Health insurance counseling

Health care glossary

Searching for the best health insurance to meet your needs gets confusing and complicated fast. We’ve created a glossary with terms you are most likely to come across, including through Medicare, to help you make sense of your options.

A


ACA, PPACA, Obamacare

The Patient Protection and Affordable Care Act is federal legislature and the current health care reform law, signed into law on March 23, 2010. While some aspects of the law went into effect at this time, the health insurance exchanges and individual mandate did not take effect until Jan. 1, 2014. It is often called the ACA for short or Obamacare, a nickname.

Adjusted gross income

Your AGI (IRS Form 1040, line 37) is your gross income for a tax year minus certain allowed deductions such as total student loan interest, alimony or IRA contributions made that year.

Allowed amount/eligible expense/payment allowance/negotiated rate

The highest amount an insurer will pay for a specific care cost or service.

Annual limit/Lifetime limit

Insurers sometimes cap the amount of money they will spend on a person in their life or in one year. This could be monetary or per service or both. Once they’ve covered up to that limit, they will not pay for covered services. Under the ACA lifetime and annual dollar limits aren’t allowed except in the case of grandfathered plans and for non-essential health benefits.

Appeal

If your insurance company denies a benefit, payment or claim, you can ask them to reconsider through an appeal. In certain situations, you have the right to request a third party to review a decision.

Balance billing

If an insurer doesn’t cover a health provider bill completely, the health provider may be able to bill you for anything that remains. This is called balance billing and often happens for out-of-network services.

Benefit year

Health insurance plans and pricing are made annually and depending on the program, you typically sign up for coverage that applies to a one-year period referred to as the calendar benefit year. In the federal exchange for individual plans, any changes begin Jan. 1. Regardless of when you sign up, the benefit year for those plans ends in the same year, Dec. 31.

B


Benefits

All items and services covered under your health care plan or program are referred to as benefits.

Brand name

Brand name drugs are protected by patents and have specific names or trademarks. Typically, brand name drugs cost more, so unless your physician indicates on the prescription to “dispense as written,” your pharmacy may substitute prescriptions for brand name medications with a generic option.

Broker/Agent

Brokers are people or businesses licensed to help you choose a health plan. Most of them earn commission from those who get insurance through them, and talking to them doesn’t cost you anything.

Catastrophic coverage level (part of Medicare prescription drug coverage Part D)

See Donut hole (part of Medicare prescription drug coverage Part D)

C


Catastrophic health plan

On the Marketplace, plans that don’t cover any health benefits beyond three primary care visits per year are considered catastrophic and only available to people under 30 or who have a hardship or affordability exemption. These plans are generally the lowest premium but have higher deductibles.

CHIP

Children’s Health Insurance Program (CHIP) is a state-run program meant to offer children care when their family earns above the Medicaid qualifying amount, but not enough to afford private insurance.

Certified Application Counselor

Designated organizations have certain staff trained to help others free of charge look and apply for health coverage through the Marketplace. (Caring Voice Coalition is a designated organization. CVC’s health insurance counseling case managers are Certified Application Counselors.)

Centers for Medicare and Medicaid Services (CMS)

CMS is a division of the federal government’s Department of Health and Human Services. CMS runs Medicare, Medicaid and CHIP as well as the Marketplace.

Claim

When you purchase covered goods and services, you or your health care provider file a claim requesting payment from your insurance company.

COBRA

While between jobs, COBRA (Consolidated Omnibus Budget Reconciliation Act) enables you to temporarily continue any coverage you had while employed at a higher out-of-pocket cost. Generally, the maximum COBRA coverage period for the previously employed individual is 18 months, and 36 months for any dependents (spouse or child) covered by the policy.

Coinsurance

The coinsurance is a percentage-based amount you pay for a covered prescription or service once you’ve met your deductible. This amount is determined by the cost of the prescription or service you receive and continues until you hit your out-of-pocket maximum.

