Health Insurance Exchange Terminology

I’ve been a baseball fan since my youth, and it’s full of statistical measures that can be confusing to a new fan. It’s not just about batting average, slugging percentage, on-base percentage or earned run average anymore. Today, baseball measures advanced stats like OPS+, WAR, BAbip and Runs Created that offer more in-depth measurements of baseball players. It can cause a lot of confusion for a new fan, much like health insurance exchange terminology can cause confusion to those seeking insurance.

To help, we’ve created this guide to health insurance exchange terminology.

ACA

The Affordable Care Act (ACA) was a health care reform law enacted in March of 2010. Also known as PPACA or Obamacare, the law aimed to make affordable health care available to more people. As part of that effort, the health insurance exchanges were mandated. The provisions in the act came into force in 2014 and radically changed the individual insurance marketplace in the US. Many of the terms and acronyms in this glossary were introduced into the lexicon as a result of the ACA.

APTC

The Advance Premium Tax Credit (or APTC) is a tax credit a qualified individual who purchases coverage on a public health insurance exchange can claim to lower their premium payments. Generally speaking, if household income is 100% to 400% of the Federal Poverty Level, the individual’s employer doesn’t offer an “affordable” plan that provides minimum value, don’t file a married filing separately tax return and are not eligible for coverage through a government program like Medicaid, Medicare or CHIP, an individual will be eligible .

The APTC amounts are based on estimated annual household income and the size of the individual’s household. First, an individual applies for coverage in a public health insurance exchange. When they do, they’re asked about their family size, household income and eligibility for other insurance. If they qualify, the individual can choose to have that APTC amount paid directly to their insurance company to lower their monthly premium. At the end of the year when taxes are filed, the exact amount of the tax credit is determined based on actual income. The individual will need to reconcile what was paid vs. what was owed. If they were overpaid throughout the year, they’ll need to pay back any overage when filing their taxes.

CMS

The Centers for Medicare and Medicaid Services (CMS) is a federal agency within the US Department of Health and Human Services (HHS). The agency administers Medicaid, Medicare and the Children’s Health Insurance Program (CHIP) in partnership with states. Additionally, CMS is responsible for oversight of healthcare.gov, the federal platform for the individual healthcare market.

CSR

In the health insurance exchange world, a CSR is not a customer service representative. Instead, it’s a cost sharing reduction. What’s a cost sharing reduction? It’s another way the public health insurance exchange can help individuals defray the costs of insurance. Essentially, it’s a discount that lowers the amount an individual will pay for deductibles, copayments and coinsurance as well as a lower out-of-pocket maximum, the point at which insurance pays 100% of your costs.

Generally speaking, in order to be eligible for the cost sharing reduction, income needs to be less than 250% of the Federal poverty level AND a silver metallic tier (more on that later) plan must be selected. Cost sharing reductions are only available on silver tier plans.

Effectuated Enrollment

Effectuated enrollment measures the number of consumers who not only selected and enrolled in a plan but have also taken the additional steps necessary to keep their coverage in effect. Many public health exchanges don’t present a consolidated premium bill at enrollment; instead, the enrollee receives an initial invoice in the mail from their insurer. As a result, the difference between who enrolled and who has active coverage is usually a result of an individual not paying their first invoice on time.

FPL

The Federal Poverty Level (FPL) is a measure of income used to determine eligibility for certain health insurance exchange benefits. FPL’s income measurement uses modified adjusted gross income (MAGI), usually similar to Adjusted Gross Income (AGI), which is generally is an individual’s taxable income.  If an individual’s income is between 100% and 400% FPL, they’ll qualify for premium tax credits in the state and federal health insurance exchanges. Those whose income is below 138% FPL and whose state has expanded Medicaid coverage, qualify for Medicaid.

As of 2020, the FPL is used to calculated eligibility:

  • $12,760 for individuals
  • $17,240 for a family of 2
  • $21,720 for a family of 3
  • $26,200 for a family of 4
  • $30,680 for a family of 5
  • $35,160 for a family of 6
  • $39,640 for a family of 7
  • $44,120 for a family of 8

FPL amounts are higher in Hawaii and Alaska.

Metallic Tiers

The ACA established four tiers of health insurance coverage, sometimes called the metallic tiers. Those tiers were bronze, silver, gold and platinum. The categories differ in their respective premium and out-of-pocket costs. Bronze plans have the lowest monthly premiums and highest out-of-pocket costs, while platinum plans have the highest premiums and lowest out-of-pocket costs. Generally, bronze plans cover around 60% of costs, with each tier adding 10% to that number.

QHP

A qualified health plan (QHP) is an insurance plan certified by the health insurance exchange. These plans follow the requirements of the ACA, including that they provide essential health coverage and have limits on cost-sharing like deductibles and copays. You can purchase QHPs both on and off exchange, though only QHPs are available to purchase on the state and federal insurance exchanges.

QHPs exist in the metallic tiers (bronze, silver, gold, platinum) previously outlined. The ten essential services QHPs must provide are:

  • Ambulatory patient services (outpatient care)
  • Emergency services (emergency room visits)
  • Hospitalization (inpatient care)
  • Maternity and newborn care
  • Mental health services and addiction treatment
  • Prescription drugs
  • Rehabilitative services and devices
  • Laboratory services
  • Preventive services, wellness services and chronic disease treatment
  • Pediatric services

SBM

An SBM refers to a state-based marketplace. State-based marketplaces, unlike federally facilitated marketplaces (FFMs) that use healthcare.gov for enrollment, generally use their own enrollment websites to enroll individuals in health insurance plans. In addition to SBMs and FFMs, there are also state-based marketplaces on the federal platform (SMB-FP). In an SMB-FP, states perform all marketplace functions for the individual market, but the state leverages the federal healthcare.gov website for enrollment.

SHOP

The Affordable Care Act (ACA) created the Small Business Health Options Program (SHOP), a health insurance exchange that enables small businesses to compare health plans and enroll in coverage for their employers. Generally, small businesses with less than 50 employees can offer SHOP plans, though that number could vary by state. Also, SHOP plans are not available in every state.

Enrolling in SHOP plans also has tax benefits, because it generally is the only way for eligible small employers to earn the Small Business Health Care Tax Credit. For SHOP insurance that starts after January 1, 2018, employers can enroll through shop plans through an insurance company or with the assistance of a SHOP-registered broker. The are not available on health insurance exchanges any longer.

SEP

A special enrollment period (SEP) is a time outside the annual open enrollment period when individuals can enroll in health insurance. Special enrollment periods include certain life events, like losing health coverage, having a baby or adopting a child. Recently, several state-based exchanges have enacted emergency special enrollment periods in response to the COVID-19 outbreak. In general, the emergency special enrollment periods were open to any uninsured individuals.

 

 

 

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