Glossary

Affordable Care Act

The law, also known as health care reform, went into effect in March 2010. The name Affordable Care Act is used to refer to the final, amended version of the law. The goal of the Affordable Care Act is to make health insurance available to everyone, regardless of medical history or ability to pay.

Affordable Coverage

Employer coverage is considered affordable when the cost for "you only" coverage is less than 9.5% of your income. If your employer offers coverage that is considered affordable and meets minimum standard coverage requirements, and you choose to buy insurance through a marketplace, you may not qualify for financial help.

Children's Health Insurance Program (CHIP)

An insurance program that provides health insurance to low-income children. In some states, it also provides for pregnant women in families who don't qualify for Medicaid and can't afford private health insurance.

If you don't qualify for financial assistance through the marketplace but can't afford health insurance, you may still be eligible for Medicaid or CHIP.

Deductible

The deductible is what you pay out of pocket before your insurance starts paying its share of your costs. How the deductible works depends on the plan you choose.

Essential Health Benefits

A package of state-mandated benefits that insurance companies are required to offer as part of insurance purchased through a marketplace. Essential health benefits must include items and services within at least the following 10 categories:

  • Ambulatory, or "outpatient," care
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and "habilitative" services and devices, such as physical therapy
  • Laboratory services, such as blood tests and X-rays
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

Individual Mandate

A requirement that most Americans obtain health insurance by January 1, 2014. If you don't have health insurance in 2014, you'll pay a penalty equal to the greater of $95 per adult and $47.50 per child (up to $285 per family), or 1% of your family income. The penalty will increase significantly in 2015 and 2016:

  • The 2016 tax penalty for going without coverage is 2.5% of your income or $695 per adult and $347.50 per child. You’ll pay the higher of the amounts. In future years, the fee is adjusted for inflation.
  • For 2016 and later: The greater of $695 per adult and $347.50 per child (up to $2,085 per family), or 2.5% of your income.
There are exceptions to the individual mandate. See Understanding Your Insurance Options for information.

Marketplace ("Exchange")

An online marketplace, or "exchange", is a website where health insurance companies come together to give you a place to shop for health insurance. That way you have one place to compare options for private health insurance side by side.

Medicaid

A government program that provides health and long-term care coverage to certain categories of low-income Americans.

If you don't qualify for financial assistance through the marketplace but can't afford health insurance, you may still be eligible for Medicaid or CHIP.

Medicare

A government program that provides health insurance coverage to people who are:

  • Age 65 and older
  • Younger than age 65 and who have permanent disabilities, end-stage renal disease, or Lou Gehrig's disease

Modified Adjusted Gross Income

Your gross income is how much money you make before taxes. You then subtract any "deductions" you have to get your adjusted gross income. Some deductions, such as tax-free interest, are then added back in to get your modified adjusted gross income. Your modified adjusted gross income is used to determine your eligibility for financial help to buy insurance in a state or government marketplace.

Out-of-Pocket

The amount you and your covered family members must pay out of your own pocket for medical services and prescription drugs. Generally, your out-of-pocket costs include the deductible, copayments, and the portion of any eligible expenses that insurance doesn't pay. It doesn't include the amounts you pay in premiums.

Out-of-Pocket Maximum

The most you and your covered family members would have to pay in a year for medical and prescription drug costs. Generally, it includes the deductible, applicable copayments, and the portion of any eligible expenses that insurance doesn't pay. It doesn't include amounts you pay for premiums.

Preventive and Wellness Services

Services including tests and immunizations that can help you avoid illness and improve your health. Under the Affordable Care Act, preventive care services recommended by the U.S. Preventive Services Task Force must be covered at no cost to you. That means you won't pay anything for these services as long as you get them from a doctor, lab, or other provider who is part of your health plan's network.