Health Care Terms You Should Know

Affordable Care Act: This is the comprehensive health care reform legislation, signed into law in 2010, that requires most Americans to have basic health coverage. Under the law, each state has a marketplace (or exchange) that sells insurance with subsidies for those who do not otherwise have affordable coverage. This legislation is sometimes referred to as “Obamacare.”

Benchmark Health Plan: This is the baseline health plan each state uses to set the standard for coverage in the state. The benchmark health plan determines the essential health benefits required to be provided by individual and small group health plans sold in the state.

Benefits: The health care services, treatments, and medicines covered under a health insurance plan.

Bronze Plan: A health insurance plan category offered in the Health Insurance Marketplace. Of the four types of plans patients may choose from, plans in this category, or “metal level,” tend to have the lowest monthly premiums but also have the highest out-of-pocket costs. Specific costs will vary depending on where you live and by plan. On average these plans pay for about 60 percent of total covered health costs.

Catastrophic Plan: A health insurance plan category offered in the Health Insurance Marketplace that has been designated for people under 30 years old OR those with “hardship exemptions” who are otherwise unable to afford health coverage. This type of plan has lower monthly premiums than the other health insurance plans but much higher annual deductibles. After a patient reaches his or her deductible, costs for essential health benefits are usually paid by the insurer.

Co-insurance: Cost sharing (see cost sharing) required by health insurance that is calculated as a percentage of the total cost of an item or service. Coinsurance may be required after a patient meets a plan’s deductible. Co-insurance amounts vary depending on the health plan and the service received.

For example: Your health plan may have negotiated a rate of $200 to visit your specialist and require a 20 percent co-insurance. If you have already met your deductible for the year (see deductible), the cost to you to visit the specialist would be $40.

Co-pay: A fixed amount the patient must pay for covered health care services or prescriptions. The amount can vary depending on your plan and the service(s) or prescription received.

For example: Your health plan may require a fixed fee of $20 every time you visit your primary care physician.

Cost Sharing: The total amount the patient is responsible for paying for covered health care services or prescriptions. This includes any co-payments, co-insurance, or deductible payments.

Cost Sharing Reductions: One of two types of financial assistance offered to qualified purchasers of exchange plans. Cost Sharing Reductions are also called “silver plan variations” and lower the amount you have to pay out-of-pocket for things like deductibles, co-pays, and coinsurance.  This means the plan pays a higher share of average total health costs than in traditional silver plans. You can get a cost sharing reduction plan if you choose a silver plan through the Marketplace and your income is below a certain level. If you choose a lower cost bronze plan or a gold or platinum plan, you won’t receive these subsidies.

Deductible: The set amount the patient is responsible for paying for health care services before his or her health plan begins to pay. For example, if the deductible is $1,500, the plan won’t pay anything until the $1,500 deductible for covered health care services is met. The deductible is paid directly to the health care provider and may not apply to all services. How a deductible works varies from plan to plan.

For example, the deductible may not apply when you visit your primary care physician for a regular check-up, so you may only have to pay your standard co-pay.  But if you require treatment from a specialist, you may have to meet your deductible before your health plan begins to cover your treatments.

Essential Health Benefits: Established by the Affordable Care Act, this is a set of ten health care service categories that must be covered by health care plans participating in the Health Insurance Marketplace, as well as other individual and small group plans.

The specific services, treatments, and medicines that are covered within each category, as well as the costs associated with them, vary from plan to plan.

Exchange (see also Marketplace): The organization set up to facilitate the purchase of health insurance in each state under the Affordable Care Act. Each state has its own “Exchange,” which offers a variety of plans. It is also a common nickname for the Health Insurance Marketplace.  Depending on the state, the Exchange may be run either by the federal government or by the state itself.

Formulary: A list of prescription drugs covered by a health insurance prescription drug plan. If a drug is not listed on the formulary, it may not be covered by the health plan.  If the medicine is not covered, you will either have to pay out-of-pocket for a non-covered drug or apply for an exception through the plan. 

