Insurance 101: Acronyms for Life, Health, and Benefits

If you work in insurance, you know the industry has its own language. Baffling to outsiders, this “alphabet soup” can even throw the most experienced insurance professionals for a loop at times. 

While there’s a ton of terminology of all types, this piece will focus on the acronyms commonly used in the world of life, health, and benefits. 

So, if you’ve ever struggled to tell your CIPR from your NIPR, or your BIPA from your BUCA, this list of helpful insurance acronyms is for you.

Common Life, Health, and Benefits Acronyms  

What is the ACA?

The ACA or The Affordable Care Act (formally known as the Patient Protection and Affordable Care Act, and informally known as Obamacare) is a 2010 law aimed at reforming the American healthcare system in a way that would result in greater protections and affordability for the American public. Key provisions of the ACA include the elimination of exclusions for pre-existing conditions and the removal of lifetime caps on benefits for plan members. 

What is AD&D? 

AD&D or Accidental death and dismemberment insurance is an add-on benefit to some life insurance policies. In many employer-sponsored term life insurance policies, the inclusion of AD&D doubles the amount paid out to a beneficiary if the death was caused by an accident. This policy also can pay out to the insured if he or she does not die, but suffers an accidental loss of a limb or limbs. 

What is ADL? 

ADL or activities of daily living are the essential daily functions that most people can perform unassisted. Some examples include eating and getting dressed. Some insurance policies, such as long-term care (LTC) and long-term disability (LTD) insurance base eligibility on a person’s inability to perform more than one ADL without assistance. 

What is AHP

AHP or association health plans are a type of health coverage designed for a specific group of people who share common traits, such as retail workers, truck drivers, or hospitality workers. AHPs are not subject to all the same rules as other ACA-qualified plans, which means they can charge higher or lower premiums to people based on their personal risk factors, like age and health histories. 

What is an ASO?

ASO or administrative services only is similar to a TPA or third-party administrator. The term describes the practice of a self-funded employer health plan outsourcing some administration of their health plan to a well-known insurance company, but for administrative services only (ASO). This means the health plan is not actually underwritten or insured by the company (United Healthcare, for example), but the employer is using the infrastructure of the healthcare company for administrative services. 

What is BCBSA?

BCBSA or the Blue Cross and Blue Shield Association is a federation of 35 separate health insurance companies in the United States. BCBSA was formed in 1982 with the merger of Blue Cross with Blue Shield. 

What is BIPA? 

BIPA is a law officially known as the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. This law is referred to as the Benefits Improvement and Protection Act of 2000 (or BIPA) for short. This law added some vital benefits to Medicare, Medicaid, and State Children’s Health Insurance Plan (SCHIP) – for example, adding in coverage for regular pap-smears, colonoscopies, and glaucoma screenings. 

What is BUCA?

The letters BUCA stand for “Blues, United, Cigna, Aetna” which is shorthand for the top four insurance carriers that provide health insurance benefits to most Americans (Blue Cross/Blue Shield, UnitedHealth Group, Cigna, and Aetna). The term BUCA, or BUCAs (plural) is often used to refer to the fully insured model used by these giant health insurance companies, as opposed to a self-funded model popular with some employers. 

What is CALPERS? 

CALPERS or the California Public Employers Retirement System is the largest defined-benefit public pension in the United States. It manages the health and retirement benefits for over 2 million public employees and their families in the state of California. While CALPERS is the largest, every state has a similar acronym for its own public employee pension plan. 

What is the CCIIO? 

CCIIO or The Center for Consumer Information and Insurance Oversight is a branch of Centers for Medicare and Medicaid Services (CMS) that is tasked with helping implement many of the reforms that were part of the Affordable Care Act. 

What is CHIP?

CHIP or The Children’s Health Insurance Program is a government program that provides healthcare to children whose families earn too much to qualify for Medicaid but still not enough to purchase private healthcare plans for their children. It is administered by the state, working closely with Medicaid, and sometimes covers pregnant women as well. 

What is CMS?

CMS or The Centers for Medicare & Medicaid Services is the government agency responsible for administering Medicare, Medicaid, CHIP, and the health insurance exchanges created by the Affordable Care Act. CMS sets regulations, provides guidance, and also conducts research in the areas of healthcare. 

What is COB?

COB or coordination of benefits refers to the act of coordinating medical care and healthcare benefits for a patient across one or more medical providers and/or insurance plans. Sometimes a patient is covered by both Medicare and a secondary, private insurance. Other times, a patient is a member of a private health plan that requires tight coordination between a primary care physician and other providers. In each case, someone at the insurance company is tasked with coordinating benefits. 

What is COBRA? 

COBRA or the Consolidated Omnibus Budget Reconciliation Act of 1986 is most commonly used to refer to continuation of coverage after the loss of health benefits from employment. This law put into place several protections for workers, among which was granting employees the right to continue their health insurance coverage for a period of time after losing access to employer-sponsored coverage. Employees who opt to take COBRA must pay the entire cost of their benefits, up to 102 percent of the total plan cost. 

What is DI?

DI can stand for disability income or disability insurance. Through purchasing disability insurance, an individual may be able to get disability income if they cannot earn money from working due to their disability. 

What is the DOI?

The department of insurance, or division of insurance, also known as DOI is the government entity that regulates the activities of the insurance industry within the state or territory. 

Each state in the U.S., along with each U.S. territory, has its own department of insurance or division of insurance. 

What is EOI? 

