Health insurance has its own language, and it can be tough to decipher. Whether you're a small business owner, HR professional, or employee, here are some basic terms you may run across.
ABCs of Small Business Health Insurance
Affordable Care Act (ACA) - The national health care reform law enacted in March 2010. The law impacts many areas of the health industry. Major provisions were implemented in 2014. Also referred to as the ACA, PPACA, ObamaCare, or health care reform.
Broker - An agent or broker is a person or business who can help you apply for health insurance. They’re licensed and regulated by states, and typically get payments (commissions), from health insurers for enrolling a consumer into an issuer's plans. "Captive" agents work for one insurance carrier alone and are typically employees of that company. Independent agents, also known as brokers, work with several carriers who pay them either a percentage or flat fee on plans they sell to their clients.
COBRA - The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a Federal law that provides certain employees, retirees, spouses, former spouses, and dependent children the right to temporarily continue their employer sponsored health benefits. Companies with more than 20 employees are required to offer COBRA to participants that meet certain qualifying events. In order to participate in COBRA, an employee must pay the full cost of the premium or benefit. COBRA participants are generally eligible for coverage for a maximum of 18 months. For most, COBRA is more expensive than individual insurance.
Dependent - A child or other individual for whom a parent, relative, or other person may claim a personal exemption tax deduction.
Essential Health Benefits (EHB) - A set of ten health care service categories that must be covered by certain health plans, starting in 2014. The service categories are: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
Federal Poverty Level (FPL) - The FPL is a measure of income level issued annually by the Department of Health and Human Services. The FPL is used to determine eligibility for certain programs and benefits such as Medicaid and Premium Tax Credits/Subsidies. See 2014 FPL charts here.
Group Health Plan - A group health plan is coverage offered by an employer or employee organization that provides health coverage to employees and their families.
Healthcare Reimbursement Plan (HRP) - An HRP is a self-insured medical reimbursement plan that allows employers to reimburse employees for individual health insurance premiums.
Individual Health Plan - A health policy an individual purchases directly from an insurance company that is not connected to job-based coverage. Individual health plans are regulated under state law.
Job-based Health Plan - Coverage that is offered to an employee (and often his or her family) by an employer.
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Lifetime Limit - A cap on the total lifetime benefits you may get from your insurance company. An insurance company may impose a total lifetime dollar limit on benefits (like a $1 million lifetime cap) or limits on specific benefits (like a $200,000 lifetime cap on organ transplants or one gastric bypass per lifetime), or a combination of the two. After a lifetime limit is reached, the insurance plan will no longer pay for covered services. The ACA prohibits lifetime and annual limits on Essential Health Benefits.
Marketplace - The Health Insurance Marketplaces are where individuals, families, and small businesses can choose a health plan and enroll in coverage. The Marketplaces also provide information on programs that help people with low to moderate income pay for coverage, such as Medicaid, CHIP, and the federal health insurance tax credits.
Network - The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services. Also called a "Network Plan" or "Network of Providers".
Open Enrollment Period - A period of time during which eligible individuals or employees can enroll in a health plan. For individual health plan coverage starting in 2015, the proposed Open Enrollment Period is November 15, 2014 – February 15, 2015. Individuals may also qualify for Special Enrollment Periods outside of Open Enrollment if they experience certain events. (See: What is a Special Enrollment Period?)
Premium - The amount that must be paid for a health insurance plan. The premium is usually paid monthly, quarterly, or yearly.
Qualified Health Plan (QHP) - Under the ACA, a QHP is an insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts), and meets other requirements.
Renewal - The time of year when a business or individual reviews and renews their health plan beyond the original time frame of the contract.
Small Group Market - The market for health insurance coverage offered to small businesses - generally those with between 2 and 50 employees.
Tax Credits and Subsidies - Under the ACA, health insurance tax credits and subsidies are available to individuals and small businesses. For eligible Americans, the individual health insurance tax credits lower the cost an individual pays for health insurance. The small business health care tax credits are designed to help small businesses provide health insurance coverage to employees.
Uncompensated Care - Health care or services provided by hospitals or health care providers that don't get reimbursed. Often uncompensated care arises when people don't have insurance and cannot afford to pay the cost of care.
Vision Coverage - A type of health benefit that at least partially covers vision care, like eye exams and glasses. This coverage can be offered either as part of a comprehensive medical plan, or by itself through a “stand-alone” vision plan.
Waiting Period - The time that must pass before coverage can become effective for an employee or dependent who is otherwise eligible for coverage under a job-based health plan. Under the ACA, the waiting period can be no longer than 90 days.
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