Copay/Copayment

Certain plans have copays, where you pay a set amount for a covered prescription or service, no matter what, and the insurance company picks up the rest. This amount is determined by your specific insurance policy. Most copayments won’t begin until after the deductible is met.

Cost sharing

How cost is shared between you and your insurance company depends partly on whether the plan includes a deductible, copay or coinsurance. Other terms explain common variables that impact cost.

Covered service

Covered medical services are eligible for payment by your insurance policy based on the plan’s pre-established benefits. If a service is not covered, you will be responsible for 100 percent of the cost.

D


Deductible

In a health care plan with a deductible, you spend a set amount (the deductible) before your health coverage begins paying for any services. Until you reach this amount, you are responsible for 100 percent of the costs. Some services, like preventative care, may be excluded. Once you meet the deductible, the policy begins covering certain costs.

Department of Health and Human Services (HHS)

HHS or the Health Department, is a federal agency tasked with protecting and bettering the health and well-being of Americans through social and public health services. HHS runs eight agencies including CMS, the FDA and the Centers for Disease Control and Prevention.

Dependent

An individual or minor you claim for a personal exemption tax deduction. Certain qualifications such as relation, age and financial reliance apply. In health care, your plan may cover your dependents. You may also receive a tax credit to help cover both of your premiums.

Disability

See CVC’s disability glossary.

Donut hole (part of Medicare prescription drug coverage Part D)

After you meet any initial deductible in your Medicare Part D plan ($400 maximum in 2017) and then you meet the initial coverage limit set annually by CMS ($3,700 in 2017), you reach the coverage gap, or “donut hole.” At that point, you are responsible for 47.5 percent of specialty and brand name drugs and 51 percent of generic drugs until you reach the “other side” of the limit—the annual out-of-pocket spending limit ($4,950 in 2017). However, by 2020 under the ACA, Medicare plans will no longer have a donut hole. The government will subsidize an increasing percentage of the cost each year until the gap is closed.

Related terms: Initial coverage limit/level, Catastrophic coverage level

Drug list/Formulary

A drug list or formulary is a list of prescription medications eligible for payment or discount by your insurance policy based on the plan’s established benefits. If a medication is not on formulary, you will be responsible for 100 percent of the cost. Drugs on formulary may still have restrictions or requirements you must meet before the insurance will pay—you can find out if your drugs have restrictions by checking the plan’s formulary or contacting the insurance company directly.

Durable Medical Equipment (DME)

Some plans offer coverage for DME, or medical equipment and supplies prescribed by a health care provider for everyday or long-term use. This can include oxygen equipment, walkers and CPAP machines.

Essential Health Benefits

Under the ACA, all plans must to some degree cover 10 categories of basic services: ambulatory patient services, emergency services, hospitalization, pregnancy/maternity/new born care, prescription drugs, rehab services and devices, lab services, preventative and wellness services, and pediatric services.

E


Exchange/Health Insurance Marketplace

You can apply for and purchase health insurance through the exchange or Marketplace, which offers services in each state to help you enroll. People in most states access the Marketplace through Healthcare.gov. Other states run their own websites, offices and phone lines.

Exclusive Provider Organization (EPO)

As with HMOs, EPOs establish a group of approved participators. However, members generally do not have to choose a PCP or obtain referrals to see specialists. You will still pay 100 percent for non-emergency services received outside of the established network.

Exemption

Under the ACA, people must have health insurance by law or pay a fee. However, certain exemptions to this law are granted based on qualifying hardships, life events, financial status and other circumstances. Find out what qualifies here.

F


Family and Medical Leave Act (FMLA)

This legislature requires most businesses or organizations to protect an employee’s job when on leave. This protection is typically used for new mothers or those who are ill, disabled or caregivers. This protection does not include pay, but does protect health care benefits you had prior to the leave. Learn more here.

Federal Poverty Level

Each year the HHS determines an income level they consider poverty. The level is used to determine income-based eligibility for certain programs or savings on coverage.

