in 2019, with the exception of a few states and the District of Columbia that have their own individual mandate.
Pre-existing condition - a health problem you had before the date that a new health plan starts. As a result of the health care law, health plans bought through the Health Insurance Marketplace cannot deny services to you because of a pre-existing condition.
Preferred provider - a provider who has a contract with your health plan to provide services to you at a discount. Check your policy to see if you can see all preferred providers or if your health plan has a “tiered” network and you must pay extra to see some providers. Your health plan may have preferred providers who are also “participating providers.” Participating providers also contract with your health plan, but the discount is usually not as great, and you may have to pay more. Sometimes called a “network provider.”
Premium tax credits - an amount that can be subtracted from the amount of income tax a person or business owes. Premium tax credits will be offered to some individuals that purchase health coverage through the Health Insurance Marketplace, to help pay for the cost of coverage. You can have the tax credit applied to your premium over the course of the year, or wait until you file your taxes to claim the full amount.
Premium/health insurance premium - the amount that must be paid for your health plan. You and/or your employer usually pay it monthly, quarterly or yearly.
Preventive care/services - health care to prevent health problems or catch an illness at an earlier stage. For example, preventive services include diabetes screening, flu shots and mammograms to screen for breast cancer.
Primary care doctor - the doctor you often see first for most of your health problems. Some plans may require you to see your primary care doctor before you see a specialist, such as an orthopedist (bone doctor) or a cardiologist (heart doctor).
Primary care provider - a provider who has a contract with your health insurer or plan to provide services to you at a discount. Your plan may have preferred providers who are also “participating” providers. Participating providers also contract with your health insurer or plan, but the discount may not be as great, and you may have to pay more.
Private individual health insurance plans - private individual health insurance plans are for individuals who do not have coverage through their job. People can buy private individual health insurance plans on their own or through the Health Insurance Marketplace. However, you can only get financial help through the marketplace.
Qualified health plan - under the health care law, a health plan that is certified by the Health Insurance Marketplace provides essential health benefits, follows established limits on cost-sharing (such as deductibles, copayments and out-of-pocket maximum amounts) and meets other requirements. A qualified health plan will have a certification by the Health Insurance Marketplace in which it is sold.
Rehabilitative 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 therapy and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.
SHIP - State Health Insurance Counseling and Assistance Programs. These provide local, one-on-one counseling and assistance on Medicare and other health plan issues for people with Medicare and their families.
SHOP - Small Business Health Options Program, a program designed to simplify the process of finding a health plan for a small business, generally those with 50 or fewer employees. The SHOP is a competitive marketplace where small employers can buy coverage using a broker. The small business tax credit is only available through the SHOP.
Short-term plan - an insurance plan with coverage that lasts less than a full year. These plans don't have to provide the protections and benefits that health insurance marketplace plans do. They also can charge you more or refuse to cover important services based on your health conditions.
Small business - in most states, a business with 2-50 or 2-100 employees depending on the state.
Small business tax credit - a tax credit, specifically for small businesses, that covers as much as 50 percent of the employer contribution toward premium costs for eligible employers who have low- to moderate-wage workers. The small business tax credit will only be available with plans bought through a SHOP.
Subsidy - financial help from the government to help you pay for health coverage or care. This is usually determined by income and family size and only available for plans bought through the Health Insurance Marketplace. There are two types of subsidies: the premium tax credit and the cost-sharing subsidy.
Summary of Benefits and Coverage (SBC) - a form that includes important information about the coverage and costs included in a health plan, such as the deductible, copayments, services not covered by the plan and whether people in the plan need a referral to see a specialist. It is presented in a way that makes it easier for consumers to make an “apples-to-apples” comparison of their coverage options.
TRICARE - a public health insurance program that covers active duty service members, National Guard and reserve members, retirees, families and survivors worldwide.
VA coverage - a public health insurance program through the Department of Veterans Affairs that covers most veterans.
Waiting period - the amount of time before health coverage starts for an employee or dependent who is otherwise eligible for health coverage under a job-based health plan. Under the health care law, the waiting period can’t be more than 90 days. For individual plans purchased outside the Health Insurance Marketplace, you may have a waiting period for coverage of a pre-existing condition.