There are many terms associated with the healthcare reform. I have hoped to remove the mystery of many of these terms by providing you with this dictionary of the commonly used terms.
Actuarial Value: The average percentage of your health care costs that the insurer covers. If a plan has an actuarial value of 70%, you’re on the hook for the other 30% of the cost of medical expenses. That’s where things like co-payments and your deductible come in.
Benefits: A lot like a ‘friends with benefits’ situation. It’s the term for the services (annual doc visits) and things (prescription meds) that a health insurance plan helps cover.
Bronze\silver\gold\platinum plans: The different plans you can shop for on the Obamacare insurance market. Each plan comes with a different actuarial value aka different price tag and level of coverage. Bronze is the cheapest per month but you’ll have to pay more out-of-pocket for things like doc visits. Platinum is the most expensive but insurance will help pay for more of the bill.
Block grants: A type of federal funding that gives states a lump sum of money to run certain programs. The GOP health care plan would allow states to opt into a block grant for Medicaid (the program that helps cover low-income people). Right now, states and the federal gov share the costs of Medicaid. And the feds generally pick up the slack for poorer states or in states where lots of people sign on. Block grants would mean federal funding would be capped at a set amount.
Claim: A medical Venmo request. After you’ve visited the doc, you or your doc will send a claim to your insurance company for any services you received (think: lab tests, the visit itself). The insurance co processes it aka pays for its portion and then let’s you know how much you might have to pay.
Cobra: Not the yoga pose. It’s a federal law called the Consolidated Omnibus Budget Reconciliation Act. It requires employers to offer you temporary health insurance when major life events come your way. As in if you lose your job. Cobra is generally more expensive than if you were still covered under the regular employee plan.
Co-insurance: The slice of a medical service you’re responsible for. Whether you pay a co-pay or co-insurance depends on the type of service and in some cases, whether you’ve met your deductible. You might be asked to pay 20% of your bills for a particular service, and your insurance company will pay the remaining 80%.
Co-pay: Like a cover charge without the open bar. It’s the flat fee you pay for covered medical services. Preventive care (think: annual physical) may be fully covered by your insurance, meaning no co-pay.
Death panels: Something that doesn’t exist. Back in 2009, former Alaska Governor Sarah Palin (R) said Obamacare would set up “death panels.” She alleged Obamacare would allow officials to determine whether people — especially older people or those with disabilities — are worthy of giving health care coverage to. And if this panel denied them coverage, it’d be the same as letting those people die. She said that Dems were proposing this as a way of lowering health care costs. Obamacare never proposed something like this. But some say she was referring to a part of Obamacare that would allow Medicare to pay for patients who want to speak to doctors about end-of-life decisions.
Deductible: The amount you have to pay toward medical costs before your health insurance starts picking up part of the bill. Every plan is different but generally, paying things like hospital bills and lab tests count toward your deductible. If you have a $3,000 deductible, that’s how much you’re on the hook for before your insurance plan says ‘ok we’ll help now.’
Essential health benefits: Certain services that insurance companies have to cover under Obamacare. These include things like maternity care and prescription drugs. Under the GOP plan, states could opt out of this requirement.
EMT Law: Emergency Medical Treatment and Labor Act. The law that says emergency rooms have to treat people who show up needing help, even if they can’t pay for it.
Exclusive provider organizations: A network of doctors and hospitals that have teamed up with insurance companies. If you have an EPO plan, your insurance company will only cover you if you visit a doc in this exclusive network (except in emergencies). If you step out of the magic circle, you’re on your own.
Federal poverty level: A set of income thresholds the federal gov issues each year. The levels vary based on how big your fam is, and are equal to how much you need to live your most basic life (think: housing, food). They’re used to figure out who qualifies for a discount on certain health care services. If your income sits above the poverty level, you go Glen Coco. If it sits below, you may qualify for Medicaid or certain health care tax credits.
Flexible spending account: A way of automatically setting aside money from your paycheck to pay for certain health care costs, including ones your insurance doesn’t cover. Think: everything from your co-pays to new glasses. You decide how much you want to put into the pot, and your employer automatically sets it aside from your paycheck. Bonus: you won’t be taxed on this money. But the feds cap the maximum amount you can contribute each year. And it’s usually a use it or lose it situation if you haven’t spent all the money by the end of your plan year.
Health maintenance organization: A network of doctors that agree to give you a bit of a discount, in exchange for calling them The One and only going to them. HMO plans generally require you to pick a primary care physician, who will then be HBIC of your health care. As in if you want to see a specialist, you have to get your PCP to sign off first aka give you a referral.