Fee/Fine/Individual mandate/Penalty

These are all used to describe the fine incurred under the ACA for those who decline enrolling in minimum essential health coverage. For 2017 the penalty is the higher of $695/adult and $347.50/child on your tax filing or 2.5 percent of your household income.

Flexible Spending Account (FSA)

These spending accounts allow you to save money tax free for spending on certain out-of-pocket health care costs. While FSAs have no eligibility requirements, they do have more restrictions. For example, you must stick to the contribution amount you choose during open enrollment and the funds do not rollover from policy to policy. Learn more here.

Formulary

See Drug list.

G


Generic drugs

Generic drugs are medications made with the same active-ingredient formula as brand-name drugs but aren’t trademarked under a certain name and therefore usually cost less.

Grace period

Most insurance companies will allow you to remain covered for a certain amount of time if you are late paying your premium. This grace period is usually 30-90 days.

H


Hardship exemption

If you are facing a qualifying hardship, you can apply for an exemption to the ACA law that says people must enroll in minimum essential health insurance or pay a fine. Examples include homelessness, eviction, domestic violence and others.

Health Maintenance Organization (HMO)

HMO health policies attempt to keep costs low by establishing a strict network of approved participators. The policy typically requires a primary care physician (PCP) who manages all your health care needs, including referrals to specialist doctors. If you receive non-emergency services outside of this established network, you will pay 100 percent of the cost of services received.

Health plan categories

In the Marketplace, plans are categorized in four “metal” levels: bronze, silver, gold and platinum. They are intended to sort the plans by percentage of cost you pay annually for any service you receive. You pay the highest percentage in bronze plans and lowest in platinum plans. (In general, while bronze plans have the highest out-of-pocket costs, they have the lowest premiums and are designed for healthier individuals. Platinum plans have the lowest out-of-pocket costs and the highest premiums, and are most cost effective for high-risk or sick individuals.)

Health Savings Account (HSA)

These tax-advantaged medical savings accounts are specifically for setting aside money to cover medical expenses. You can draw funds from the HSA to pay for out-of-pocket medical, prescription, dental and vision expenses incurred throughout the year. An HSA must be paired with an IRS-qualified, high-deductible health plan (QHDHP)—not just any plan with a deductible. Bot you and any employer can contribute to HSAs and the funds rollover from policy to policy.

High Deductible Health Plan (HDHP)

HDHPs are health insurance policies with a high-cost deductible responsibility. You typically pay 100 percent of services received until the deductible has been met. Generally, health insurance premiums are lower per month for HDHP plans, but members are responsible for more out-of-pocket costs. HDHPs are often paired with HSA options.

High-risk pool plan

Some states run high-risk pools that offer plans to people who can’t find insurance because they have preexisting conditions, typically at a higher cost and with more limited benefits. These pools have dwindled under the ACA, which doesn’t allow health insurers to exclude people based on health status.

Home health care

Certain in-home medical services required for your care are referred to as home health care or home health services, and may be covered through Medicare or your Marketplace plan. Examples include nursing care or physical therapy.

Household

The Marketplace considers your household to be you, your spouse and anyone else you claim as a tax dependent.

I


Initial coverage level/limit (part of Medicare prescription drug coverage Part D)

See Donut hole (part of Medicare prescription drug coverage Part D)

In-network

Physicians, medical facilities and pharmacies set up as approved participators with your insurance policy are said to be “in-network.” (These care providers have a contract with insurance companies that allow the insurance to negotiate lower costs on your behalf.) So if you use in-network participators, you should pay less for services, typically an amount pre-determined based on your benefits.

Insurance plan types

Health care plans are offered in many different types. They differ mostly in how restrictive they are as far as whether they require things like primary care physicians, referrals, pre-authorization for services, in-network care and filing claims or other paper work. The most common types are: health maintenance organizations (HMO), preferred provider organizations (PPOs), exclusive provider organizations (EPOs), and point-of-service (POS) plans.

L


Lawfully present

Immigrants who meet certain requirements for legal residency status are considered lawfully present.

