A

Accountable Care Organization (ACO)

ACOs are groups of doctors, hospitals and other health care providers who volunteer to coordinate patient care and provide the full range of health care services for their Medicare patients.  As part of healthcare reform, ACOs are offered incentive programs to be able to share in the savings it generates for the Medicare program.

Account-based Health Plan

Account-based health plans are typically higher deductible insurance plans that are paired with a tax-preferred account such as a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA) to help pay for out-of-pocket medical expenses. Flexible Spending Accounts (FSAs) are also considered account-based health plans.

Actuarial Equivalent

A health benefit plan that offers similar coverage to a standard benefit plan with the same expected amount of spending by insurers.

Actuarial Value

Actuarial value is the measure of the average value of benefits in a health insurance plan which allows different health plans to be easily compared. The actuarial value only includes expected benefit costs paid by the plan and not premium costs paid by the enrollee.

Adverse Benefit Determination

Adverse benefit determination is a denial, reduction or termination of, or a failure to provide or make a payment (in whole or in part) for a benefit (pre-service or post-service); a denial of part of a claim due to the terms of the plan regarding coinsurance, copayments or deductibles; Retroactive rescissions of coverage, except for termination of coverage for non-payment of premiums.

Affordable Care Act (ACA)

The Patient Protection and Affordable Care Act (ACA) is a comprehensive health reform signed into law in March 2010 by President Obama.  The law was created to make health care more accessible and affordable for many Americans.

Allowable Charge

The maximum amount a health plan will reimburse a provider for a specific service.

Annual Limit

A limit on the dollar amount of claims a health plan will pay in a given year for an individual.

Association Health Plan

Health insurance plans that are generally offered to individual and/or small business members of an association.

Average Total Number of Employees

Under health reform, the average total number of employees means the average number of employees employed by the company during the preceding calendar year. An employee is typically any person for which the company issues a W-2, regardless of full-time, part-time or seasonal status or whether or not they have medical coverage.

B

Basic Health Plan

Beginning in 2014, states will have the option of creating a basic health plan to provide coverage to individuals with incomes between 133 and 200 percent of poverty instead of enrolling in the health insurance exchange (marketplace) and receiving premium subsidies. The federal government will provide states that choose to offer this plan with 95 percent of what it would have paid to subsidize these enrollees in the health insurance exchange.

Benefit Package

The set of health services, such as physician visits, hospitalizations, and prescription drugs, that are covered by an enrollee's insurance policy or group health plan.

C

Cadillac Plans

These plans have an individual coverage premium of $10,200 or more and $27,500 or more for family coverage starting in 2018.

Capitation

Under a capitation system health care providers are paid a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care.

Case Management

The coordination of health care for patients with specific diagnoses or high health care needs, performed by case managers who can include medical directors or nurses.

Catastrophic Coverage

A coverage option with a limited benefit plan design accompanied by a high deductible. The plan design is intended to protect primarily against the cost for unforeseen and expensive illnesses or injuries.

Chronic Care Management

The coordination of both health care and supplemental services to improve the health status of patients with chronic conditions, such as diabetes and asthma. These programs focus on evidence-based interventions and rely on patient education to improve patients’ self-management skills.

Claim

An itemized statement of costs and services that have been provided by the health care provider.

Claim Form

A form generally filled out by a provider and submitted to your health plan for consideration of payment of benefits under that health plan.

Certificate of Coverage

A document provided to health plan enrollees that explains the benefits that will and will not be covered.

Children’s Health Insurance Program (CHIP)

CHIP provides health coverage to uninsured children in families with incomes that are too high to qualify for Medicaid, but can’t afford private coverage.

Coinsurance

The amount that a health plan enrollee must pay for health services after the deductible has been met.

Community Rating

A method of pricing health insurance plans, where all policyholders are charged the same premium, regardless of health status, age or other factors.

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

A federal act that requires group health plans to allow employees and certain dependents to continue their group coverage for a stated period of time following a qualifying event which causes the loss of group health coverage. Employees are typically entitled to extended coverage for 18 months; however, if they are deemed disabled by the Social Security Administration, coverage may continue for up to 29 months.

Consumer Driven Health Plans (CDHPs)

These health plans seek to increase consumer awareness about health care costs and provide incentives for consumers to consider costs when making health care decisions. These plans usually have a high deductible accompanied by a savings account for health care services. There are two types of savings accounts: Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs).

Coordination of Benefits (COB)

An arrangement where, if you or your dependents are covered under more than one group health plan, the plans work together to coordinate reimbursement for the services you received.

Copayment / Copay

A fixed dollar amount paid by an individual receiving a service covered by the enrollee's  health plan.

