It’s policy driven, which can be difficult even for industry experts to understand, let alone the everyday consumer. It’s also technical jargon that can be hard to follow along.
Rather than resigning not to understand, here’s a helpful guide to the most common terms being used at the moment. Now, more than ever, it’s important to stay informed about potential changes and how they might impact your coverage.
Here’s a glossary of common terms to help you better understand the words and phrases currently associated with health care reform:
- Block grants: A fixed amount of funding that the federal government provides to states for broadly defined functions, such as community development or social services. Lawmakers are considering changing Medicaid funding into a block grant system, where states would receive a lump sum rather than a per-person payment for each Medicaid patient or broadly defined functions, such as community development or social services. Lawmakers are considering changing Medicaid funding into a block grant system, where states would receive a lump sum rather than a per-person payment for each Medicaid patient.
- Catastrophic health plan: A high-deductible medical coverage plan under the Patient Protection and Affordable Care Act (ACA) for people who are under 30 years of age or qualify for a hardship exemption. The plan is intended to support an individual during medical emergencies only, as the plan does not provide benefits before the deductible is met.
- Continuous coverage incentive: An enticement or penalty intended to keep consumers from having a lapse or gap in their health insurance coverage.
- Essential health benefits: Items and services within 10 benefit categories that health insurers are currently required by federal law to provide to customers. These categories include: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, chronic disease management and pediatric services.
- Guaranteed issue: A requirement that insurers permit an individual to enroll in a plan regardless of health, age, gender, pre-existing or other factors that could determine how services are used.
- Health Savings Accounts (HSA): A savings account for individuals with high deductible insurance plans to set aside money to use on health care expenses. Any contributions are done pre-tax, resulting in savings on health care costs. These funds roll over year to year.
- High-risk pools: If the rules on health insurance discrimination based on health status are weakened, high risk pools might be put into place as a source of coverage for individuals with pre-existing conditions. High risk pools are state-subsidized health insurance plans established for people who have pre-existing conditions that may keep them from otherwise obtaining health insurance.
- Individual mandate: A penalty or fee for anyone who can afford health insurance but chooses not to buy it. The fee is calculated using two different ways, as a percentage of your household income or your individual income. An individual will pay whichever is higher.
- Medicaid expansion: A free or low-cost insurance program provided by the government aimed at assisting low-income individuals, families, children, pregnant women, and people who are disabled. Under the ACA, states have the option to expand Medicaid eligibility to all non-elderly adults with incomes up to 138 percent of the federal poverty line. Michigan was one of 32 states (including Washington, D.C.) to expand Medicaid expansion through its Healthy Michigan program.
- Open enrollment period: A set time when people can enroll in health insurance or select specific coverage changes to their plan. The time of year for open enrollment depends on whether a person is using an employment-based health insurance, Medicare or the ACA’s health insurance marketplace.
- Pre-existing condition: A medical disorder or illness that started prior to a person obtaining health insurance. Under current law, health insurers are prohibited from charging higher prices to customers with pre-existing conditions.
- Premium subsidy: A tax credit made available through the ACA to help offset the cost of premiums and deductibles for middle-income Americans. The subsidy are provided on a sliding scale according to income and can be applied to any individual health insurance policy, other than catastrophic policies, sold through the federal or state marketplaces.
- Cost-sharing reductions: A discount that offsets the cost of monthly health care premiums for low- and moderate-income households. Under the ACA, the federal government provides extra funding to insurance companies to offer plans with discounts to help reduce deductibles, copayments, and other out-of-pocket charges.
- Refundable tax credit: Under the ACA replacement proposal, the American Health Care Act, tax credits would be distributed by using age, instead of income, as a way to calculate how much people receive. If approved, the refundable tax credits would be available in full to individuals earning less than $75,000 and households earning less than $150,000, but they would be capped for higher earners.
- Transitional plans: Sometimes referred to as grandmothered or non-ACA compliant, these small group plans purchased before the marketplaces opened in October 2013 that are exempt from covering the 10 essential health benefits. Originally set to expire at the end of the year, the U.S. Department of Health and Human Services recently extended the transitional policies through 2018.
Knowing the meaning of these commonly used health care terms will help you understand the current discussion around health care reform and how it might impact your health insurance benefits moving forward.
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