Health Care Reform Glossary


Employer-based coverage for the lowest-cost single-coverage option does not exceed 9.5 percent of an employee's W2 wages.

Cafeteria plan

A type of employee benefit that provides a choice between different types of benefits. Qualified cafeteria plans are excluded from gross income for tax purposes.

Common control

A group of companies under common control are to be treated as a single company

Cost-sharing assistance subsidies

If you buy health insurance on an exchange, your total out-of-pocket spending (which includes deductibles, co-pays and co-insurance) will be capped at a particular amount. The subsidies will apply after your out-of-pocket spending hits that amount.


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


The ACA requires health plans and issuers that offer dependent coverage to make the coverage available until the adult child reaches the age of 26.

Employer mandate or employer shared responsibility

Business owners with at least 50 full-time or full-time equivalent (FTE) employees that do not offer health coverage to their full-time employees that meets minimum standards may be subject to a shared responsibility payment penalty under the health care law.

Essential health benefits

Minimum benefits that all health insurance policies that are sold on the exchanges must provide. It must include services within at least ten core categories, among them emergency services; maternity and newborn care; prescription drugs; and preventive and wellness services.


A competitive marketplace where you can buy insurance if your employer does not provide insurance. Depending on where you live, your exchange may be operated by your state or by the Federal government.

Flexible spending account

A financial account that can be set up through an employer’s cafeteria plan which allows an employee to set aside a pre-tax portion of earnings to pay for qualified expenses.

Full-time equivalent

A full-time employee is anyone who works an average of 30 hours or more a week. Part-time workers are counted (two half-time employees equal one full-time employee).

Grandfathered plan

Employer health plans that were in effect on March 23, 2010 and haven't significantly reduced benefits or increased employee costs may be considered grandfathered and exempted from certain provisions in the health care law, such as the requirement to provide 100 percent coverage for preventive care.

Guaranteed issue

Health insurers cannot reject your application for insurance or refuse to renew it due to your health status, age, income, use of health services or other factors. Your insurance can still be terminated for fraud, failure to pay premiums or if you move.

High-premium plan (gold-plated plan)

A high-premium policy with low deductibles and excellent coverage that typically covers even the most expensive treatments. This is sometimes referred to as a "Cadillac" plan and may be subject to additional taxation beginning in 2018.

Large employer

A company with 50 or more full time equivalent employees is considered large. Only large employers are subject to the mandate to provide affordable health coverage or pay a range of penalties.

Look-back provision

An employee's status as a full-time employee is determined by looking back at a defined period of 3 to 12 months, as chosen by the employer. Any employee on your payroll for an average of 30 hours a week or more during that period is considered full time. 

Minimum value

Requires large employers to cover at least 60 percent of an employee's total health care costs – not just premiums but copays, deductibles and other qualified out-of-pocket spending as well. If coverage does not meet that minimum value, the employee could be eligible to receive a premium tax credit – and the employer could be hit with a $3,000 penalty for any full-timer who gets the credit.

Patient Protection and Affordable Care Act (PPACA)

Full-Name for the healthcare reform legislation passed in 2010. It is sometimes referred to as "Affordable Care Act" or "Obamacare".

Premium tax credits

Consumers and self-employed individuals may be eligible for a new kind of tax credit to lower monthly health plan premiums.  The value of the tax credit you’re eligible for depends on how much income you or your family expects to earn.  

Qualifying health plan

An insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost-sharing (such as deductibles, copayments and out-of-pocket maximum amounts) and meets other requirements. A qualified health plan will have a certification by each marketplace in which it is sold.

Small business health care tax credits

Businesses that cover at least half of the cost of single coverage for their employees, have fewer than 25 full-time-equivalent workers and have average wages of less than $50,000 a year may qualify for a tax credit of up to 50 percent of employer-paid premiums.

Small Business Health Option Program (SHOP)

Beginning in 2014, each state is supposed to offer small employers access to a SHOP exchange that offers a variety of qualified health plans. States define “small” differently.

Wellness programs

A program intended to improve and promote health and fitness that is typically offered through the workplace, although insurance plans can offer them directly to their enrollees. The ACA creates new incentives to promote employer wellness programs and encourage opportunities to support healthier workplaces.

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