Health Insurance 101

Health Insurance can be confusing to understand. Once you’ve watched some of the videos about how the Health Insurance & The Marketplace works, it’s important to review these common health care terms.

Affordable Care Act:

The comprehensive health care reform law was enacted in March 2010. The law was enacted in two parts: The Patient Protection and Affordable Care Act was signed into law on March 23, 2010 and was amended by the Health Care and Education Reconciliation Act on March 30, 2010. The name “Affordable Care Act” is used to refer to the final, amended version of the law.


Percentage of allowed charges for covered services that you are required to pay after you have fulfilled the deductible.


A fixed amount you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.

Cost Sharing Reduction (CSR):

A discount that lowers the amount you have to pay out-of-pocket for deductibles, coinsurance, and copayments. CSR subsidies are automatically applied on the federal Marketplace for individuals and families with income below 250% of the federal poverty level (FPL). A consumer must select and enroll in a silver plan for CSR eligibility.


The amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay.

Essential Health Benefits (EHBs):

Marketplace plans must include health benefits in at least these 10 categories.


If an individual does not have qualifying health coverage, he or she can apply for one of the many exemptions to avoid paying the “penalty” or “individual share responsibility payment.”
Apply for an Exemption here

Federal Poverty Level:

A measure of income level issued annually by the Department of Health and Human Services (HHS). Federal poverty levels are used to determine eligibility for certain programs and benefits.


A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a “drug list.”

Health Insurance Marketplace:

Also known simply as “Marketplace” or “Exchange,” the Health Insurance Marketplace is a resource where individuals, families, and small businesses can learn about their health coverage options; compare health insurance plans based on costs, benefits, and other important features; choose a plan; and enroll in coverage. The Marketplace encourages competition among private health plans, and is accessible through HealthCare.gov, the CMS call center, and in-person assistance.
Apply on the Marketplace Now

Individual Shared Responsibility Payment:

Also known as the “penalty” for not having health coverage or an exemption. This is a fee that is collected through the IRS when an individual files his or her tax return.

Minimum Essential Coverage (MEC):

The type of coverage an individual needs in order to meet the individual responsibility requirement (individual mandate) under the Affordable Care Act (ACA). A person without coverage may have to pay the individual shared responsibility fee for each month they are without coverage or do not have an exemption.
See What Plans are Minimum Essential Coverage (MEC) here.

Open Enrollment Period:

An annual period of time designated for the purchase of health coverage.
The 2017 Open Enrollment Period is November 1, 2017 — December 15, 2017.

Out-of-pocket Maximum:

The most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100% of the allowed amount.

Preventive Services:

Most health plans cover a set of preventive services like shots and screening tests with no cost-sharing — including copayments and coinsurance even if the deductible has not been met for the year. This includes Marketplace private insurance plans.


The amount that must be paid monthly, quarterly, or yearly for health insurance. A consumer must pay the first month’s premium by the insurer’s deadline to avoid plan termination. Monthly premiums are based on several factors including age, tobacco status, location, how many people are enrolling on the same plan, and the insurance company.

Premium Tax Credit (PTC):

Consumers between 133-400% of the federal poverty level qualify for the Premium Tax Credit (PTC), which is a subsidy available only through the Marketplace to help pay for a Qualified Health Plan (QHP). Consumers can elect to have all or some of the PTC paid directly to the plan on a monthly basis, or they can choose to claim the full amount on their tax return.
Calculate Your Possible Premium Tax Credit (PTC) here.

Qualifying Life Event:

A qualifying life event is a change in life that can make an individual eligible for a Special Enrollment Period to enroll in health coverage. Examples of qualifying life events are moving to a new state, certain changes in your income, and changes in family size (marriage, divorce, or having a baby) and gaining membership in a federally recognized tribe or status as an Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder.

Special Enrollment Period (SEP):

A time outside of the open enrollment period during which you and your family have a right to sign up for health coverage. In the Marketplace, you qualify for a special enrollment period 60 days following certain life events that involve a change in family status (for example, marriage or the birth of a child) or loss of other health coverage. Job-based plans must provide a special enrollment period of 30 days.
Find out if you can get a Special Enrollment Period here.

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Set up an appointment with one near you.