Health Insurance Terminology: 12 Basic Terms You Should Know

Before you get health insurance for yourself or your family, it’s helpful to learn common terms used in the trade. This will be used by your agent to explain details about your policy so having learned the terms would save you both a lot of time. The Affordable Care Act has rolled out new terms and concepts that you may need to know so you get a better understanding of how your policy works and the coverage it offers.

Affordable Care Act

Also known as the Patient Protection and Affordable Care Act or simply as Obamacare, this is a health care reform signed into law by President Obama back in 2010. The law includes certain provisions that were rolled out in the past couple of years. An example of such is the universal coverage for preventive services.

Affordable Insurance Exchange

Some agents may also use this interchangeably with Health Insurance Marketplace. This is a space where individuals, families, and small business owners can learn about the different coverage options that match their needs and income. This allows them to compare plans and to select the best one that suits them. Individuals and companies can submit an application and receive information on all health plans available in the area.

Cobra

This stands for the Consolidated Omnibus Budget Reconciliation Act of 1985 – a federal law that gives you the right to continue with the group insurance plan set out by your employer even after termination of your employment. The coverage can span from 18 months or more and is applied to everyone who voluntarily or involuntarily leaves their jobs or reduces their hours to part-time.

Copayments

This is a fixed amount of money that you pay out of your pocket for a health care service. This amount can range from $15 to $20 often paid at your health care provider’s office.

Deductible

Another expense out of your pocket is deductible. This must be paid to avail of the medical care set out in your policy. A deductible is often determined on an annual basis and the higher that is, the lower the monthly premium will be.

Dependent Coverage

Other insurance plans cover family members of the policyholder. This is what you call a Dependent Coverage, which offers protection to children until a child reaches the age of 26. This was declared under the Affordable Care Act.

Drug Formulary

This is a list of all the medicines that are covered under your policy.

Essential Health Benefits

The Affordable Care Act requires a list of essential health benefits to be included for individual and small group plans. These essential health benefits include pediatric care, hospitalization, maternity, newborn care, care for mental health, and substance use disorders. This provision went into effect in 2014.

Grandfathered Health Plans

These are group or individual health insurance plans that were purchased on or before March 23, 2010. These plans are exempted from the additional provisions that came with the Affordable Care Act.

Health Care Plan Categories

There are four major categories in health care plans. You can find either Bronze, Silver, Gold, and Platinum plans in the marketplace. These plans depend on the amount you pay and how much the plan pays in return. The platinum plans have the most coverage and the highest premium. Meanwhile, the Bronze plans have the lowest premium and least coverage.

HIPAA

HIPAA means the Health Insurance Portability and Accountability Act. This is a guiding principle set out in handling health information which talks about the confidentiality of health information, special enrollment in health plans when certain events occur, availability, and renewal of health coverage. This was enacted into federal law.

Lifetime Limits

This is the limit of total benefits covering you for a lifetime as declared in your policy. However, The Affordable Care Act eliminated these lifetime limits on essential health benefits effective 2014. The yearly limits were also removed.

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