HR leaders are used to acronyms. And although the Affordable Care Act (ACA) uses numerous acronyms that were already in use prior to 2010, it's also added quite a few new ones.
Understanding the following acronyms will make your life easier when it comes to ACA compliance.
Applicable Large Employer (ALE)
ALE refers to an employer that is subject to the ACA's employer shared responsibility provisions and applies to organizations with 50 or more full-time and full-time equivalent employees. If you're an ALE, you're required to offer affordable, minimum value health insurance to full-time employees or face a potential penalty.
Advanced Premium Tax Credit (APTC)
For people who shop for health insurance in the marketplaces, financial assistance is available, depending on income and whether the person's employer offers coverage. Although the financial assistance is often referred to as a subsidy, it's actually a tax credit. Eligible tax filers can claim it on their tax return, in which case it's referred to as a "premium tax credit" (PTC). But unlike other tax credits, an "advanced premium tax credit" (APTC) is one that can be paid in advance throughout the year directly to the enrollee's health insurance carrier.
Actuarial Value (AV)
Actuarial value is a measure of how robust a health insurance plan is. A plan's AV is the percentage of health care costs that would be covered by the plan, as opposed to being paid out-of-pocket by the insured.
Essential Health Benefits (EHB)
Under the ACA, health plans must cover a set of 10 benefits, which include inpatient and outpatient care, emergency services, maternity and newborn care, mental health and substance abuse treatment, prescription drugs, rehabilitative services, lab work, preventive services and pediatric oral/vision care.
Employer Shared Responsibility Provisions (ESRP)
ESRP is the requirement that certain employers offer affordable, minimum value coverage to their full-time employees or face a penalty if an employee obtains coverage in the exchange and receives an APTC.
Health plans are considered grandfathered if they were already existing when the ACA was signed into law in March 2010. These plans can remain in force as long as no substantial changes are made that would increase a person's costs or reduce their benefits.
Health Insurance Exchange (HIE)
The public health insurance exchange, or insurance marketplace, is where Americans can purchase coverage. Each state has an official exchange or defers to the FFM, established under the ACA.
State-Based Marketplace (SBM)
Thirteen states operate their own health insurance marketplaces, while another four have state-based marketplaces but use HealthCare.gov for enrollment.
Federally-Facilitated Marketplace (FFM)
The federal government runs marketplaces via HealthCare.gov for states without their own marketplace.
Modified Adjusted Gross Income (MAGI)
MAGI is adjusted gross income plus certain deductions such as untaxed foreign income, non-taxable Social Security benefits and tax-exempt interest. The ACA has its own methodology for calculating MAGI to determine whether an exchange enrollee is eligible for APTC and to determine whether an employee's coverage offer is affordable.
Minimum Essential Coverage (MEC)
Minimum essential coverage is any health insurance plan that meets the ACA's requirement for having coverage. Under the ACA, employer-sponsored coverage is generally considered MEC.
Minimum Value (MV)
For health insurance to provide minimum value, it must cover at least 60 percent of the total allowed cost of benefits. Also, a minimum value plan must include substantial coverage of inpatient hospitalization and physician services.
Maximum Out-of-Pocket (MOOP)
MOOP is the max amount of costs for covered services an employee will pay out of pocket in a policy period. MOOP predates the ACA, but it's the first time that a health plan's MOOP has been regulated.
Small Business Health Options Program (SHOP)
SHOP was created as a marketplace where small employers could purchase coverage. It's available in tandem with the Health Insurance Exchange Plan Management (HIX) for individuals, and in most states, the same entity (either the state or federal government) runs both exchanges.
Health care reform has added plenty of new terminology — and knowing it should help you and your organization stay in compliance with the ACA.
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