Health deductible health plan: Health insurance with, yup, a high deductible. Meaning you have to pay more out of pocket for any health care costs before the insurance company gives an assist. HDHPs usually have a lower premium though, meaning you’re paying less each month to have insurance but will end up paying more when you visit the doc.
Health savings account: A type of bank account for health care costs. It’s meant to help people with high-deductible plans pay for health care costs. You can put money into it on a pre-tax basis, so less goes to Uncle Sam, and more can go to that unexpected root canal. Unlike an FSA, the money in an HSA rolls over year-to-year if you haven’t spent it all.
Maternity leave: When women put up their OOO after giving birth or adopting. The US gov requires most companies to give employees 12 weeks of maternity leave. But none of that is paid. Claim to fame: the US is pretty much the only developed country that doesn’t require paid maternity leave.
Medicaid: The government-sponsored program that helps low-income people pay for things like emergency hospital visits and lab tests. It’s run by the feds and the states. Usually, Medicaid doesn’t charge premiums but some states might ask people for small co-payment fees for health services.
Medical loss ratio: The percentage of your premium payment that insurers use to pay for medical costs vs. costs related to doing business. For example, if an insurance company’s Medical Loss Ratio is 50% – it means they’re spending half of what you give them on paying for health services, and the other half on things like marketing, admin etc. Obamacare requires insurers to have a Medical Loss Ratio of at least 80%.
Medicare: Not to be confused with Medicaid. It’s the federal health insurance program for Americans 65 or older and certain younger people with disabilities. This is what part of your paycheck is going toward. Usually, you’re automatically in it once you celebrate your 65th birthday. There are different types of Medicare coverage that help pay for different things (think: hospital visits vs medical tests). Most people think Medicare is free for everyone – it’s not. Some people might end up paying out-of-pocket fees or premiums.
Obamacare: Aka the Affordable Care Act. It’s the landmark healthcare legislation President Obama signed into law back in 2010. The goal: affordable health insurance for everyone. It changed the healthcare industry because it made it illegal for insurance companies to deny coverage for anyone, even if they have preexisting conditions. Obamacare also helps people pay for coverage with income-based tax credits, and expanded the number of people eligible for Medicaid. It also requires everyone to have insurance or pay a fine. The idea is that if everyone buys in, not just sick people, it will keep premiums low for everyone.
Out of pocket maximum: The max amount of money you have to pay for health care in a year. This includes money that goes towards your deductibles, copays, or coinsurance fees. After you meet your maximum, your insurance pays for all costs related to your covered health benefits. Win.
Per capita caps: Part of the GOP’s Obamacare replacement plan. It would cap how much money the feds pay to states to help them fund Medicaid. For each state, those caps would be based on how many people were enrolled in Medicaid as of 2016.
Point of service plans: The Goldilocks of insurance plans. It includes some features of HMOs and some features of PPOs. Like HMOs, you’ll pay less for using in-network providers. But like PPOs, you can still go outside your network and be covered.
Pre-existing condition: Health issues — anything from cancer to diabetes — that insurance providers don’t like because they’re expensive to cover. Before Obamacare, insurance providers were allowed to give you a big fat ‘denied’ stamp or hike up prices if you had these kinds of conditions. Now they can’t do that. PSA: some insurance providers consider sexual assault injuries and pregnancy pre-existing conditions. Under the proposed GOP healthcare plan, that could change. States could allow insurance providers to charge more for pre-existing conditions.
Premium: Like your Netflix subscription but for healthcare coverage. It’s the base amount you pay each month to have health insurance.
Preferred provider organizations: A type of health care plan that could still help cover costs when you see providers outside your network. Unlike HMOs. The tradeoff: these plans can have a higher premium.
Single payer system: Aka a government-run health care plan. The ‘single payer’ could be the feds, which would really mean it’s taxpayers. Everyone would pay into the same system and have the same coverage, regardless of income or health levels. Meaning no deductibles, copayments etc. This doesn’t exist in the US. But former Dem presidential candidate Bernie Sanders thinks it should.
Subsidies: A system set up under Obamacare. The federal government subsidizes aka helps low-income people pay for things like premiums, deductibles and/or copayments. It does this mostly by offering consumers things like certain tax credits.
Tax credits: A type of subsidy. Under Obamacare, people can get income-based tax credits. In general, lower income equals a higher credit. The proposed GOP healthcare plan replaces those with age-based tax credits. The older you are the higher your credit.
Bottom Line: There are many terms associated with healthcare reform making understanding of the legislation difficult or impossible. Hopefully, this dictionary of terms will help add some clarity to the situation.