Cost-Sharing

Health plan members are required to pay a portion of the costs of their care. Examples of these costs include copayments, coinsurance and annual deductibles.

Cost Shifting

Increasing revenues from some payers to offset losses or lower reimbursement from other payers, such as government payers and the uninsured.

Covered Person

The person in whose name a health plan is issued and, in the case of family coverage, the enrollee’s dependents.

Covered Service

A service that an enrollee is entitled to under the terms of their health plan.

D

Deductible

The amount of eligible expenses a health insurance plan enrollee is required to pay each year before reimbursement by the health plan begins.

Defined Benefit Insurance Plan

This is a pre-determined dollar amount provided by an employer to its employees. The dollar amount is provided annually toward health insurance premiums or employee health benefits.

Defined Contribution Insurance Plan

Employers make available a fixed dollar contribution towards the purchase of an insurance plan(s), which caps the employer’s healthcare exposure..  Employees are generally able to select from multiple plan options for themselves and their dependents. 

Dependent

A person, other than the primary enrollee (usually a spouse or child), who receives coverage under the health plan.

Disease Management

The coordination of care for the entire disease treatment process, including preventive care, patient education and outpatient care in addition to inpatient and acute care.

Donut Hole

A gap in prescription drug coverage under Medicare Part D, where beneficiaries pay 100 percent of their prescription drug costs after their total drug costs exceed an initial coverage limit until they qualify for a second tier of coverage.

Dual Eligibles

A term used to describe an individual who is eligible for Medicare and for some Medicaid benefits.

E

Effective Date

The date on which coverage under the health plan begins.

Emergency Medical Care

Services provided for the initial outpatient treatment of a critical medical condition. Most health plans have specific guidelines to define emergency medical care.

Electronic Health Record (EHR)

Patient  health records collected in a digital format, including medical, demographic and administrative information. These records are capable of being shared across multiple health care organizations and information networks.

Employee Retirement Income Security Act of 1974 (ERISA)

ERISA provides minimum federal standards of conduct for welfare benefit plans in private industry and protects the interests of employee benefit plan participants and their beneficiaries by requiring the disclosure to them of financial and other information concerning the plan.

Employer Mandate / Employer Responsibility

Beginning in 2015, employers meeting size or revenue thresholds will be required to offer minimum essential health benefit packages or pay a set portion of the cost of those benefits for use in the health insurance exchanges.

Essential Health Benefits (EHB)

A set of 10 benefit categories including hospitalization, outpatient services, emergency care, prescription drugs, maternity care, preventive services and other benefits. Each state will select a benchmark plan which will establish the essential health benefits for that state. The only requirement for the essential health benefits is that if they are included in the plan, they may not be subject to a lifetime dollar limit and until 2014 can only be subject to a "restricted annual dollar limit." Beginning with plan years on or after January 1, 2014 essential health benefits will need to be added to non-grandfathered small group health plans.

Exchange (Health Insurance Marketplace)

An exchange, also known as a health insurance marketplace, may be public or private. See "Public Health Insurance Exchange" or "Private Health Insurance Exchange" for detailed definitions.

External Review

Health care reform requires all health plans (except grandfathered plans) to provide an external review appeal process that meets minimum standards. With the exception of a few state processes currently in existence, external review has typically been limited to appeals of clinical decisions. The federal external review process is available for adverse benefit determinations that involve medical judgment or rescission of coverage.

F

Family Coverage

Health care coverage for a health plan enrollee and eligible dependents.

Federal Poverty Level (FPL)

A level of income issued annually by the Department of Health and Human Services (HHS) – used to determine eligibility for certain programs and benefits. FPL will be used to determine the amount of tax credit (subsidy) an individual qualifies for to offset the cost of purchasing health insurance on the Exchange.

Flexible Spending Account (FSA)

An employee paid account that can be used for qualified health care and dependent care expenses either in conjunction with a health plan or stand alone. Starting in 2013, there is a new maximum salary-reduction contribution limit of $2,500 for FSAs, which will change in subsequent years based on the rate of inflation.

Formulary

A list of drugs covered by the health plan which may include how much the enrollee and the insurance provider pay for each drug.

Fully Insured

A health plan where a company pays the enrollee’s premium with fixed rates based on the number of enrollees in the plan.

G

Grandfathered Plan

A health plan that was in place on March 23, 2010, when the ACA was enacted, is exempt from complying with some parts of the health reform law, as long as the plan does not make certain changes.

Group Health Plan

Health insurance that is offered by a plan sponsor, typically an employer on behalf of its employees.

