Under the Affordable Care Act, whether an employer is required to provide health insurance depends on the number of full-time employees and full-time equivalents. That means your payroll tracking reports are now closely tied to your company’s health coverage.
Health insurance terms can be confusing — especially now that the ACA has brought a whole new layer of jargon. Here are definitions of some of the terms you may need to know, provided by the U.S. Department of Health and Human Services.
Affordable Coverage. Employer coverage is considered affordable — as it relates to the premium tax credit — if the employee’s share of the annual premium for the lowest priced self-only plan is no greater than 9.56% of annual household income. Individuals who are offered employer-sponsored coverage that’s affordable and provides minimum value aren’t eligible for a premium tax credit.
Bronze, Silver, Gold and Platinum Plans. In the Marketplace, plans are primarily separated into four health plan categories — Bronze, Silver, Gold or Platinum — based on the percentage the plan pays of the average overall cost of providing essential health benefits to members. The plan you choose affects the total amount you’ll likely spend for essential health benefits during the year. The percentages the plans will spend, on average, are:
- Bronze (60%),
- Silver (70%),
- Gold (80%), and
- Platinum (90%).
This isn’t the same as coinsurance, in which you pay a specific percentage of the cost of a specific service.
Creditable Coverage. Health insurance coverage under any of the following:
- A group health plan,
- Individual health insurance,
- Student health insurance,
- Medicare and Medicaid,
- CHAMPUS and TRICARE,
- The Federal Employees Health Benefits Program,
- Indian Health Service,
- The Peace Corps,
- A public health plan (any plan established or maintained by a state, the U.S. government or a foreign country),
- Children’s Health Insurance Program (CHIP), or
- A state health insurance high-risk pool.
If you have prior creditable coverage, it reduces the length of a preexisting condition exclusion period under new job-based coverage.
Essential Health Benefits. A set of health care service categories that must be covered by certain plans. (These benefits began in 2014.)
The ACA ensures health plans offered in the individual and small group markets (inside and outside of the Health Insurance Marketplace) offer a comprehensive package of items and services. These essential health benefits must include items and services within at least the following 10 categories:
- Ambulatory patient services,
2. Emergency services,
4. Maternity and newborn care,
5. Mental health and substance use disorder services, including behavioral health treatment,
6. Prescription drugs,
7. Rehabilitative and habilitative services and devices,
8. Laboratory services,
9. Preventive and wellness services and chronic disease management, and
10. Pediatric services, including oral and vision care.
Insurance policies must cover these benefits in order to be certified and offered in the Health Insurance Marketplace. States expanding their Medicaid programs must provide these benefits to people newly eligible for Medicaid.
Full-Time Employee. An employee who works an average of at least 30 hours per week (so part-time would be less than 30 hours per week).
Grandfathered Health Plan. As used in connection with the ACA: A group health plan that was created — or an individual health insurance policy that was purchased — on or before March 23, 2010. Grandfathered plans are exempted from many changes required under the ACA. Plans or policies may lose their “grandfathered” status if they make certain significant changes that reduce benefits or increase costs to consumers.
Health Insurance Marketplace. A resource where individuals, families and small businesses can:
- Learn about their health coverage options,
- Compare health insurance plans based on costs, benefits and other important features,
- Choose a plan, and
- Enroll in coverage.
The Marketplace also provides information on programs that help people with low to moderate income and resources pay for coverage. This includes ways to save on the monthly premiums and out-of-pocket costs of coverage available through the Marketplace, and information about other programs, including Medicaid and the Children’s Health Insurance Program (CHIP). In some states, the Marketplace is run by the state. In others it is run by the federal government.
Premium Tax Credit. The ACA provides a new tax credit to help individuals afford health coverage purchased through the Marketplace. Advance payments of the tax credit can be used right away to lower monthly premium costs. People who qualify may choose how much advance credit payments to apply to their premiums each month, up to a maximum amount. If the amount of advance credit payments an individual gets for the year is less than the tax credit due, the difference will be received as a refundable credit when the taxpayer files a federal income tax return. If the advance payments for the year are more than the amount of the credit, the taxpayer must repay the excess advance payments with his or her tax return.
Qualified Health Plan. Under the ACA, an insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost-sharing ( such as deductibles, co-payments, and out-of-pocket maximum amounts), and meets other requirements. A qualified health plan will have a certification by each Marketplace in which it is sold.
Special Enrollment Period. A time outside of the open enrollment period during which individuals and their families have the right to sign up for health coverage. In the Marketplace, they qualify for a special enrollment period 60 days following certain life events that involve a change in family status (for example, marriage or birth of a child) or loss of other health coverage. Job-based plans must provide a special enrollment period of 30 days.
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 services. The UCR amount sometimes is used to determine the allowed amount.
Want to Know More?
As the ACA continues to roll out, the health care vocabulary is growing. For more information, visit www.healthcare.gov/glossary/