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 metal-tiered insurance plans that you could buy for yourself and your family as an individual. In addition, depending on your income, you could receive subsidies to help you pay premiums. Plans that are considered ACA-compliant must offer certain types of coverage and cannot deny you for pre-existing conditions.

The 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 x-ray. Your lab bill, however, was $90. The lab will send a claim for that $90 to your insurance, and your insurance will pay the lab $25. The lab will then send you a bill for the difference ($65).

Assignment 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 doctor’s office or before being admitted to a hospital.

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 benefits. If you are paying $600 a month for an AHP for your family, it is not the same coverage as a marketplace plan that may be two or three times more. On the other hand, associations offer a number of other non-insurance benefits that may help you save money on medical and drug costs. And some insurance is better than no insurance at all.

Balance 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 doctor charged you $100 for an office visit, but your insurance company will only pay $70, the doctor may bill you the remaining $30. As a rule, providers in your network won’t balance bill. However, out-of-network providers are well within their rights to bill you for what your insurance doesn’t pay. The current brouhaha is from when people go to an in-network facility but are treated by an out-of-network provider, which they don’t usually know until the bill comes. These are considered “surprise” bills and are creating quite a bit of angst for insurance companies and regulators.

The benefit is the maximum amount your health insurance agrees to pay for a covered service. For example, your insurance may cover emergency department visits up to $250 per visit for a maximum of two visits per year.

The 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.

After 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 understand sometimes. Never hesitate to reach out to your member services representative and ask questions about your coverage.

When 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.

After 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 deductible, and receive medical services that cost $100, you are responsible for paying $20 and your insurance is responsible for paying $80. Not all insurance plans include coinsurance, and not all plans have the same split (e.g., 80/20). Always review your policy and outline of coverage to understand what you may be responsible for paying.

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 insurance) pays first and that the secondary insurance only pays if needed to cover costs not covered by the primary.

Some 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.

The 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 year, after which you are responsible for your coinsurance and copays. Keep in mind that the deductible is only applied to services covered in your policy. Also, your deductible resets each year.

The 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.

Different 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 usually only offer health insurance to full-time employees. Eligibility is also defined for dependents, including spouse, domestic partner, and children.

Enrolling 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 plans allow you to enroll at any time.

Short 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 already has. Short term medical is a standalone product designed to be used when someone who is relatively healthy has a gap in their major medical insurance (like, they’re between jobs, just graduated from school, waiting for open enrollment). Sometimes, especially when costs for major medical are out of reach, people will use an excepted benefit plan as their primary insurance. We always say some insurance is better than no insurance, but make sure you fully understand your plan’s coverage and limitations.

One 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 insurance excludes certain conditions, prescription drugs, specific types of treatments, non-essential procedures, etc. And not all health insurance is the same. If you have a plan that complies with the ACA, you don’t have to worry about pre-existing conditions and preventive care. However, if you have a non-ACA plan, like short term medical or a limited benefit indemnity plan, then you most likely have a pre-existing exclusion and preventive care is not covered.

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 “your responsibility,” which is the balance of charged services minus the amount paid or denied. It’s up to your provider to then bill you for any balance. The bill could be less than what’s shown on the EOB, but it can never be more. If there is any question or discrepancy, call your insurance company’s member services department as soon as possible.

If 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 “non-preferred” and may include both generic and brand name drugs. Tiers 3 and 4 are the highest cost drugs, including speciality medications, newer drugs, or drugs the same or similar to a less expensive alternative in Tier 1 or 2.

Generic 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, effectiveness, and quality.

Guaranteed 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 waiting periods.

If 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.

An 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 services. Make sure you understand the differences in cost to you if you were to go to a provider not in-network, or out-of-network. Some insurance companies reimburse for out-of-network, but your out-of-pocket costs will be higher than in-network. Other insurance companies may not reimburse out-of-network costs at all.

If 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 benefits you’re eligible for fall under the inpatient classification. On the other hand, if you go to the hospital or another facility to have your tonsils removed, you probably go home the same day, so you would be an outpatient and your insurance benefits would fall under the outpatient classification.

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 services (including behavioral health treatment), prescription drugs, rehabilitative and habilitative services (those that help patients acquire, maintain, or improve skills necessary for daily functioning) and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services, including oral and vision care. Non ACA-compliant insurance is not required to offer MEC.

Out-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.

Pre-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 limitation, which means it won’t cover illnesses or conditions you had within a certain timeframe before your coverage began. That timeframe could be as short as six months or as long as five years or never.

A preferred provider is usually an in-network provider who has contracted with your insurance to provide services at an affordable rate.

Your 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.

Medical 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. Depending on how you answer the questions, you may immediately be denied coverage under that specific plan, or you may be asked to provide more detail and, possibly, medical records. Major medical and ACA-compliant insurance plans do not use medical underwriting.