Guarantee Issue

Beginning in 2014, ACA requires insurers to offer and renew coverage to non-grandfathered plans, without regard to health status, use of services or pre-existing conditions.

H

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

This law sets standards for the security and privacy of personal health information (PHI).

Health Maintenance Organization (HMO)

HMOs are a type of health plan that provides coverage through a specific network of hospitals, physicians and other health care providers. HMOs generally require the selection of a primary care physician (PCP) who is responsible for managing and coordinating all health care for the enrollee.

Health Reimbursement Arrangement (HRA)

A tax-exempt arrangement that is established by an employer to help employees pay for qualified health care expenses. HRAs are usually paired with a high-deductible health plan and are funded solely by employer contributions.

Health Savings Account (HSA)

A tax-advantaged savings account that can be used to pay for qualified health care expenses.. Both employers and employees can contribute to the plan. To open an HSA, an individual must have health coverage under an HSA-qualified high-deductible health plan that has deductibles of at least $1,250 for an individual and $2,500 for a family in 2013.

High Deductible Health Plan (HDHP)

These health plans have higher deductibles and lower premiums than traditional insurance plans.

High-Risk Pool

ACA requires the government to establish or issue contracts to establish a temporary high-risk pool (through 2013) to provide coverage for eligible individuals with pre-existing condition exclusions. Eligibility is limited to individuals who have been uninsured for at least six months prior to applying for pool coverage, and who have a pre-existing condition. 

I

Individual Health Insurance Plan

Health care coverage for an individual with no covered dependents. Commonly known as individual coverage.

In-Network

Covered services provided or ordered by an individual’s primary care physician (PCP) or another network provider referred by their PCP.

Individual Mandate

A requirement that most individuals obtain health insurance or pay a penalty tax beginning in 2014.

Internal Review

An internal review of an adverse claim determination.

L

Lifetime Benefit Maximum

A limit on the amount an insurer will pay toward the cost of health care services over the lifetime of the policy. Health care reform prohibits lifetime dollar limits on essential health benefits effective for plan/policy years beginning on or after September 23, 2010. 

M

Medicaid

A federal and state-funded program that provides medical and health-related services to certain low-income Americans. ACA expands Medicaid eligibility to non-Medicare eligible individuals with incomes up to 133 percent of the federal poverty level, establishing uniform eligibility for adults and children across all states by 2014.

Medical Loss Ratio (MLR)

The minimum percentage of premium dollars a commercial insurance company must spend on the reimbursement of certain medical costs.

Medicare

A federal program that provides health care coverage to people age 65 and older, and to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other special criteria such as end-stage renal disease. Eligible individuals can receive coverage for hospital services (Medicare Part A), physician-based medical services (Medicare Part B) and prescription drugs (Medicare Part D).

Medicare Advantage

Also referred to as Medicare Part C, the Medicare Advantage program allows Medicare beneficiaries to receive their Medicare benefits through a private insurance plan.

O

Open Enrollment Period

The period of time set up to allow you to choose from available health insurance plans. The first open enrollment period for the new Health Insurance Marketplace begins in October 2013 and runs through March 2014.

Out-of-Pocket Costs

Health care costs that are not covered by insurance, such as deductibles, copayments, and co-insurance. Out-of-pocket costs do not include premium costs.

Out-of-Pocket Maximum

An annual limit on the amount of money individuals are required to pay out-of-pocket for covered health care costs, excluding premiums. The health reform law, beginning in 2014, prevents an employer that offers essential health benefits from imposing cost-sharing in amounts greater than the current out-of-pocket limits for high-deductible health plans (as of 2013 $6,250 for an individual policy or $12,500 for a family policy). These amounts may be adjusted annually for inflation.

P

Patient Centered Outcomes Research Institute (PCORI)

Formally know as Comparative Effectiveness Research fees, ACA created the PCORI to fund and promote research that will assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed.

Pay for Performance

A payment system where health care providers receive incentives for meeting or exceeding quality and cost benchmarks. Some systems also penalize providers who do not meet established benchmarks. The goal of pay for performance programs is to improve the quality of care over time.

Plan Sponsor

The term "plan sponsor" means the employer in the case of an employee benefit plan established or maintained by a single employer; or the employee organization in the case of a plan established or maintained by such organization; or in the case of a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan.

Pre-existing Condition

A health condition (other than pregnancy) that was diagnosed and/or treated within the six months prior to when the individual enrolled in the health plan. ACA prohibits the denial of coverage or charging higher premiums due to a pre-existing condition for plan and policy years beginning after September 23, 2010 for children under 19, and for all others beginning in 2014. Individual coverage that is a grandfathered plan is not subject to the new restrictions on pre-existing conditions that were part of the health reform law.

