Benefits Buzz

Health Law Acronyms Defined

Posted on January 10th, 2014

Ever wonder if the Co-Ops created by the ACA offer QHPs with access to APTCs and an ACO network?  Yikes!!!

So many acronyms, what do they all mean? There are a number of different acronyms that are regularly used when we talk about healthcare reform. Here are some of those acronyms along with definitions.

ACA = Affordable Care Act: The healthcare reform law was enacted in two parts: The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010 and was amended by the Health Care and Education Reconciliation Act on March 30, 2010. The name Affordable Care Act (ACA) is used to refer to the final, amended version of the law.

ACO = Accountable Care Organization: This is a group of doctors and hospitals that work together to improve the quality of care that a patient receives. The organization's payment is tied to achieving quality goals and outcomes that result in cost savings. 

APTC = Advanced Premium Tax Credit: The new healthcare reform law provides tax credits, also referred to as subsidies, to reduce monthly premium payments for individuals that qualify.

Co-Op = Consumer Operated and Oriented Plan: These are new, non-profit insurance companies created by the healthcare reform law to offer competitive insurance products in the individual and small group markets.

EHB = Essential Health Benefits:  Health plans offered in the individual and small group markets must now offer a comprehensive package of services known as essential health benefits. Examples include coverage for hospitalizations, prescription drugs and mental health care.

FPL = Federal Poverty Level:  This is a measure of income used by the government to determine eligibility for different public programs. Individuals and families earning up to 400% or 4 times the federal poverty level may qualify for subsidies to reduce the cost of their health insurance plan.

MLR = Medical Loss Ratio: If an insurer uses 80 cents out of every premium dollar to pay for medical claims and activities that improve the quality of care for its members, the company would be said to have a medical loss ratio of 80%. The new law requires health plans to have a medical loss ratio of 80% or 85%, depending on market segment. The remaining 15-20% is used by the insurance company for things like marketing, profits, salaries, administrative costs and commissions. The intent of the medical loss ratio is to provide value to members and to keep premiums lower.

QHP = Qualified Health Plan: An insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost-sharing and meets other requirements defined by the healthcare reform law.

SBC = Summary of Benefits and Coverage: These are new benefit summary documents that are supposed to provide an easy-to-read overview of your benefits and help you make “apples-to-apples” comparisons of costs and coverage between different health plans.

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Note: The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.



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