We get it — health insurance can be confusing. That’s why we’ve put together a list of 10 essential health insurance terms you and your family need to know.
Affordable Care Act (ACA)
The Affordable Care Act (ACA) is a major health care reform law passed by Congress in 2010. It’s also sometimes referred to formerly as the Patient Protection and Affordable Care Act (PPACA), or – as it was passed during Barack Obama’s first term as president – ObamaCare (or Obamacare).
Here’s what the ACA aims to do:
- Make affordable health insurance available to more people. The law offers subsidies, like premium tax credits, that can help lower costs for consumers. The amount of help you get depends on your household income compared to the Federal Poverty Level (FPL).
- Expand the federal Medicaid program to include all adults with income below 138% of the FPL. (According to the Kaiser Family Foundation, as of February 12, 2025, 40 states and one jurisdiction (DC) have adopted expansion; 10 states have not.)
- Promote new, creative ways to deliver medical care that help lower overall health care costs.
Most group health insurance plans marketed in California are ACA-compliant. That means they include a set of 10 Essential Health Benefits mandated by the ACA.
Aggregate Deductible
The Aggregate Deductible Amount is the total number of deductibles that the insured and their family need to meet before reaching the family deductible. For example, if an insurance policy has a $250 deductible and a two-times aggregate deductible, the family must meet a total of $500 in deductibles. This amount can be reached through contributions from different family members, but one person alone cannot satisfy the entire family deductible.
The Aggregate Deductible is sometimes referred to as an “Annual Aggregate Deductible.”
Allowed Amount
The Allowed Amount is the maximum amount on which payment by the insurer is based for covered health care services.
It may also be called “eligible expense” or “payment allowance” or “negotiated rate” or “allowable amount.”
If the health care provider charges more than the health plan’s Allowed Amount, the insured or covered dependent could be obligated to pay the difference if not using a preferred provider under the health plan.
COBRA
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law passed by Congress that allows individuals (employees, spouses, and dependent children) to maintain group health coverage following termination due to a qualifying event. The law applies to employer-sponsored health plans with 20 or more employees. A similar California provision applicable to groups of 19 or fewer employees is known as Cal-COBRA. (As of 2013, 39 other states and the District of Columbia have adopted state COBRA expansion; visit the KFF website for details.)
If a qualified employee or dependent elects COBRA coverage, the employee pays 100% of the premium, including the share previously paid by the employer, plus a small administrative fee.
In some situations, like a layoff, an employer may agree to pay all or some part of an employee’s COBRA premium.
Emergency Medical Condition
An Emergency Medical Condition is when someone has an illness, injury, or symptom so serious that you’d want to get help right away to avoid serious harm.
Emergency Services
Evaluation of an individual’s emergency medical condition and related treatment to keep the condition from getting worse. Emergency services may be provided in a hospital emergency room or urgent care facility.
Different health plans and insurers may have different criteria for evaluating whether a health care service is emergency care.
ERISA
The Employee Retirement Income Security Act of 1974, frequently shorthanded as ERISA, is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals enrolled in these plans.
ERISA prevents states from directly regulating employee welfare benefits, including employer-sponsored health plans.
Federal ERISA laws govern employer-sponsored health plans, except those offered by a church or governmental entity for its employees.
Exclusive Provider Organization (EPO)
An Exclusive Provider Organization (EPO) is a type of health insurance arrangement that requires participants to choose the doctors, specialists, and hospitals in the EPO plan network, except in cases of emergency.
EPOs frequently allow participants to self-refer to a specialist inside the plan network. Visits to health care providers outside of the EPO plan network are prohibited, except in an emergency.
Not all health insurers offer EPOs as part of their coverage options.
Grievance
A grievance is a complaint a member communicates to the health plan or insurer. It can relate to a provider network issue, pre-authorization, processing of a claim, or another matter.
Of 230 medical issuers participating in the federal Affordable Care Act (ACA) Marketplace program in the 2021 plan year, there were a combined 291.6 million in-network claims. More than 48 million claims were denied, resulting in an average in-network claims denial rate of 16.6%.
Reasons for denial (and a subsequent filed grievance) include a claim for excluded services, lack of required preauthorization or referral, unsupported medical necessity, and “other reasons.”
Few consumers appeal their denied claims, and the majority of insurers uphold their original denial decision on appeal.
Health Maintenance Organization (HMO)
An HMO is an organization that provides comprehensive health care to voluntarily enrolled individuals and families, often in a select geographic area, by member physicians with limited referrals to outside specialists. Membership in an HMO is financed by fixed periodic payments determined in advance.
An HMO generally does not cover out-of-network care except in case of an emergency.
Members may be required to live or work in the HMO’s service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.
More to Come
Stay tuned for more useful terms in upcoming blogs. If you have questions about health insurance you can’t find answers to, reach out to your HR team or your group’s health insurance or employee benefits broker.