Adverse selection: From about.com: Adverse selection is the tendency for people to avoid buying insurance unless they are sure they will benefit from it. In a health insurance context, this means that sicker people are more likely to buy insurance coverage than healthier people. Insurance companies need an understanding of their risk pool to properly price their coverage. They also cannot price their product too high or healthy people will not purchase the product leaving them with no business.
Advance Premium Tax Credit (APTC): This is the subsidy you qualify for if your income ranges between 133% – 400% of the Federal Poverty Level (FPL). It is referred to as “advanced” if the subsidy is paid to your health insurance provider on a monthly basis. It is resolved at the end of the year on your tax return.
The lower your income the greater the subsidy, the higher your income the lower the subsidy. The subsidy is based on the 2nd lowest cost Silver plan. You are required to pay between 2% (133% of FPL) to 9.5% (> 300% of FPL) of your modified adjusted gross income (MAGI). The difference between the cost of the 2nd lowest cost Silver plan and the percentage of income you are required to pay is your subsidy amount. See the Federal Poverty Table.
Cost Sharing Reduction (CSR): A discount that lowers the amount you pay out-of-pocket for deductibles, coinsurance, and copayments. You can get this reduction if you get health insurance through the Marketplace, your income is below 250% of the FPL, and you choose a health plan from the Silver plan category. There are 3 brackets of CSR that provide richer benefits for lower incomes.
Essential Health Benefits (EHB): There are 10 of them and they are one of the cornerstones of the Affordable Care Act. All plans must offer the EHB’s listed below.
- Ambulatory Patient Services
- Prescription Drugs
- Emergency Care
- Mental Health Services
- Rehabilitative and Habilitative Services
- Preventive and Wellness Services
- Laboratory Services
- Pediatric Care
- Maternity and Newborn Care
Grandfathered plans: If you have health coverage from a plan that existed on March 23, 2010 — and that has covered at least one person continuously from that day forward — your plan may be considered a “grandfathered” plan. A grandfathered health plan isn’t required to comply with some of the consumer protections of the Affordable Care Act that apply to other health plans that are not grandfathered. Grandfathered plans are not affected by healthcare reform and it’s a rare case where you can ACTUALLY KEEP your plan!
Medicaid: A state and federal partnership, Medicaid provides coverage for people with lower incomes, older people, people with disabilities, and some families and children. Additional information at healthcare.gov. Under the Affordable Care Act, some states, in partnership with the Federal government are expanding eligibility for Medicaid.
Medicare: The US government’s national health insurance program for people aged 65 and older who have worked for at least 10 years in Medicare-covered employment, and who are citizens or permanent residents of the US. Medicare Part A covers inpatient hospital stays, and Medicare Part B covers physician and outpatient services.
Medical Loss Ratio (MLR): The Affordable Care Act requires health insurance issuers to submit data on the proportion of premium revenues spent on clinical services and quality improvement, also known as the Medical Loss Ratio (MLR). It also requires them to issue rebates to enrollees if this percentage does not meet minimum standards. MLR requires insurance companies to spend at least 80% or 85% of premium dollars on medical care, with the review provisions imposing tighter limits on health insurance rate increases. If they fail to meet these standards, the insurance companies will be required to provide a rebate to their customers starting in 2012.
Open Enrollment: This is the time when you can enroll or change plans without a special qualifying event. For 2013, the open enrollment period is October 1, 2013 through March 31, 2014. For applications received on or before December 15th, 2013, plans wil start on January 1st, 2014. Future open enrollments will start October 15th and end on December 7th. You may NOT purchase a major medical plan outside of open enrollment unless you have a qualifying event. The purpose of open enrollment is to somewhat deter purchasing insurance coverage after you get sick (adverse selection)
Preventive care: Under the Affordable Care Act, you and your family may be eligible for some important preventive services — which can help you avoid illness and improve your health — at no additional cost to you. Detailed information at healthcare.gov.
Qualified Health Plan (QHP): Under the Affordable Care Act, 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. (from healthcare.gov)
Qualifying event: A qualifying event allows you to purchase major medical qualified health plans outside of the standard open enrollment period. Examples of a qualifying event include: birth of a child, involuntary loss of coverage (i.e. employer no longer offering group coverage, going bankrupt, termination of employment), a spouse losing their job and coverage. An accident or illness resulting in dire need of coverage is NOT a qualifying event. Without a qualifying event, the ONLY time qualified health plans can be purchased is during open enrollment.
Subsidy: Subsidies come in two forms. The most well known is technically referred to the Advanced Premium Tax Credit (APTC). The other subsidy is referred to as the Cost Sharing Reduction (CSR) and is only available if you purchase a Silver plan.