Lifetime limit

See Annual limit.

Low-income subsidy

In Medicare, if you meet certain eligibility guidelines you can qualify for low-income subsidies that help you cover the costs of Medicare Part D. The program is often referred to as “Extra Help.”

M


Marketplace

See Exchange.

Medicaid

Medicaid is a jointly funded, federal-state health insurance program for people with low incomes and limited resources.

Medicare

Medicare is four-part health coverage for people over 65 and certain people with disabilities. Part A is free to people who paid taxes while employed. For more detail see: “Insurance and Social Security Disability.”

Medicare advantage (Medicare Part C)

Part C offers additional coverage to original Medicare (parts A and B) by contracted private companies that includes medical and, in most cases, prescription drug benefits.

Medicare Part D

Part D of Medicare provides coverage for prescription drug costs.

Medicare supplemental plans

Medicare supplemental plans (often referred to as Medigap) supplement the costs left behind by Medicare. The 20 percent member responsibility is covered completely by a supplemental plan. Certain plans—denoted by specific letters like Plan “F”—cover additional costs like deductibles. These policies tend to have a higher monthly premium than other Medicare options, however, so while they offer comprehensive coverage, they may not be realistic or necessary for everyone.

Minimum essential coverage

ACA requires you have qualifying health coverage, which includes: Medicare, Medicaid, CHIP, job-based plans, Marketplace plans, COBRA and many other private plans. If you are enrolled in a plan that meets those requirements, you have minimum essential coverage. Things that don’t count: vision care only, dental care only, workers’ compensation, disease-specific coverage and plans that offer discounts on medical services only.

N


Network

Any medical service or provider your plan contracted with to provide health care is part of your care network.

Non-preferred provider

You will probably pay more if you visit this kind of out-of-network care provider, who is not on a contract with your insurer.

Nondiscrimination

Law prohibits job-based insurance plans from many types of health status-based discrimination.

O


Obamacare

See ACA.

Open enrollment period

The specified time periods for individuals to enroll in health plans are called open enrollment periods. Medicare open enrollment is different than the open enrollment period for Marketplace plans.

Original Medicare

Parts A (hospital insurance) and B (medical insurance) are called original Medicare. See Medicare.

Out-of-network

Physicians, medical facilities and pharmacies not included as approved participators with your insurance policy are “out-of-network.” You will pay a higher share of cost, or pay 100 percent for services received out-of-network, depending on your plan network type. (See Insurance plan types.)

Out-of-pocket (OOP) maximum/Out-of-pocket limit

Every ACA-compliant plan has an OOP max, or the most you will pay for covered prescriptions and services in a policy period. This number is generally slightly higher than your deductible to account for copay or coinsurance. Once you have paid this amount in health expenses—not including premiums—your insurance will pay 100 percent of covered services for the rest of the year. (Under the Affordable Care Act, plans on the marketplace can’t have an OOP max higher than $6,850 for an individual in 2016.)

P


Penalty

See Fee.

Plan year/Policy year

Your coverage is valid for a 12-month period that might not align with the calendar year. Group plans call it a plan year, while individual plans call it a policy year.

Plan ID

When you enroll with a plan you are assigned a unique identifying number called your plan ID. You can find your plan ID on your member identification card, in your policy documents, or when you login to your account online. Plans from the Marketplace are assigned 14-character IDs.

Point-of-Service (POS)

POS plans combine elements of an HMO and a Preferred Provider Organization (PPO). You usually choose a PCP who manages your health care needs, including referrals to specialist doctors. But unlike an HMO, you can receive services outside of the established network. You will pay more, but not 100 percent, if the services are covered by your plan.

PPACA

See ACA.

Preauthorization/Prior authorization/Precertification

Before you pursue certain care services or items, your plan may require prior approval. Preauthorization is the decision that your insurance company has deemed the care medically necessary. However, the preauthorization is not a binding promise to pay.

