Key Terms to Know
Health Insurance Exchanges: A new transparent and competitive insurance marketplace where individuals and small businesses can shop simply and quickly for health insurance, comparing products and prices. The exchanges work with state insurance departments to enforce insurance reforms and protections.
Qualified Health Plan: Under health care reform, starting in 2014, an insurance plan that is certified by an Exchange, provides essential health benefits, follows established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts), and meets other requirements. A qualified health plan will have a certification by each Exchange in which it is sold.
Essential Health Benefits: A set of health care service categories that must be covered by plans in the individual and small group markets, including doctor office visits, hospitalizations, and prescriptions. Insurance policies must cover these benefits to be certified and offered in exchanges, and all Medicaid plans must cover these services by 2014. Grandfathered plans are exempt. This provision applies to plans both inside and outside of the Health Insurance Exchanges.
Minimum Essential Coverage: The coverage needed to avoid the individual mandate penalty. All employer-sponsored health coverage in the small or large group market within a state is minimum essential coverage, even if essential health benefits are not provided. So if an individual has employer-sponsored health coverage, the individual mandate penalty will not be imposed.
Insurance Mandate for Individuals: Individuals must pay a government tax penalty beginning in 2014 if they lack qualified health coverage. The penalty increases in successive years.
Insurance Mandate for Employers: Large employers must offer qualified health coverage to their employees beginning in 2015, or face a tax penalty. The penalty increases in successive years.
Nondiscrimination: A requirement that coverage in the individual and group markets not discriminate based on health status. Coverage under plans cannot be denied or restricted. You also can’t be charged more because of your health status. Job-based plans can restrict coverage based on other factors such as part-time employment that aren’t related to health status.
Actuarial Value: The percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an actuarial value of 70%, on average, you would be responsible for 30% of the costs of all covered benefits in the form of deductibles, co-payments and co-insurance. However, you could be responsible for a higher or lower percentage of the total costs of covered services for the year, depending on your actual health care needs and the terms of your insurance policy.
Full Time Equivalent (FTE): The number of hours worked by part-time employees that represents one full-time employee during a fixed time period, such as one month or one year.
Actual Full Time Employees: Individual people who work at least 30 hours per week or 130 hours per month for an employer.