Affordable Care Act (ACA)The Patient Protection and Affordable Care Act (more commonly known as the Affordable Care Act [ACA] or Obamacare) is a healthcare reform law enacted in 2010 with the intention of providing more affordable health insurance to more people. The ACA introduced us to the insurance marketplace with(...)
Allowed AmountThe allowed amount is the maximum dollar amount your insurance pays for services billed by your provider. If the allowed amount is less than the billed amount, the provider may bill you the difference (also known as “balance billing”). For example, your insurance may pay up to $25 for labs and(...)
Assignment of BenefitsAssignment of benefits means you have agreed to allow your provider to file a claim for covered services directly with your insurance company, and your insurance will pay the provider directly. You most likely signed an assignment of benefits form when you filled out your paperwork at the(...)
Association Health Plan (AHP)Association Health Plans (AHPs) are a type of group coverage available to individuals and small companies. The associations often offer health insurance that may be less expensive than an ACA plan on the marketplace. Keep in mind that AHPs are not necessarily ACA-compliant and may have limited(...)
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Balance BillingBalance billing is one of those health insurance terms that has been getting a lot of press recently. Basically, balance billing is when your provider bills you for the difference between what they charged for their services and what your insurance company agreed to pay. For example, if your(...)
Billed AmountThe billed amount is what the provider charges for their services. When you look at your Explanation of Benefits (EOB) from your insurance, you’ll see the billed amount and allowed amount listed side-by-side.
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Certificate of CoverageAfter you enroll in an insurance plan, you receive a certificate of coverage that describes your benefits. Depending on your insurance, it can be quite long and detailed. It is the “bible” of your coverage. Unfortunately, it is also written in insurance language and may be difficult to(...)
ClaimWhen you make a claim with your insurance, you’re asking the company to pay for covered services you received from a healthcare provider. Most of the time, your provider will submit the claim, and your insurance company pays them directly.
CoinsuranceAfter you meet your insurance plan’s deductible, the coinsurance is the percentage of a covered service that you are responsible for paying. For example, if your insurance pays 80% of the allowed amount, you are responsible for the remaining 20% of the charge. So, if you’ve met your(...)
Coordination of Benefits (COB)It’s not unusual that you might have two different insurance plans that cover similar benefits. For example, both your health insurance and your automobile insurance could cover injury sustained in an accident. Coordination of benefits ensures that the primary insurance (probably your health(...)
Copayment/CopaySome insurance plans include fixed dollar amounts (e.g., $25), called copayments or copays, for healthcare services, such as doctor’s visits, and prescription drugs. Your plan’s copays may or may not be part of your deductible.
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DeductibleThe deductible is the upfront amount you pay for covered services before your insurance begins to pay their part. Generally, major medical and short term insurance plans include deductibles. For example, if you have a $600 deductible, you pay $600 toward covered services you receive during the(...)
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Effective DateThe day that your health insurance officially covers you is the effective date. It is not always the day you enroll. You may enroll a month before your coverage actually begins, and it never begins before the insurance company receives your first premium payment.
EligibilityDifferent types of insurance have different requirements for who is eligible to sign up. For example, to be eligible for Medicare, you have to be 65 or older. If you are buying insurance through an association, to be eligible you will need to be an active member of that association. Employers(...)
EnrollmentEnrolling in a health insurance plan means you are signing up for that plan. ACA and major medical plans have a defined enrollment period, called open enrollment, when you can sign up. Medicare also has an open enrollment for people who may have missed their initial enrollment period. Most(...)
Excepted Benefit PlansShort term medical, fixed indemnity, critical illness, and other supplemental insurance plans are considered excepted benefit plans. Excepted benefit plans are not the same as major medical and are not required to comply with the ACA. They are often used to supplement insurance that someone(...)
Excluded Services/Exclusions and LimitationsOne of the most important sections in your certificate of coverage is the section that describes what your plan does not cover. It’s easy to assume that once you have health insurance, you’re golden and you can go see your healthcare provider for whatever you need. Not so fast. Most health(...)
Explanation of Benefits (EOB)Your Explanation of Benefits (EOB) is not a bill. Rather, it is a statement from your insurance company that shows you how much your provider charged for services and how much your insurance company paid for those services. The EOB will include explanations for denied charges, and it will show(...)
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FormularyIf you have a prescription drug plan or your health insurance includes prescription drugs, the formulary is the list of drugs that the plan covers. Formularies are generally sorted into three or four tiers. Tier 1 includes generic drugs and are the least expensive. Tier 2 drugs are(...)
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Generic DrugsGeneric drugs used to be brand name drugs whose patent has expired. This means any drug maker can manufacture the medicine and offer it at a lower cost to you. Generic drugs are exactly the same as their brand name counterpart (e.g., Tylenol and acetaminophen) - they have the same dosage,(...)
Guaranteed IssueGuaranteed issue health insurance provides coverage regardless of your health status as long as you’re eligible for that coverage. All ACA-compliant plans are guaranteed issue. Excepted benefit plans are usually not guaranteed issue and often have pre-existing limitations or exclusions and(...)
Guaranteed RenewableIf your health insurance is guaranteed renewable, your coverage will continue, usually up to a certain age like 65, as long as you pay your premium. The insurance company can still raise your premiums, though.
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In-NetworkAn in-network provider is contracted with your health insurance company to provide services to its policyholders (i.e., you) at more affordable rates. In-network refers to doctors, hospitals, labs, etc. To get a list of providers in your network, contact your insurance company’s member(...)
InpatientIf you are receiving inpatient care, it generally means that you have been admitted to a hospital or other healthcare facility for at least an overnight stay. For example, if you have your appendix removed and you are in the hospital for two days, you are an inpatient, and any insurance(...)
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Minimum Essential Coverage (MEC)Basically, minimum essential coverage is the essential health benefits that all ACA-compliant plans must include. Essential health benefits fall into ten categories: outpatient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder(...)
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Out-Of-Pocket CostsOut-of-pocket costs refers to the expenses your insurance doesn’t cover and that you are responsible for paying, including your deductible, copays, and coinsurance.
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Pre-Existing ConditionPre-existing conditions are typically long-term or chronic such as asthma, diabetes, and cancer. If you have ACA-compliant insurance, then it is required to cover pre-existing conditions. However, if your insurance is not ACA-compliant, it most likely includes a pre-existing condition(...)
Preferred ProviderA preferred provider is usually an in-network provider who has contracted with your insurance to provide services at an affordable rate.
PremiumYour health insurance premium is the amount you pay, usually monthly, for your coverage. Your premium is in addition to your deductible, coinsurance, and copays and is not included in your out-of-pocket maximum.
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UnderwritingMedical underwriting refers to the process some health insurance plans (excepted benefit plans like short term medical and limited indemnity benefit plans) use to determine whether to insure you or what type of coverage to offer. You are usually asked to complete a health questionnaire.(...)