Preferred Provider Organization (PPO)

A type of managed care organization that provides health care coverage through a network of providers.

Premium

The amount paid, often on a monthly basis, for health insurance. The cost of the premium may be shared between employers or government purchasers, and individuals.

Premium Reimbursement Account (PRA)

This is an account offered by an employer that allows employees to reimburse themselves with tax-free dollars for payments made for qualified individual insurance plans.

Premium Subsidies

A fixed amount of money, or a designated percentage of the premium cost, that is provided to help people purchase health insurance. The health reform law provides premium subsidies to individuals with incomes between 133% and 400% of the federal poverty level who purchase policies through the Health Insurance Exchanges, beginning in 2014.

Preventive Care Services

Health care services used in the prevention or early detection of disease that are performed on a patient without symptoms or abnormal study results. ACA requires certain health plans to provide coverage without member cost-sharing for certain preventive services.

Primary Care Provider (PCP)

A provider, usually a physician, specializing in internal medicine, family practice, or pediatrics, who is responsible for providing primary care and coordinating other necessary health care services for patients.

Public Health Insurance Exchange

A public health insurance exchange is a marketplace for consumers to compare, purchase and enroll for health care coverage. These online marketplaces offer consumers and small employers a wide choice of affordable health plans and are operated by either the state or federal government. Each state must, not later than January 1, 2014, establish a health insurance exchange that facilitates the purchase of qualified health plans (QHPs); and provide for the establishment of a Small Business Health Options Program (SHOP) that is designed to assist qualified small employers in enrolling their employees in qualified health plan. States may either partner with the federal government when establishing an exchange or allow the federal government to establish one on their behalf.

Private Health Insurance Exchange

Employers may purchase health care insurance plans through a private exchange. Their employees can then choose a health plan from those supplied by participating organizations.

Q

Qualified Health Plan

Insurance plans that are sold through a Health Insurance Exchange must have been certified as meeting a minimum benchmark of benefits (i.e., essential health benefits) under the health reform law.

R

Reinsurance

Insurance purchased by insurance companies, and employers that self-insure their employees' health care costs, to limit liability or exposure to high claims or increased cost trends. The health reform law includes a temporary federal reinsurance program for employers that insure early retirees over age 55 who are not eligible for Medicare.

Rescission

A rescission is when an approved health insurance policy is rejected from its commencement by the insurer, usually on the grounds of material misrepresentation or omission on the initial application. Under health reform, rescissions are prohibited except in cases of fraud or intentional misrepresentation.

Risk Adjustment

The process of increasing or reducing payments to health plans to reflect higher or lower than expected spending. Risk adjusting is designed to compensate health plans that enroll a sicker population as a way to discourage plans from selecting only healthier individuals.

S

Section 125 Plan

Otherwise known as a cafeteria plan, this plan allows employees to choose among different types of benefits, similar to the ability of a customer to choose among available items in a cafeteria, and the employees' pre-tax contributions are not subject to federal, state, or Social Security taxes.

Self-Insured Plan

The employer assumes the financial responsibility of health care benefits for its employees in a self-insured or self-funded plan. Employer sponsored, self-insured plans typically contract with a third-party administrator (TPA) to provide administrative services for the plan.

Small Business Health Options Program (SHOP Exchange)

A program that was designed to give small businesses health insurance options comparable to the large group market.

Small Business Tax Credit

The health reform law includes a tax credit equal to 50 percent (35 percent in the case of tax-exempt eligible small employers) for qualified small employers that provide health coverage to their employees. The tax credit is available to employers with 25 or fewer employees with average annual wages of less than $50,000.

T

Tax Credit

An amount that a person or business can subtract from the income tax that they owe. If a tax credit is refundable, the taxpayer can receive a payment from the government to the extent that the credit is greater than the amount of tax they would otherwise owe.

Tax Deduction

An amount that a person can subtract from adjusted gross income when calculating the taxes that they owe. Generally, people who itemize deductions can deduct the portion of medical expenses, including health insurance premiums, that exceed 7.5 percent of their adjusted gross income. Under health reform, the threshold for deducting medical expenses increases to 10 percent in 2013 (this increase is waived for individuals 65 and older for tax years 2013-2016). 

V

Value-Based Purchasing

A payment reform which provides bonuses to hospitals and other providers based upon their performance against quality measures.

W

Wellness Plan/Program

An employer program designed to improve health and prevent disease. The goals of these programs include reducing health care costs, maintaining and improving employee health and productivity, and reducing absenteeism due to illness.