Choosing and maintaining a health insurance plan is supposed to be simple, but a lot of people find it confusing to understand everything that goes into it. On top of it all, it does not help that the terms and jargon that is thrown around can sometimes be ambiguous.
But it’s something that everyone needs to familiarize themselves with because it is important to have that knowledge. Therefore, here is a simple guide of 16 health insurance terms and what they mean.
- Affordable Care Act
You have probably heard of the ACC, or at least the other name it is referred to as “Obamacare”. The name became popular as it was a healthcare reform legislation that was signed into law in 2010 by then-president Barrack Obama. Many of the provisions, including Universal Coverage for preventative services, has already been put in place, and several other provisions have been planned to be rolled out in the upcoming years.
- Affordable Insurance Exchange
Affordable Insurance Exchange, or Health Insurance Marketplace, is an exchange that exists at both, federal and state levels. People, either individuals, families, or corporations, can learn about the different plans and coverages that suit their unique circumstances specifically.
Insurance companies have a common practice of canceling health coverage when an applicant makes a mistake on the form, but the Affordable Care Act stops them from doing so. While it isn’t legal to cancel healthcare on the basis of mistakes anymore, insurance companies do have the power to cancel the coverage of those who purposefully lie or omit important information in their applications.
Consolidated Omnibus Budget Reconciliation Act, or COBRA, is a law that gives individuals the right to continue being on the group insurance plan provided by their employer for 18 months (or more) even after he/she has left the company. COBRA ensures that the terminated employee continues getting healthcare coverage for this time period regardless of whether they left on their own accord or were fired.
This is the fixed sum that is paid initially in exchange for healthcare services after one’s deductible has been calculated.
A health insurance deductible is the amount of money you pay out of your own pocket before the insurance provider will start covering your medical expenses. This is the money you give to self-insure before you become eligible to claim medical coverage.
- Dependent Coverage
The policyholder may include those in his care, i.e. immediate family members under dependent coverage. Under Obamacare, a policy holder’s children are eligible to stay on in their plan as dependent coverage until they turn 26 years of age.
- Drug Formulary
This includes all the medication that you can claim insurance for under your specific plan.
- Essential Health Benefits
Essential health benefits are the items and services that the law requires health insurance providers to include under their plans, according to the Affordable Care. Among the many mandatory services, this includes hospitalization, pediatric care, maternity, newborn care, mental health, and more.
- Grandfathered Health Plans
These are the group or individual health insurance plans that are exempted from several of the provisions signed on through the Affordable Care Act. Grandfathered plans include those that were acquired on or before March 23, 2010.
- Lifetime Limits
Lifetime limits are the limits on the benefits or number of times that a policyholder could claim benefits from the insurance company over the course of his or her lifetime. The Affordable Care Act removed lifetime limits for essential health benefits, and from 2014, health service providers cannot set yearly limits in their insurance plans anymore, either.
- Medicaid Expansion
This term refers to the government-mandated health coverage that is made available to those who fall under the categories of low income and disabled. With the Affordable Care Act, the requirements for eligibility into the program were also expanded to include more people.
Mental Health Parity Act, or MHPA, is a law that required health providers to include mental health benefits in their insurance plans for employers of companies. It was also stipulated that each plan’s mental health benefits must also be equal to other health benefits. However, the requirement for eligibility was that the employer or company must have more than 50 employees.
- Minimum Essential Coverage
This is the minimum amount of health insurance that an individual must apply for to avoid having to pay penalties.
- Preexisting Condition
Preexisting conditions are medical issues that a policyholder may have been diagnosed with prior to applying for health insurance coverage. Since the Affordable Care Act modified in 2014, health providers are not allowed to increase the price of their plans or deny coverage for those who may have preexisting conditions.
- Tax Credit Premium And Advanced Premium
This is the tax break given to individuals so that they can afford to get health coverage.