Have you ever felt overwhelmed by health insurance jargon? You’re not alone! That’s why we’ve put together another list of 10 essential health insurance terms for you and your team. Our first list, published in August 2024, gave you a solid foundation. Now, let’s build on that to ensure you’re equipped to navigate the world of health benefits with confidence. you can read it here.

Affordable Care Act (ACA)

The Affordable Care Act (ACA) is the comprehensive federal health care reform law enacted by the U.S. Congress in 2010. It is also sometimes referred to by its full name, the Patient Protection and Affordable Care Act (PPACA), or – because it was enacted during Barack Obama’s first term as president – ObamaCare (or Obamacare).

The main goals of the ACA are:

• To make affordable health insurance available to more people. The law provides subsidies (in the form of premium tax credits) that reduce costs for consumers; available subsidies vary based on household income in relation to the Federal Poverty Level (FPL).
• Expand the federal Medicaid program to include all adults with income below 138% of the FPL. (According to the Kaiser Family Foundation, as of March 27, 2023, 40 states and one jurisdiction (DC) have adopted expansion; 10 states have not.)
• Support innovative medical care delivery methods designed to reduce health care costs generally.

Most group health insurance plans marketed in California are ACA-compliant. That means they include a set of 10 Essential Health Benefits mandated by the ACA.

Aggregate Deductible

The Aggregate Deductible Amount is the required number of deductibles that must be met by the insured and family members before the family deductible is met. For example, an insurance company offers a $250 deductible and a two times aggregate deductible. Under this coverage, the family must meet the equivalent of two deductibles, or $500. This can be met by any combination of insured family members, but one person cannot satisfy the entire family deductible.

The Aggregate Deductible is sometimes referred to as an “Annual Aggregate Deductible.”

Allowed Amount

The Allowed Amount is the maximum amount on which payment by the insurer is based for covered health care services.

It may also be called “eligible expense” or “payment allowance” or “negotiated rate” or “allowable amount.”

If the health care provider charges more than the health plan’s Allowed Amount, the insured or covered dependent could be obligated to pay the difference if not using a preferred provider under the health plan.

COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law passed by Congress that, among other things, allows individuals (employees, spouses, and dependent childrn) to maintain group health coverage following termination due to a qualifying event. The law applies both to employer-sponsored health plans with 20 or more employees. A similar California provision applicable to groups of 19 or fewer employees is known as Cal-COBRA.

If your employees elect COBRA coverage, they pay 100% of the premium, including the share previously paid by the business, plus a small administrative fee.

In some situations, in connection with a layoff, an employer may agree to pay all or some part of an employee’s COBRA premium. This decision is entirely discretionary and does not apply in most circumstances.

Emergency Medical Condition

An Emergency Medical Condition is an illness, injury, symptom, or condition so serious that a reasonable person would seek care right away to avoid severe harm.

Emergency Services

Evaluation of an individual’s emergency medical condition and related treatment to keep the condition from getting worse. Emergency services may be provided in a hospital emergency room or an urgent care facility.

Different health plans and insurers may have different criteria for evaluating whether a health care service is emergency care.

ERISA

The Employee Retirement Income Security Act of 1974, frequently shorthanded as ERISA, is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals enrolled in these plans.

ERISA prevents states from directly regulating employee welfare benefits, including employer-sponsored health plans.

Federal ERISA laws govern employer-sponsored health plans, except those offered by a church or a governmental entity for its employees.

Exclusive Provider Organization (EPO)

An Exclusive Provider Organization (EPO) is a type of health insurance arrangement that requires participants to choose the doctors, specialists, and hospitals in the EPO plan network, except in cases of emergency.

EPOs frequently allow participants to self-refer to a specialist inside the plan network. Visits to health care providers outside of the plan network are prohibited, except in an emergency.

Not all health insurers offer EPOs as part of their plan options.

Grievance

A grievance is a complaint a member communicates to his/her/their health plan or insurer. It can relate to a provider network issue, pre-authorization, processing of a claim, or another matter.

Of 230 medical issuers participating in the federal Affordable Care Act (ACA) Marketplace program in the 2021 plan year, there were a combined 291.6 million in-network claims. More than 48 million claims were denied, resulting in an average in-network claims denial rate of 16.6%.

Reasons for denial (and a subsequent filed grievance) include a claim for excluded services, lack of required preauthorization or referral, unsupported medical necessity, and “other reasons.”

Few consumers appeal their denied claims, and the majority of insurers uphold their original denial decision on appeal. Among HealthCare.gov consumers, in 2021, less than two-tenths of one percent of in-network claim denials were appealed. For those that were, insurers upheld the denial in 59% of cases.

Health Maintenance Organization (HMO)

An HMO is an organization that provides comprehensive health care to voluntarily enrolled individuals and families, often in a select geographic area, by member physicians with limited referrals to outside specialists. Membership in an HMO is financed by fixed periodic payments determined in advance.

An HMO generally does not cover out-of-network care except in case of an emergency.

Members may be required to live or work in the HMO’s service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.

More to Come

That’s a wrap on our second list of 10 essential health insurance terms you and your employees need to know. Stay tuned for more helpful insights in upcoming posts.

 

If you have questions about health insurance that you can’t easily find answers to, reach out to your health insurance or employee benefits broker. Don’t have one? We’ve made it super easy for you to connect with a broker. Get started here.