Definitions

Affordable Care Act – Name of the Healthcare law that went into effect on March 23, 2010.

Accountable Care Organization – An ACO is an organization of health care providers (doctors, hospitals, etc.) that agree to be accountable for the quality, cost & overall care of Medicare beneficiaries (patients) who are enrolled in the traditional fee-for-service programs who are assigned to it.

Actuarial Value – Refers to the amount of benefits coverage as a percentage of the cost of the plan.† For example, if the health insurance plan states it has an actuarial value of 60% that means on average 60% of the cost for all covered benefits is paid by the insurance plan and 40% of the cost is paid by the person.† This is used in defining a Minimum Value Plan under the Affordable Care Act.

Administrative Period – The optional period of up to 90 days between the end of the measurement period and the start of the stability period.† This is used by an employer while determining the eligibility for coverage for an employee and is the time used to actually gather information and enroll eligible employees in the health plan.

Advanced Premium Tax Credit – The amount the government will pay to the insurance company for health insurance purchased through the Health Insurance Marketplace.† An individual may be eligible for this tax credit if they do not have employer-sponsored health coverage that is affordable and meets the minimum value standards, if they are not enrolled in Medicaid, Medicare, CHIPS or other some other government health programs and if the family household income is between 100% of Federal Poverty Level and 400% of Federal Poverty Level.

Affordable or Affordable Premium – This means that the employee portion of the self-only (employee-only) premium, that provides minimum value and is the lowest cost coverage provided by the employer does not exceed 9.5% of the employee’s household income.† The coverage is treated as affordable as long as the employee’s required contribution (or share of premium) is no more than 9.5% of the employee’s wages (Box 1 of the Form W-2) instead of household income.† As an alternative, the employer may elect to calculate affordability based on either the rate of pay or base it on the federal poverty level.

Applicable Large Employer – See definition for Large Employer

Balance Billing – Refers to the amount an out of network physician or hospital may bill an individual.† It is the difference between the cost of the service and the amount paid by the insurance carrier.

Basic Health Plan – A new State program that must meet certain Federal requirements and be approved by HHS.† It will be available on January 1, 2015 and could be another option for individuals who canít get Medicaid because many states have not expanded their programs.† The individuals must also be eligible to purchase coverage through the Health Insurance Marketplace.

Boutique Doctor – Doctors who charge a fee to provide enhanced services to their patients such as first day appointments, 24/7 access to doctors, home visits and other services traditionally not covered by insurance.

Co-Insurance – The amount of money an individual must pay after the deductible is met.† For example, if you elect a bronze plan in the Marketplace, the insurance company will pay 60% of the cost and the individual would have to pay 40% of the cost of certain benefits.† The 40% paid by the individual is considered the Co-Insurance.

Concierge Doctor (or Practice) – A doctor or group of medical practitioners who charge a fee to provide enhanced services to their patients such as first day appointments, 24/7 access to doctors, home visits and other services traditionally not covered by insurance.

Co-Pay or Co-payment – The amount of money an individual will pay the doctor, the emergency room, for prescription drugs or for certain other benefits that are covered by the insurance policy.† For example, you may have to pay $50 when you go to the emergency room or $30 when you visit your doctor to receive certain procedures.

Cost Sharing Assistance – Also referred to as the out-of-pocket expense subsidy, is a program where the Federal Government will limit a person’s maximum out-of-pocket costs.† For some individuals it will also reduce other cost-sharing requirements (for example, deductibles, coinsurance, and co-payments).† Individuals and families who have a household income between 100% of FPL and 400% of FPL may be eligible for this additional subsidy under the Affordable Care Act.

Deductible – The amount of money an individual must pay before the insurance company will begin to pay any benefits.

Essential Health Benefits – A package of benefits that must be offered by new individual health plans, new small group health plans, qualified health plans offered through the Marketplace and Medicaid in all States.† These benefits must include items and services from the following 10 categories:† 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, Laboratory Services, Preventative and Wellness Services and Chronic Disease Management, Pediatric Services including Oral and Vision Care.† Essential Health Benefits cannot have annual dollar caps and must be offered by affected plans by January 1, 2014.

