Health Insurance Terms You Need to Know

Affordable Care Act

The Affordable Care Act, also known as the Patient Protection and “Obamacare,” is the health care reform legislation signed into law in 2010 by President Obama. Some provisions, like universal coverage for preventive services, are already in place while others will be rolled out in the next few years.

Affordable Insurance Exchange

Also referred to as Health Insurance Marketplace, these exchanges exist at state and federal levels to allow individuals, families, and small businesses to learn about coverage options to suit their income and to help them compare plans to be able to select the one that best fits their requirements.

Cancellations

Some insurance companies would cancel health coverage in the past, just because you made a mistake on your application. Under the ACA, they are no longer allowed to do that, though they can cancel your coverage if you falsified or omitted information on your application.

COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, is a federal law that gives you the right to temporarily continue with your employer’s group insurance plan even after you leave a job or when you reduce your hours.

Copayments

Copayments are a fixed amount of money that must be paid out-of-pocket for a health care service. It is usually paid at your health care provider’s office while visiting.

Deductible

This is the amount of money you must pay out-of-pocket for any medical care before your health insurance plan takes over the payments. It is calculated on an annual basis and high deductibles mean lower monthly premiums.

Dependent coverage

Under Obamacare, dependent coverage for children should be available until a child reaches the age of 26.

Drug Formulary

A list of medications covered by your health insurance plan.

Essential Health Benefits

Obamacare requires that certain health plans for individuals and small groups offer a comprehensive package of items and services. These include pediatric care, hospitalization, maternity, and newborn care, as well as care for mental health and substance use disorders.

Grandfathered Health Plans

Individual or group health plans purchased on or before March 23, 2010, are exempt from many of the provisions of the Affordable Care Act.

Health Care Plan Categories

Health care plans are divided into four categories: Bronze, Silver, Gold, or Platinum. The plans differ, depending on what you pay versus what the plan pays. Platinum plans have the highest premium and the most coverage. Bronze plans offer less overall coverage with lower premiums.