Commony Used Terms
- Essential Health Benefits
- Grandfathered Plan
- Rating Area
- Enrollment Period Qualifying Events
- Waiting Periods
- Minimum Essential Coverage
- Plan Modifications
- Emergency Services
- Plain Language
- Premium Adjustment Percentage
- Creditable Coverage
- Qualified Health Plan
- Special Enrollment Periods
- Essential Health Benefits Package
- Allowable Costs
- Applicable Out-Of-Pocket Maximums
- Full Time Equivalent Employee
- Average Annual Wages
- Required Contribution
- High Risk Professions
- Cost-Of-Living Adjustment
- Coverage Provider
- Qualified Medical Expense
- Cafeteria Plans
- Group Health Plan
- Health Insurance Issuer
- Group Market
- Individual Market
- Large and Small Group Markets
- Large Employer
- Small Employer
Essential Health Benefits
Specific benefits to be defined by HHS, but will include the following general categories:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Plans that were in existence on 3/23/10 are considered “grandfathered” plans. Eligible dependents and new employees may continue to join the plan. Grandfathered plans are exempted from certain provisions of the law.
Each State is required to establish one or more rating areas within the State.
Enrollment Period Qualifying Events
Qualifying event means, with respect to any covered employee, any of the following events which, but for the continuation coverage required under this part, would result in the loss of coverage of a qualified beneficiary:
- The death of the covered employee
- Termination (other than by reason of such employee’s gross misconduct)
- Reduction of hours, of the covered employee’s employment
- The divorce or legal separation of the covered employee from the employee’s spouse
- The covered employee becomes entitled to benefits under the Social Security Act
- A dependent child ceasing to be a dependent child under the generally applicable requirements of the plan.
Waiting period means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.
Minimum Essential Coverage
Minimal essential coverage, which satisfies the individual mandate, is coverage through any of the following plans:
- A governmental plan
- An employer-sponsored plan (a group health plan or a group health insurance plan)
- Plans in the individual market
- A grandfathered plan
Plan modifications as described in Section 102(a) of ERISA - A summary of any material modification in the terms of the plan and any change in the information required under subsection (b) of this section shall be written in a manner calculated to be understood by the average plan participant and shall be furnished.
The term emergency services means, with respect to an emergency medical condition:
- A medical screening examination that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition, and
- Within the capabilities of the staff and facilities available at the hospital, such further medical examination and treatment as are required
The term plain language means language that the intended audience, including individuals with limited English proficiency, can readily understand and use because that language is concise, well organized, and follows other best practices of plain language writing.
Premium Adjustment Percentage
The premium adjustment percentage for any calendar year is the percentage (if any) by which the average per capita premium for health insurance coverage in the United States for the preceding calendar year exceeds such average per capita premium for 2013.
Creditable coverage generally includes a period of coverage under an individual or group health plan not followed by a break in coverage of 63 days. Creditable coverage excludes liability, limited scope dental, vision, specified disease or other supplemental-type benefits.
Qualified Health Plan
Qualified health plans are health plans that:
- Have in effect a certification (which may include a seal or other indication of approval) that such plan meets the criteria for certification described in section 1311(c) issued or recognized by each Exchange through which such plan is offered; and
- Provides the essential health benefits package; and
- Is offered by a health insurance issuer that:
- Is licensed and in good standing to offer health insurance coverage in each State in which it is available
- Agrees to offer at least one qualified health plan in the silver level and at least one plan in the gold level in each such Exchange; and
- Agrees to charge the same premium rate for each qualified health plan of the issuer without regard to whether the plan is offered through an Exchange or whether the plan is offered directly from the issuer or through an agent; and
- Complies with the regulations and such other requirements as an applicable Exchange may establish
Special Enrollment Periods
A special enrollment period is any of the following:
- Individuals losing other coverage - A group health plan shall permit an employee who is eligible, but not enrolled, for coverage under the terms of the plan (or a dependent of such an employee if the dependent is eligible, but not enrolled, for coverage under such terms) to enroll for coverage under the terms of the plan if each of the following conditions is met:
- The employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or individual; and
- The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment, but only if the plan sponsor (or the health insurance issuer offering health insurance coverage in connection with the plan) required such a statement at such time and provided the employee with notice of such requirement (and the consequences of such requirement) at such time; and
- The employee’s or dependent’s coverage:
- Was under a COBRA continuation provision and the coverage under such provision was exhausted; or
- Was not under such a provision and either the coverage was terminated as a result of loss of eligibility for the coverage (including as a result of legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment) or employer contributions toward such coverage were terminated
- For dependent beneficiaries:
- A group health plan makes coverage available with respect to a dependent of an individual
- The individual is a participant under the plan (or has met any waiting period applicable to becoming a participant under the plan or has failed to enroll during a previous enrollment period, and is now eligible to be enrolled under the plan)
- A person becomes such a dependent of the individual through marriage, birth, or adoption or placement for adoption
Essential Health Benefits Package
An essential health benefits package is any health plan coverage that:
- Provides for the essential health benefits defined by
- The Secretary under subsection (b);
- Limits cost-sharing for such coverage
- Subject to subsection (e), provides either the bronze, silver, gold, or platinum level of coverage
An individual is exempted from the individual mandate due to hardship based on:
- No affordable qualified health plan available through the Exchange, or the individual’s employer, covering the individual; or
- The individual meets the requirements for any other such exemption from the individual responsibility requirement or penalty
The amount of allowable costs of a plan for any year is an amount equal to the total costs (other than administrative costs) of the plan in providing benefits covered by the plan.
