Health Care Reform Glossary

Actuarial Justification

A process where a health plan demonstrates that plan dues are reasonable, based on benefits and costs. This is subject to limitations by state and federal law. Afordable Care Act (ACA) requires health plans to publicly disclose actuarial justifications for unreasonable dues increases.

Adjusted Community Rating

A method of pricing health plan dues based on the member’s age and geographic location – not their health status. ACA requires health plans to use adjusted community rating.

Affordable Care Act (ACA)

Health care reform legislation signed by President Obama on March 23, 2010.

Allowed Amount

Maximum amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance" or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference. (See Balance Billing.)

Annual Limits

The dollar limits health plans place on claims that they will pay throughout a plan year. ACA prohibits restrictive annual limits for essential benefits for plan years beginning after Sept. 23, 2010.

Appeal

A request for your health insurer or plan to review a decision or a grievance again.

Balance Billing

When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.

Children's Health Insurance Program (CHIP)

Health care coverage for children in low- and moderate-income households. Like Medicaid, it is jointly funded and administered by your state and federal government. It was originally called the State Children's Health Insurance Program (SCHIP).

Community Living Assistance Services and Supports (CLASS)

A new national program for purchasing long-term care insurance. The Department of Health and Human Services (HHS) will begin working on the framework for CLASS starting Jan. 1, 2011. The program will create more long-term care options for disabled people. Employees can voluntarily contribute pre-tax dollars to the fund. HHS is expected to define the benefit by October 2012. Enrollment and contributions will begin after the benefit is defined. Participants must make payroll contributions for at least five years before they can receive benefits. Employers may automatically enroll their employees and let them opt out.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

A 1986 federal law that entitles you and eligible dependents covered by your employer-sponsored group plan to pay for continued coverage for a specified period if your coverage ends due to a qualifying event, such as reduced work hours, loss of employment, or a change in family status.

Coinsurance

Your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. You pay co-insurance plus any deductibles you owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your co-insurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.

Complications of Pregnancy

Conditions due to pregnancy, labor and delivery that require medical care to prevent serious harm to the health of the mother or the fetus. Morning sickness and a non-emergency caesarean section aren’t complications of pregnancy.

Community Rating

A method of pricing health plans that requires members to pay the same rates or dues, regardless of health status, age or other factors.

Co-op Plan

A health plan that will be sold by member-owned and -operated nonprofit organizations through an exchange starting in 2014. ACA provides grants and loans to help co-op plans enter the marketplace.

Copayment

A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.

Cost-sharing

Health care provider fees that you are responsible for paying, such as deductibles, coinsurance and copayments. ACA prohibits total cost-sharing to exceed $5,950 for an individual and $11,900 for a family. These amounts will be adjusted annually to reflect the growth of member dues.

Deductible

The amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1000, your plan won’t pay anything until you’ve met your $1000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services.

Disease Management

A program for members who have or are at risk for a specific chronic condition. Members receive information from health professionals to help manage their condition. This preventive approach works to decrease patients' need for medical care and improve their quality of life.

Durable Medical Equipment (DME)

Equipment and supplies ordered by a health care provider for everyday or extended use. Coverage for DME may include: oxygen equipment, wheelchairs, crutches or blood testing strips for diabetics.

Emergency Medical Condition

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

Emergency Medical Transportation

Ambulance services for an emergency medical condition.

Emergency Room Care

Emergency services you get in an emergency room.

Emergency Services

Evaluation of an emergency medical condition and treatment to keep the condition from getting worse.

Employee

Works a normal work week of 20 hours or more.

The federal law passed in 1974 that sets minimum standards for most voluntarily established pension and health plans to provide protection for individuals in these plans.

Essential Health Benefits

ACA directs the U.S. Department of Health and Human Services (HHS) to define "essential benefits." Essential benefits must include:

Employee Retirement Income Security Act (ERISA)

The federal law passed in 1974 that sets minimum standards for most voluntarily established pension and health plans to provide protection for individuals in these plans.

Exchange

An exchange, or marketplace, will help individuals and small businesses compare and purchase health plans. An exchange will determine who qualifies for subsidies and make subsidy payments to health plans on behalf of individuals receiving them. They will also accept applications for other health care programs, such as Medicaid and CHIP.

Excluded Services

Health care services that your health insurance or plan doesn’t pay for or cover.