Gold Plan: A health insurance plan category offered in the Health Insurance Marketplace. Plans in the gold category, or “metal level,” cover about 80% of average total health costs (the second highest percentage in the exchanges) and may have higher premiums. Specific costs vary by where you live and the health plan.

Health Plan Categories: Under the Health Insurance Marketplace, health plans have been separated into four health plan categories — Bronze, Silver, Gold, or Platinum. These categories are also referred to as “metal plans,” “metal levels,” or “metal tiers.”

Plans in each category cover a certain percentage of health care costs and should be chosen based on your particular health care needs, your or your family member’s budget, which physicians you prefer and which medications you require, as well as what you can afford in total premium and out-of-pocket costs.

Marketplace (see also Exchange): The organization set up to facilitate the purchase of health insurance in each state under the Affordable Care Act. Each state has its own marketplace, which offers a variety of plans. It is also commonly referred to as the Health Insurance Exchange.  Depending on the state, the Marketplace may be run either by the federal government or by the state itself.

The marketplace website serves as a resource where individuals and families can learn more about health coverage options, compare health insurance plans, and enroll in coverage.

Open Enrollment: The period of time during which individuals who are eligible to enroll in a health care plan can enroll or change their coverage. Under the Health Insurance Marketplace, the open enrollment period for 2015 is November 15 – February 15, for coverage starting in the coming calendar year.

Platinum Plan: A health insurance plan category offered in the Health Insurance Marketplace. Plans in the platinum category, or “metal level,” cover about 90% of average total health costs (the highest percentage in the exchanges) and may have the highest premiums.

Pre-existing Condition: A health issue or condition that a patient had before her health coverage began. Under the Affordable Care Act, plans are no longer permitted to exclude pre-existing conditions from coverage.

Prior Authorization: Sometimes referred to as pre-authorization or prior approval. Treatments, medications, or services requiring prior authorization must be approved by the health plan before a patient receives them, or the health plan may not provide coverage, except in an emergency.

Provider: A medical professional who provides health services or helps in preventing, identifying, or treating a health condition.

Provider Network: The group of doctors, hospitals, and medical specialists who have been contracted to provide health care services to members of an insurance plan.  Members of a provider network have typically contracted with the health plan to provide services at a discounted rate in return for being included in the network.

A provider network generally includes primary care physicians, specialty physicians, labs, X-Ray facilities, home health care companies, hospice, medical equipment providers, and surgery centers.

If patients choose to see a provider who is not included in their health plan’s network, the out-of-pocket cost for those services may be higher than they would pay to see a provider in the network, or may not be covered at all, depending on the provisions of the specific health plan.

Silver Plan: A health insurance plan category in the Health Insurance Marketplace. Of the four types of plans to choose from, plans in this category have a moderate monthly premium (higher than bronze but lower than gold) and moderate out-of-pocket costs. Specific costs will vary depending on where you live and the specific plan. Patients that qualify for cost-sharing reductions to lower their cost sharing must select a silver plan in order to get this benefit.

Specialist: A doctor or medical professional who focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent or treat certain types of symptoms and conditions. Copays or coinsurance are usually higher for specialist visits than for primary care visits.

Step Therapy: The practice of health plans requiring patients to try certain treatments first, before progressing or “stepping up” to treatments that a provider originally prescribed. The intent of step therapy is to control costs and create incentives for patients to use the therapies the insurance company prefers.

Summary of Benefits and Coverage: A chart listing plan details which provides enrollees with standardized information that they can compare across health plans as they make decisions about which health plan to choose.  Items listed in the Summary of Benefits and Coverage includes but is not limited to deductibles, copayment amounts, and coinsurance amounts.

Utilization Management: A health insurance provider’s process for reviewing a request for medical treatment in order to confirm that a patient’s health plan provides adequate coverage for the specific services.  It is sometimes referred to as “utilization review.” In some instances, if a service or treatment significantly exceeds the scope of a patient’s coverage or less-expensive alternatives are available, a health plan may not cover the treatment or service being reviewed.