Top Insurance Definitions You Might Want to Know
With all the talk of "repealing and replacing" the Affordable Care Act (Obamacare), we're starting to hear a lot of insurance terms in the news again. Here is a mini refresher course for consumers who are following along.
Advanced Premium Tax Credit (APTC)
Financial assistance eligible consumers may receive when enrolling in a Covered California health insurance plan, to assist them in paying their monthly premium costs. The amount of premium assistance an individual may receive is determined based on his or her income as a percentage of the federal poverty level. This tax credit may also be described as "premium assistance." Tax credits are also available to small businesses with fewer than 25 full-time-equivalent employees to help offset the cost of providing coverage.
Broker
Independent, licensed insurance agent that searches the marketplace in the interest of individual families, small businesses, and employees, not the insurance companies. See also "Certified Agent" below.
Capitation
A set dollar limit you or your employer pay to a health maintenance organization (HMO), regardless of how much you use (or don’t use) the services offered by the health maintenance providers.
Case Management
A system embraced by employers and insurance companies to ensure individuals receive appropriate, reasonable health care services.
Certified Insurance Agent
As defined by Covered California:
Insurance agents wishing to work with Covered California must possess a valid license through the California Department of Insurance and must complete Covered California's Certified Insurance Agent training and certification program. Covered California's training and certification for insurance agents began in September 2013.
Covered California Certified Insurance Agents assist consumers in receiving eligibility determinations. Agents also work one on one with consumers to help them complete the Covered California application and select and enroll in a health insurance plan in either Covered California's individual market or through Covered California for Small Business (CCSB). Unlike Certified Enrollment Counselors, Certified Insurance Agents may collect premiums for consumers who are enrolled electronically, but they are prohibited from collecting any premium payments on behalf of consumers who complete the paper application. Certified Insurance Agents provide impartial information about a consumer's plan choices, and they can offer advice about which particular plan may best meet a consumer's needs.
Claim
A request by an individual (or his or her provider) to an individual’s insurance company for the insurance company to pay for services/benefits obtained from a health care professional or facility.
Coinsurance
This is a percentage of a medical claim that you would pay. Your insurance would pay a percentage and you would share the payment with your part of the percentage.
Comprehensive Major Medical Insurance
A form of health insurance coverage that combines the features and benefits of a hospital-surgical expense policy and the features and benefits of a major medical policy.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
In the United States, a statute which requires that employers sponsoring group health plans offer continuation of coverage under the group plan to employees and their spouses and dependent children who have lost coverage because of the occurrence of a “qualifying event.” Qualifying events include reduction in work hours, many types of termination of employment, death, and divorce.
Coordination of Benefits
A provision in a group health insurance policy specifying that benefits will not be paid for amounts reimbursed by other group health insurers. The purpose of a coordination of benefits provision is to assure that an insured’s benefits from all sources do not exceed 100 percent of allowable medical expenses.
Co-Payment
A predetermined (flat) fee an individual pays for health care services, in addition to what the insurance covers. For example, some HMOs require a $10 “co-payment” for each office visit, regardless of the type or level of services provided during the visit. Co-payments are not usually specified by percentages.
Deductible
The amount that you must pay before an insurance company pays for medical expenses. For example, if your deductible is $500, you must pay $500 for medical services (your copays do not count toward this amount) before your insurance will start paying for your medical claims.
Denial of Claim
Refusal by an insurance company to honor a request by an individual (or his or her provider) to pay for health care services obtained from a health care professional.
Dependent
A Dependent is usually defined as an Individual relying on another for support or aid. Under the ACA, children of Plan Participants (Individuals or Employees) are considered dependents up to age 26.
Essential Health Benefits
All health insurance plans offered in the individual and small-group markets must provide a comprehensive package of items and services, known as essential health benefits. These benefits fit into 10 categories, and include services like prescription drugs, mental health care, and emergency services.
Explanation of Benefits
A statement you will receive from your health insurance company a few months after your medical appointment/service. This document will detail out what your health insurance company will pay and what you’re responsible to pay.
Flexible Spending Account (FSA)
A special account you put money into that you use to pay for for additional services and costs that the primary health plan may not cover. Since you don't pay taxes on this money, you'll save an amount equal to the taxes you would have paid on the money you set aside.
Health Savings Account (HSA)
A medical savings account that allows you to contribute pre-tax money to be used for qualified medical expenses. HSAs are available to taxpayers who are enrolled in a high-deductible health insurance policy.
Metal Tiers
Health insurance plans are divided into 4 levels: Bronze, Silver, Gold, and Platinum. The richer the plan level, the richer plan benefits, meaning you would pay less for each service but the monthly premium will be higher.
Out-Of-Pocket Maximum
Limits the total amount you are responsible for paying during any one plan year.
Pre-Existing Condition
A coverage limitation that used to be included in health policies which states that certain physical or mental conditions will not be covered under the new policy for a specified period of time. The Affordable Care Act removed this pre-existing condition clause while simultaneously implementing the mandate that everyone buys insurance or face a penalty.