External Review

The review of a health care service or treatment by a person or entity with no affiliation to the health plan to determine if the service or treatment is medically necessary. ACA requires health plans to provide an external review process that meets minimum standards.

Formulary

A list of drugs that are covered under your drug plan.

Fully Insured

When a group is fully insured, the health plan uses the group's past benefit costs or claims experience to calculate future rates. This is usually done annually. This is also known as underwritten business.

Grandfathered Plans

Coverage provided by a health plan in which an individual was enrolled on March 23, 2010, and to which the plan has made no changes that would trigger a loss of grandfather status under federal regulations.

Grievance

A complaint that you communicate to your health insurer or plan.

Group Health Plan

An employee welfare benefit plan established or maintained by an employer or employee organization, such as a union, that provides health plans for participants and their dependents.

Guaranteed Issue

A requirement that health plans provide coverage to those who request it. ACA requires that health plans be sold on a guaranteed-issue basis beginning in 2014.

Guaranteed Renewability

A requirement that health plans renew coverage, except in the case of fraud or when member dues are not paid. HIPAA requires health plans to be guaranteed renewable.

Habilitation Services

Health care services that help a person keep, learn or improve skills and functioning for daily living. Examples include therapy for a child who isn’t walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings.

Health Insurance

A contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium.

Health Maintenance Organization (HMO)

A health care system used by plans such as HMSA’s Health Plan Hawaii. HMO plans provide coverage for a wide variety of health care services with an emphasis on preventive care. As an HMO member, you select a primary care provider (PCP) and health center from the plan's network. All care you receive must be provided or arranged by your PCP except for emergency care, HMSA's Online Care, vision exams, gynecological exams, HealthPass exams, and mental health and substance abuse treatment.

Health Savings Account (HSA)

A tax-advantaged medical savings account available to taxpayers enrolled in a High-Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), funds roll over and accumulate into the following year. More information about HSAs can be found on the U.S. Treasury website.

High-Deductible Health Plan (HDHP)

A type of health plan with higher out-of-pocket payments and lower member dues. In 2010, an HSA-qualifying HDHP must have a deductible of at least $1,200 for single coverage and $2,400 for family coverage. The plan must also limit the total amount of out-of-pocket cost sharing for covered benefits each year to $5,950 for single coverage and $11,900 for families.

High-Risk Pool

A state-subsidized health plan that provides coverage for individuals who cannot purchase a private health plan due to a pre-existing medical condition. ACA creates a temporary federal high-risk pool program that will be administered by states to provide coverage if you have a pre-existing condition and have been uninsured for at least six months.

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

A law that addresses health care portability to protect health care coverage for workers and their families when they change or lose their jobs. It is designed to reduce the administrative costs of providing and paying for health care through standardization. It includes requirements to protect the privacy of your health information.

Home Health Care

Health care services a person receives at home.

Hospice Services

Services to provide comfort and support for persons in the last stages of a terminal illness and their families.

Hospitalization

Care in a hospital that requires admission as an inpatient and usually requires an overnight stay. An overnight stay for observation could be outpatient care.

Hospital Outpatient Care

Care in a hospital that usually doesn’t require an overnight stay.

Individual Mandate

A provision under ACA that requires everyone who can purchase a health plan for less than 8 percent of their household income to do so or pay a tax penalty.

Individual Market

Health care coverage that is offered to individuals and not through a group health plan.

In-network Co-insurance

The percent (for example, 20%) you pay of the allowed amount for covered health care services to providers who contract with your health insurance or plan. In-network co-insurance usually costs you less than out-of-network co-insurance.

In-network Co-payment

A fixed amount (for example, $15) you pay for covered health care services to providers who contract with your health insurance or plan. In-network co-payments usually are less than out-of-network co-payments.

Internal Review

The review of a health care service or treatment to determine if it is medically necessary. ACA requires health plans to conduct an internal review if requested by a member.

Interstate Compact

An agreement between two or more states to provide health care coverage to their residents. ACA provides guidelines for states to enter into interstate compacts to allow health plans to be sold in multiple states.

Job Lock

The situation in which individuals remain in their current job because of an illness or condition that may make them unable to obtain health care coverage if they leave their job. ACA would eliminate job lock by prohibiting health plans from refusing to cover individuals due to their health status.

