Here are some handy definitions to help you understand some basic health insurance terms.
Affordable Care Act: Health reform legislation passed by the 111th Congress and signed into law in March 2010. Applies to the fully insured individual and group marketplaces.
Copayment: A payment made by an individual in addition to that made by an insurer.
Deductible: Set amount a member has to pay every year toward medical bills before an insurance company starts paying.
Fully insured: Healthcare policies that usually are purchased by individuals and small groups. Monthly premiums are paid to an insurance company and in return, the insurance company pays medical claims and assumes all the risk for those costs.
Medical loss ratio (MLR): The percent of premium an insurer spends (on claims and expenses) that improve healthcare quality. If that threshold is not met, companies are required to send refunds to their customers.
Medicare supplement: These plans are sold by private health insurers and are only available to individuals who are eligible for Medicare. These policies pay costs not covered by Medicare, like copayments, coinsurance and deductibles.
Premium: Amount an individual or employer pays to a health plan to purchase health insurance coverage.
Reserves: Health insurance carriers are required to maintain reserve funds to show a company’s financial strength and to serve as “insurance” for payments of claims in times when costs run higher than anticipated or emergencies or disasters occur.
Self-funded: A health plan for which the sponsoring organization or employer group assumes the financial risk of paying for medical claims from its own funds (as opposed to claims being paid by an insurer). Federal law allows self-funded group plans to determine their own benefit structures and policies. A third-party administrator is usually hired by self-funded groups to issue claims payments and handle other administrative processes.
Small group: Under Arkansas law, a small group is generally defined as one with 2-50 employees.
More vocabulary: http://news.arkansasbluecross.com/healthliteracy/insurance-basics/glossary/#tabBasics