Applicable Out-Of-Pocket Maximums
Maximums are equal to the yearly allowable HSA contribution as defined under Section 223 of the IRS Code.
Full Time Equivalent Employee
The term full-time equivalent employees means a number of employees equal to the number determined by dividing (rounded to the next lowest whole number if not otherwise a whole number):
- The total number of hours of service for which wages were paid by the employer to employees during the taxable year, by
Average Annual Wages
The average annual wages of an eligible small employer for any taxable year is the amount determined by dividing (rounded to the next lowest multiple of $1,000 if not otherwise such a multiple):
- The aggregate amount of wages which were paid by the employer to employees during the taxable year; by
- The number of full-time equivalent employees of the employees for the taxable year
The term required contribution means:
- In the case of an individual eligible to purchase minimum essential coverage consisting of coverage through an eligible-employer-sponsored plan, the portion of the annual premium which would be paid by the individual (without regard to whether paid through salary reduction or otherwise) for self-only coverage; or
- In the case of an individual eligible only to purchase minimum essential coverage, the annual premium for the lowest cost bronze plan available in the individual market through the exchange in the State in the rating area in which the individual resides (without regard to whether the individual purchased a qualified health plan through the exchange), reduced by the amount of the credit allowable for the taxable year (determined as if the individual was covered by a qualified health plan offered through the exchange for the entire taxable year).
High Risk Professions
The term employees engaged in a high-risk profession means law enforcement officers (as such term is defined in section 1204 of the Omnibus Crime Control and Safe Streets Act of 1968), employees in fire protection activities (as such term is defined in section 3(y) of the Fair Labor Standards Act of 1938), individuals who provide out-of-hospital emergency medical care (including emergency medical technicians, paramedics, and first-responders), and individuals engaged in the construction, mining, agriculture (not including food processing), forestry, and fishing industries. Such term includes an employee who is retired from a high-risk profession described in the preceding sentence, if such employee satisfied the requirements of such sentence for a period of not less than 20 years during the employee’s employment.
The cost-of-living adjustment for any calendar year is the percentage (if any) by which:
- The Consumer Price Index (CPI) for the preceding calendar year, exceeds
- The CPI for the calendar year 1992
The term coverage provider means each of the following:
- Health insurance coverage - If the applicable employer-sponsored coverage consists of coverage under a group health plan which provides health insurance coverage, the health insurance issuer
- HSA and MSA contributions - If the applicable employer-sponsored coverage consists of coverage under an arrangement in which the employer makes contributions
- Other coverage - In the case of any other applicable employer-sponsored coverage, the person that administers the plan benefits
Qualified Medical Expense
The term qualified medical expense means amounts paid:
- For the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body
- For transportation primarily for and essential to medical care
- For qualified long-term care services
- For insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care or for any qualified long-term care insurance contract
The term cafeteria plan means a written plan under which:
- All participants are employees, and
- The participants may choose among 2 or more benefits consisting of cash and qualified benefits
Group Health Plan
The term group health plan means an employee welfare benefit plan (as defined in section 3(1) of the Employee Retirement Income Security Act of 1974) to the extent that the plan provides medical care and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise.
Health Insurance Issuer
The term health insurance issuer means an insurance company, insurance service, or insurance organization (including a health maintenance organization) which is licensed to engage in the business of insurance in a State and which is subject to State law which regulates insurance (within the meaning of section 514(b)(2) of the Employee Retirement Income Security Act of 1974). Such term does not include a group health plan.
The term “group market” means the health insurance market under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and dependents) through a group health plan maintained by an employer.
The term “individual market” means the market for health insurance coverage offered to individuals other than in connection with a group health plan.
Large and Small Group Markets
The terms “large group market” and “small group market” mean the health insurance market under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) through a group health plan maintained by a large employer or by a small employer, respectively.
The term “large employer” means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 50 (101 in States that define small employer as up to 99) employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year. However, until 1/1/2016, a State may elect to substitute 51 employees in place of 101 employees.
The term “small employer” means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least one but not more than 100 (States have discretion to increase up to 99) employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year. However, until 1/1/2016, a State may elect to substitute 50 employees in place of 100 employees.
(Please note: This document was produced by the Self-Insurance Institute of America to provide an overview of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act. It does not cover every aspect of the legislation, and certain provisions of the law may change or be modified by additional rules and regulations. This document does not constitute legal or tax advice.)