Federal Poverty Level – This government measurement is used to determine eligibility for tax credits and out-of-pocket cost reductions in the Health Insurance Marketplace plans.† In order to be eligible for a premium tax credit an individual’s household income must be between 100% and 400% of FPL.† If an individual’s income is below 100% FPL and the person’s resident State has expanded Medicaid, can enroll in Medicaid.† If an individual’s income is below 100% FPL and the person’s resident State has not expanded Medicaid, they can enroll in a Marketplace plan but they will not be eligible for any premium tax credits or reduction of out-of-pocket expenses.

Full-Time Employee – Under the Affordable Care Act, a full-time employee is defined as an employee who works on average at least 30 hours per week (or 130 hours of service per month).

Full-Time Employee Equivalent - A calculation performed by the employer to count the number of employees.† To calculate FTEs, the employer adds together all the hours worked (not to exceed 120 hours of service for any employee) who are not considered a Full-Time Employee (see definition) and divides this number by 120.† This is then added to the number of full-time employees to determine if the employer is considered a large employer under the Affordable Care Act.

Health Insurance Marketplace (the Marketplace) – The State or Federally run Exchanges where individuals and small businesses ban purchase qualified health plans that meet certain benefits and cost standards on a affordable basis.† Open enrollment will begin on October 1, 2013.† Insurance plans elected will be effective 1/1/2014.† For more information, go to www.healthcare.gov

Hours of Service (Time Worked) – Refers to each hour for which an employee is paid (or entitled to payment) for the performance of certain duties for the employer.† This includes each hour for which an employee is paid (or entitled to payment) by the employer for a period of time during which no duties are actually performed (for example vacation, holiday, jury duty or illness).

Inadequate Coverage Penalty – Refers to the penalty a large employer may be assessed if at least one of the health plans offered by the employer is not affordable and is considered a minimum value health plan. † This penalty may be assessed if an employee receives either a premium tax credit or cost reduction assistance through the Marketplace.† This penalty will not apply until 2015.

Individual Mandate (Individual Responsibility) – Beginning on 1/1/2014, most individuals and their dependents must be enrolled in a health insurance plan that meets standard Minimum Essential Coverage (see definition) or pay a penalty.† For 2014 the penalty would be the greater of $95 or 1% of household income over the filing threshold.† The amount of the penalty increases each year thereafter and is capped for the family at 3 times the flat dollar amount.† There is also an overall cap set at the national average premium of the bronze level plan purchased through the Marketplace.

Initial Measurement Period – Used by employers to determine if a new employee and/or a variable hour employee will be eligible for the group health plan (average 30 work hours per week).† The period of determination cannot be less than three but no more than 12 consecutive calendar months.† The period used is chosen by the employer.

In-Network (Provider) – Refers to a doctor, hospital, pharmacy or other medical service providers who have agreed to provide their services for a set price negotiated by the insurance company.† Failure to use an in-network provider may result in a substantially larger out-of-pocket expense for an individual.

Large Employer – is defined under the ACA as an employer that employed an average of at least 50 full-time equivalent (see definition) employees on business days during the preceding calendar year.

Maximum (Annual) Out-of-Pocket Expense – Refers to the most an individual or family must pay out-of-pocket each year before the insurance plan must begin paying 100% of the cost of covered benefits.† For 2014, the maximum out-of-pocket amount for an individual will be $6,350 and for a family will be $12,700.† This maximum only apply to in-network services.† Consequently, if an individual uses an out-of-network doctor, hospital or pharmacy they may have to pay more than the annual maximum.† Also the Maximum Annual out-of-pocket expense can change each year.† The amount is determined and announced by the Federal Government.† An individual can check Healthcare.gov each year to find out if the amount has been changed.

Medical Loss Ratio – Refers to the amount an insurance carrier must pay for claims verses administrative costs.† In the large group market the insurance company must spend 85% on payment of benefits and quality improvement and 80% in the small group and individual markets.