Lifetime Limit

Dollar limits that a health plan will pay over the course of a member’s life. ACA prohibits lifetime limits on benefits beginning Sept. 23, 2010.

Limited Benefits Plan

A type of health plan that provides coverage for only certain health care services or treatments during a specified period.

Mandated Benefit

A requirement in state or federal law that health plans provide coverage for a specific health care service.

Marketplace

A marketplace, or exchange, will help individuals and small businesses compare and purchase health plans. An exchange will determine who qualifies for subsidies and make subsidy payments to health plans on behalf of individuals receiving them. They will also accept applications for other health care programs, such as Medicaid and CHIP.

Medicaid

A joint state and federal program that provides health care coverage to eligible low-income individuals. Eligibility (such as for children, pregnant women, or people with disabilities) and income and asset requirements vary by state. Medicaid often pays for long-term care, such as nursing home care. ACA extends eligibility for Medicaid to all individuals earning up to $29,326 for a family of four.

Medical Loss Ratio

The percentage of dues that a health plan spends on health care services for its members. ACA requires health plans to spend 85 percent of dues on medical care for large group plans and 80 percent on medical care for small group and individual plans.

Medically Necessary

Health care services or supplies needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms and that meet accepted standards of medicine.

Medicare

A federal government program that provides health care coverage for eligible individuals age 65 or older or anyone with a disability, regardless of income or assets. Eligible individuals can receive coverage for hospital services (Medicare Part A), medical services (Medicare Part B), and Prescription drugs (Medicare Part D). Medicare Part A and B together are known as original Medicare. Benefits can also be provided through a Medicare Advantage plan (Medicare Part C).

Medicare Advantage

An option that Medicare beneficiaries can choose to receive most or all of their Medicare benefits. Also known as Medicare Part C. Private health plans contract with the federal government and are required to offer the same benefits as original Medicare, but may follow different rules and offer additional benefits.

Medicare Supplement Insurance

Private health plans that you can purchase to “fill in the gaps” to pay for out-of-pocket expenses, such as deductibles and coinsurance, that original Medicare doesn’t cover. Also known as Medigap plans.

Multi-state Plan

A health plan created by ACA and overseen by the U.S. Office of Personnel Management (OPM) that will be available in every state through an exchange beginning in 2014.

Network

The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.

Non-Preferred Provider

A provider who doesn’t have a contract with your health insurer or plan to provide services to you. You’ll pay more to see a non-preferred provider. Check your policy to see if you can go to all providers who have contracted with your health insurance or plan, or if your health insurance or plan has a “tiered” network and you must pay extra to see some providers.

Open Enrollment Period

A specified period each year when you can enroll in a health plan.

Out-of-Network Co-insurance

The percent (for example, 40%) you pay of the allowed amount for covered health care services to providers who do not contract with your health insurance or plan. Out-of-Network Co-insurance usually costs you more than in-network co-insurance.

Out-of-Network Provider

Physicians, hospitals, and other health care providers who are not under contract with HMSA. You may be required to pay a higher portion of the costs when you seek care from an out-of-network provider.

Out-of-Network Co-payment

A fixed amount (for example, $30) you pay for covered health care services from providers who do not contract with your health insurance or plan. Out-of-network co-payments usually are more than in-network co-payments.

Out-of-Pocket Limit

The most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100% of the allowed amount. This limit never includes your premium, balance-billed charges or health care your health insurance or plan doesn’t cover. Some health insurance or plans don’t count all of your co-payments, deductibles, co-insurance payments, out-of-network payments or other expenses toward this limit.

Physician Services

Health care services a licensed medical physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine) provides or coordinates.

Plan

A benefit your employer, union or other group sponsor provides to you to pay for your health care services.

Plan Year

The year that is designated as the plan year in the plan document of an employment-based plan, except that if the plan document does not designate a plan year, if the plan year is not a 12-month plan year, or if there is no plan document, the plan year is:

  • The deductible or limit year used under the plan.
  • The policy year, if the plan does not impose deductibles or limits on a 12-month basis.
  • The sponsor’s taxable year, if the plan does not impose deductibles or limits on a 12-month basis, and either the plan is not insured or the insurance policy is not renewed on a 12-month basis.
  • The calendar year, in any other case.

Preauthorization

A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.

Pre-existing condition exclusion

The period when you don’t receive health plan benefits for an illness or medical condition within a specified period of time before you can enroll in a health plan. ACA prohibits pre-existing condition exclusions for all plans beginning in January 2014.

