ACA (Affordable Care act):
Also known as Obamacare, the ACA is a comprehensive healthcare reform law that expanded access to health insurance, implemented consumer protections, and established health insurance marketplaces.
Actuarial Value
The estimated average share of expenses an insurance plan will cover. For example, a plan with 70% actuarial value would, on average, coverage 70% of the costs of covered claims.
Advanced Premium Tax Credit:
A subsidy provided under the ACA to help eligible individuals and families with low to moderate incomes afford health insurance premiums. Payment are made on your behalf directly to a participating carrier to help you cover the cost of insurance.
Adverse Selection
Adverse selection refers to the behavior of individuals who are healthy not enrolling in coverage. This results in only the most unhealthy individuals enrolling in coverage, an inability to spread out risk, and increases in cost for those within the pool. This is avoided through limited windows of enrollment (open enrollment and special enrollment periods), by having waiting periods, or by not covering pre-existing conditions depending on the plan type.
Affordable Coverage:
Refers to cover that is offered by an employer to their employees and dependents. Affordability is calculated by a specific percent of household income, including the employees and dependents income. The percent changes each year. For example, in 2023 an offer of coverage is considered affordable if it cost less than 9.12% of the household’s income. In 2024, the affordability threshold will be 8.39%.
Affordability is also determined based on the cheapest offered plan, and is calculated separately for employee only coverage and coverage for dependents.
Allowance:
This is the amount you can get for designated services at the specified interval. You will often find an Allowance on vision insurance for contacts OR glasses, and the policy will have a specified interval at which you can use the allowance. For example, the plan may allow the allowance to be used every year or every other year.
Ancillary Benefits:
additional benefits beyond primary (often referred to as major medical) health insurance, such as dental, vision, disability, and life insurance. These benefits enhance an employer’s overall insurance package. Manually ancillary benefits can be purchased directly by individuals as well.
Annual Maximum:
This is the most a plan will pay in a plan year. You will find that dental plans have Annual Maximum’s. Think of this as the most benefit you can get from a plan.