Preferred Provider Organization (PPO)

PPO plans provide the most flexibility to visit physicians, medical facilities and hospitals. You are not required to choose a PCP, no referrals to specialist doctors are needed, and you can visit any in-network or out-of-network provider. You will generally pay a larger percentage of covered services received out-of-network.

Prescription drug

Law requires certain drugs can only be taken with a prescription from a qualified health professional.

Prescription drug coverage

The plan or portion of a plan that helps cover expenses related to prescriptions medications is referred to as prescription drug coverage. Medicare Part D is prescription drug coverage.

Pre-existing condition

When you have a condition prior to beginning new health coverage, it is a pre-existing condition.

Pre-existing condition exclusion period

If you have a pre-existing condition, an individual policy might include an amount of time where care related to the condition isn’t covered. These rules vary from state to state and some states allow policies that don’t cover certain conditions at all. Under the ACA, insurers are no longer allowed to limit benefits for a condition in most cases.

Primary care

Generally your first stop for health care is primary care, which provides routine and preventative services, as well as a wide range of basic health treatments. These care professionals—including doctors, nurses, nurse practitioners and physician assistants—can refer you to specialists or more advanced care.

Primary Care Physician (or Provider)/PCP

Insurance companies often refer to the medical doctor that provides your regular care as your PCP. The term Primary Care Provider can also include a nurse practitioner, clinical nurse specialist or physician assistant, if allowed under state law.

Private-Fee-for-Service (PFFS)

PFFS plans combine elements of an HMO and a PPO, and are typically specific to Medicare-affiliated coverage. Members choose a PCP for these plans, but referrals are not required to see a specialist doctor. Services outside of the established network will cost you more, but not 100 percent if covered by your plan.

Q


Qualifying health coverage

See Minimum essential coverage.

Qualifying life event

Marketplace enrollment is only allowed outside the enrollment window if something big changes in your life. These events generally fall into these categories: loss of coverage, household size changes, residency changes—with a few exceptions.

Quantity limit

Insurance plans (including Medicare Part D) sometimes limit the amount of drugs they will cover over a period of time. You may be able to work with the plan to authorize a higher limit. Check with your plan to find out if quantity limits exist for any regular medications you take.

R


Referral

For certain medical services or visits to a specialist, some provider groups or plans require you receive a written directive from your PCP. HMOs often require referrals for any care outside of your PCP.

S


Social Security

U.S. workers pay a small percent of their income as a sort of insurance to replace part of your income when work stops—because of disability, retirement or death. The United States Social Security Administration administers these financial programs.

Social Security Disability Insurance (SSDI)

SSDI benefits are awarded based on the work credits that a person has earned by paying into the Social Security system. (See “Disability and the Difference Between SSDI and SSI.”)

Specialist

Specialists have specific knowledge of treating and diagnosing certain symptoms, conditions or diseases.

State Insurance Department

In states that elect to manage their own health insurance plans people can learn more about plans and pricings from the state agency that regulates its insurance, the State Insurance Department.

State Medical Assistance Office

Each state’s State Medical Assistance Office runs it state Medicaid program.

State Pharmaceutical Assistance Programs (SPAP)

Many states run income-based programs to help cover costs of drugs or drug plan premiums. Visit Medicare.gov to see if your state has one.

Step therapy (Medicare prescription drug coverage Part D)

Related to prior authorization, Medicare Part D may require you try a less expensive version of a prescribed drug to test its efficacy before it will cover the expensive version.

Summary of benefits and coverage (SBC)

A summary of benefits and coverage is an overview of elements each policy includes—such as deductibles and co-pays—used to compare plans before enrolling.

Supplemental Security Insurance (SSI)

SSI is a need-based financial program based on income and assets. (See “Disability and the Difference Between SSDI and SSI.”)

T


Total Cost Estimate

Your total cost for your health coverage is estimated before you pay, to give you an idea of what you would be responsible for with a certain plan.

True out-of-pocket (TrOOP) maximum

Your true OOP maximum is the most you will pay for covered prescriptions and services in a given year, including any applicable deductibles.

 

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