Preferred Provider

A provider who has a contract with your health insurer or plan to provide services to you at a discount. Check your policy to see if you can see all preferred providers or if your health insurance or plan has a “tiered” network and you must pay extra to see some providers. Your health insurance or plan may have preferred providers who are also “participating” providers. Participating providers also contract with your health insurer or plan, but the discount may not be as great, and you may have to pay more.

Preferred Provider Organization (PPO)

A type of health plan that allows you to choose any health care provider. Providers within the network agree to accept HMSA’s eligible charge, minus your copayment, as payment in full. Nonparticipating providers have not agreed to accept HMSA’s eligible charge as payment in full. If you receive services from a nonparticipating provider, you owe a copayment plus the difference between the nonparticipating provider’s billed charge and HMSA’s eligible charge.

Premium

The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly or yearly.

Prescription Drug Coverage

health insurance or plan that helps pay for Prescription drugs and medications.

Prescription Drugs

Drugs and medications that by law require a prescription.

Preventive Health Services

Covered services to prevent diseases or identify diseases for early treatment. ACA requires health plans to provide coverage for preventive benefits without deductibles, copayments or coinsurance.

Primary Care Physician

A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine) who directly provides or coordinates a range of health care services for a patient.

Primary Care Provider

A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine), nurse practitioner, clinical nurse specialist or physician assistant, as allowed under state law, who provides, coordinates or helps a patient access a range of health care services.

Provider

A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine), health care professional or health care facility licensed, certified or accredited as required by state law.

Provider Network

A group of physicians, hospitals, and other health care providers who are under contract with HMSA. HMSA negotiates payment rates with the network to provide services to its members.

Qualified Health Plan

A health plan that is sold through an exchange. ACA requires an exchange to certify that qualified health plans meet minimum standards as required by law.

Rate Review

A review of proposed rate increases by insurance regulators to ensure that the increases are enough to pay claims, are reasonably priced, and do not discriminate against a certain individual or group.

Reconstructive Surgery

Surgery and follow-up treatment needed to correct or improve a part of the body because of birth defects, accidents, injuries or medical conditions.

Rehabilitation Services

Health care services that help a person keep, get back or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt or disabled. These services may include physical and occupational therapy, speech-language pathology and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.

Reinsurance

Health plans purchased by insurers from other insurers to limit the loss from a disaster or unexpectedly high claims. ACA directs states to create temporary reinsurance programs.

Rescission

Actions taken by a health plan to retroactively cancel a member’s current health care coverage. ACA prohibits rescissions except in cases of fraud or intentional misrepresentation.

Risk Adjustment

A process through which health plans that enroll a disproportionate number of sick people are reimbursed for that risk by plans that enroll a disproportionate number of healthy individuals. ACA requires states to conduct risk adjustment for all non-grandfathered health plans.

Risk Corridor

A temporary provision in ACA that requires health plans whose costs are lower than anticipated to make payments into a fund that reimburses plans whose costs are higher than expected.

Self-Insured

A company’s health plan is self-insured (or self-funded) when the employer assumes the financial risk for providing health care benefits to its employees.

Skilled Nursing Care

Services from licensed nurses in your own home or in a nursing home. Skilled care services are from technicians and therapists in your own home or in a nursing home.

Small Employer

Employs up to 50 employees.

Small Group Market

The market for health plan coverage offered to small businesses that have two to 50 employees. ACA will broaden the market to businesses that have between one and 100 employees.

Solvency

The ability of a health plan to meet its financial obligations. State insurance regulators carefully monitor the finances of health plans to make sure they remain solvent. In extreme circumstances, a state may seize control of a health plan that is in danger of becoming insolvent.

Specialist

A physician specialist focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent or treat certain types of symptoms and conditions. A non-physician specialist is a provider who has more training in a specific area of health care.

Underwritten

The process of using an employer group’s past claims experience to calculate its future health plan rates. This is usually done annually. These groups are also referred to as fully insured groups.

UCR (Usual, Customary and Reasonable)

The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.

Urgent Care

Care for an illness, injury or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.

Waiting period

A period of time that you may have to wait after becoming employed or applying for a health plan before coverage becomes effective. Member dues are not collected during this period.

Source: National Association of Insurance Commissioners and the Office of Management and Budget