The Affordable Care Act is a set of health reform laws that were designed to make it possible for individuals and small businesses to be able to find affordable health insurance. It offers several protections to consumers that did not exist before the law. Here are some terms and jargon to help you understand more about the Affordable Care Act.
When you were in school, there was probably a glossary in the back of at least one of your textbooks. Your teacher directed you to take a look at it whenever you didn’t understand a word or phrase that you came across while reading the textbook. The Affordable Care Act Glossary functions in the same way. It helps you understand more about the words and phrases used in the Affordable Care Act. Here are some more that you should know about.
Medical Loss Ratio (MLR): A basic financial measurement used in the Affordable Care Act to encourage health plans to provide value to enrollees. If an insurer uses 80 cents out of every premium dollar to pay its customers’ medical claims and activities that improve the quality of care, the company has a medical loss ratio of 80%.
A medical loss ratio of 80% indicates that the insurer is using the remaining 20 cents of each premium dollar to pay overhead expenses, such as marketing, profits, salaries, administrative costs, and agent commissions. The Affordable Care Act sets minimum medical loss rations for different markets, as do some state laws.
Nondiscrimination: A requirement that job-based coverage not discriminate based on health status. Coverage under job-based plans cannot be denied or restricted. You also can’t be charged more because of your health status. Job-based plans can restrict coverage based on other factors such as part-time employment that aren’t related to health status.
Qualified Health Plan: 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.
Rider: A rider is an amendment to an insurance policy. Some riders will add coverage (for example, if you buy a maternity rider to add to coverage for pregnancy to your policy.) In most states today, an exclusionary rider is an amendment, permitted in individual health insurance policies, that permanently excludes coverage for a health condition, body part, or body system.
Starting in September 2010, under the Affordable Care Act, exclusionary riders cannot be applied to coverage for children. Starting in 2014, no exclusionary riders will be permitted in any health insurance.
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