Minimum Essential Coverage – is the type of coverage an individual will need to avoid being penalized under the Individual Mandate.† Employer-sponsored coverage, individual policies, Medicare, CHIP, Medicaid, TRICARE and certain other coverage are considered minimum essential coverage under the Affordable Care Act.

Minimum Value – A health plan meets this standard if itís designed to pay at least 60% of the total cost of medical services for a standard population.† Beginning in 2015, if a large employer does not offer a minimum value plan to it’s full-time employees, an employee may be eligible to receive a premium credit and/or cost reduction assistance through the Marketplace.

Modified Adjusted Gross Income – The figure that will be used by the IRS to determine the amount of premium tax credit and/or reduction of out-of-pocket expenses that will be available to an individual under the Affordable Care Act.† Generally, your modified adjusted gross income (MAGI) is the total of your adjusted gross income and tax-exempt interest income you may have. These are the amounts on lines 37 and 8b of IRS from 1040. Some examples of income are: wages, salaries, tips, taxable interest, certain dividends, business income, capital gains, and unemployment compensation, as well as annuities, Social Security payments and some pensions.

No-Coverage Penalty – Refers to the penalty a large employer may be assessed if the employer does not offer minimum essential coverage to substantially all full-time employees.† The penalty may be assessed if an employee receives either a premium tax credit or cost reduction assistance through the Marketplace.† This penalty will not apply until 2015.

Obamacare – Common name used to describe the healthcare law that went into effect on March 23, 2010.

Out-of-Network (Provider) – Refers to a doctor, hospital, pharmacy or other medical service providers who do not have a contract to provide services with the insurance company.† If an individual uses an out-of-network provider, they may have to pay higher out-of-pocket expenses.

Out-of-Pocket Expense – Refers to the amount of money that an individual must pay without receiving any reimbursement from the insurance plan.† This includes the deductible, co-insurance, co-payments and balance billing payments.

Patient Protection and Affordable Care Act – Official title of the healthcare law that went into affect March 23, 2010.

Premium Tax Credit – Tax subsidy that will be available to individuals who purchase insurance through one of the Health Insurance Marketplaces.† Eligibility will be determined on a number of factors such as family income and enrollment in other insurance programs.† The premium tax credit may be taken as an advance monthly credit or at the end of the year on the individuals’ tax return.

Private (Insurance) Exchange – This is similar to and may even look like the public Health Insurance Marketplace.† However, this type of exchange has been developed and is run by a private company.† It may be an insurance company, a consulting company or even a brokerage firm.† In these exchanges, employees will be able to select from a number of insurance plans that may include health insurance, dental insurance, vision insurance and other insurance products.† An employer may provide the individual with a set amount of money that can be used to purchase the insurance plans.† The employee would pay the difference through payroll deduction.† If the insurance purchased is eligible, it may even be paid with pre-tax dollars through payroll deduction.

Public (Insurance) Exchange – Also known as the Health Insurance Marketplace is the exchange created by the Affordable Care Act to provide health insurance coverage to individuals, their families and small businesses.† The exchanges can be run by the State, by the Federal Government or can be run by both the State and Federal Government.† The only way to receive a premium tax credit or reduction of out-of-pocket expenses under the Affordable Care Act is to purchase a health insurance plan through the public exchanges.

Small Business Health Options Program -† A new program that is meant to simplify the process of buying health insurance for small businesses and reduce overall cost of premiums.† In general,† in 2014, SHOP is open to employers with 50 or fewer full-time equivalent (FTE) employees. Beginning in 2016, all SHOPs will be open to employers with up to 100 FTEs: If you’re self-employed with no employees, you can get coverage through the individual market Health Insurance Marketplace, but not through SHOP.

Subsidy – Under the Affordable Care Act, an individual may be eligible for a premium tax credit and/or cost sharing assistance.† To receive either type of subsidy an individual must purchase a plan through the Health Insurance Marketplace and have a family household income between 100% of FPL and 400% of FPL.

Qualified Health Plan - Under the Affordable Care Act refers to the insurance plans that have met certain standards and criteria in order to be included in the Marketplace.