Evidence of insurability or EOI typically applies to life and disability insurance and is needed when a plan is not guarantee issue (GI). Evidence of insurability can mean anything from health questionnaires to medical exams: basically, it is information provided by the applicant to the insurance company to secure underwriting. If the insurance company does not deem the applicant to be a good risk based on their EOI, they may charge a higher premium or decline coverage altogether.  

What is an EPO? 

An exclusive provider organization or EPO is one of the three most common types of health insurance networks in America today, along with the HMO and PPO. An EPO is somewhat of a middle-ground between the most restrictive HMO and the most free (but expensive) PPO. On an EPO plan, a member may see in-network specialists typically without a referral from the primary care physician and will only be able to get coverage for care outside of the network in the case of an emergency. 

What is ERISA?

The Employee Retirement Income Security Act or ERISA is a law that protects employee retirement plan participants and their beneficiaries. This law governs employer-sponsored retirement plans and protects plan participants from mismanagement and abuse, as well as enforcing the payment of funds to plan participants and beneficiaries even if the company goes bankrupt. 

What is GI?

Guarantee issue or GI is a provision of some group life and disability insurances that offer coverage to all eligible group members without evidence of insurability (EOI). Typically, plans are offered with GI when an employee first becomes eligible (for example, when starting employment) and at a specific annual open enrollment period. Plans limit the time when a member can join without EOI in order to prevent people from waiting until they know they are about to need the benefits before signing up. 

What is HIPAA? 

Best known for its reference to health information privacy, HIPAA or the Health Insurance Portability and Accountability Act of 1996 is a federal law that created national standards for the protection of sensitive patient information. It’s thanks to HIPAA that we all have to sign privacy policies each time we visit a healthcare provider. 

What is an HMO? 

An HMO or health maintenance organization is one of the three most common types of health insurance networks in America today, along with the PPO and EPO. An HMO is the most restrictive, but also the lowest cost, option. Members of an HMO plan must see their primary care physician for a referral for any other care and will only receive out-of-network coverage in the case of an emergency. 

What is LTD? 

Long-term disability insurance or LTD is a type of income replacement that will pay a percentage of the insured’s previous income level if he or she is unable to work due to a covered disability. Unlike its short-term counterpart, long-term disability insurance is intended for replacing income when someone is disabled for long periods of time. Depending on the plan, this can be for one or two years, all the way through normal social security retirement age. LTD usually has a three to six month waiting period before it begins to pay, ensuring that the disability is truly long-lasting before it kicks in.  

What is LTC? 

Long-term care insurance or LTC is a coverage to help pay for the cost of nursing homes, assisted living facilities, in-home caretakers, and other types of long-term care. With the cost of these services exploding over the past few decades, LTC policies have become more limited.

What is an MCO? 

A managed care organization or MCO describes a number of different types of health plans, such as the common HMO, in which the costs are controlled through management of health services. Mechanisms such as provider networks and pre-authorization requirements are commonly used by MCOs to try to keep healthcare costs lower and prevent unnecessary care from happening.  

What is MEC? 

Minimum essential coverage or MEC is a set of 10 categories of health benefits that must be covered by a health plan under the Affordable Care Act. All plans sold on the healthcare marketplace (or exchange) must provide MEC. In addition, most employer health plans must also provide MEC to qualify as ACA compliant. 

What is MHPA? 

The Mental Health Parity Act of 1996 or MPHA is a law that requires health plans to provide equal levels of coverage for mental health services as they do for other health services. This means health plans are prohibited from offering less coverage (or no coverage) for mental health and substance abuse treatment, compared to treatment for something like cancer or diabetes. 

What is a MLR?

The ACA requires health insurance companies to spend at least 80-85 percent of premium dollars on providing patient care (that is, paying out claims). This is known as the Medical Loss Ratio, or MLR. Health insurance companies have to meet this minimum MLR in order to be ACA compliant. 

What is NRL?

Nonresident licensing or NRL is the type of insurance license given to producers who do not reside in a state, but who still sell products within it. In order to obtain a NRL, you must first have a valid producer license in your state of residence. 

What is a PBM?

A pharmacy benefit manager or PBM is a company that manages the prescription drug component of a health plan on behalf of an insurance carrier, a self-funded health plan, or even on behalf of Medicare Part D. PBMs are responsible for keeping drug lists known as formularies, negotiating drug prices with manufacturers, and reimburse pharmacies for the price of the drugs obtained by members of the health plan. 

What is a PPO?

A preferred provider organization or PPO is one of the three most common types of health insurance networks in America today, along with the HMO and EPO. A PPO health plan provides the most freedom of choice to the member, but also has the highest premiums (generally speaking). On a PPO plan, a member can choose any provider they want and generally do not need to seek a referral to see a specialist. However, the amount the health plan will pay is often drastically reduced for out-of-network providers (except in the case of an emergency). Still, a PPO plan is one of the only plans that allows coverage for out-of-network services at all, making it a popular choice for consumers. 

What is a QHP?

A qualified health plan or QHP is a health insurance plan that meets the standards imposed by the Affordable Care Act. These standards include offering minimum essential coverage (MEC) and meeting cost-sharing requirements – among others. All health plans available on the marketplace are QHPs, and employers who offer health insurance are penalized if the plans they offer are not qualified. 

What is STD?

Short-term disability insurance or STD is a type of income replacement that will pay a percentage of the insured’s previous income level if he or she is unable to work due to a covered disability. The key word in STD is “short.” Typically, STD policies will pay benefits for about 90 days, and often after a waiting period of anywhere from three to 14 days, so the plan avoids paying out benefits for extremely short-lived periods of sickness. 

What is a TPA? 

A third-party administrator or TPA is another name for a company that offers “administrative services only.” This is a company that works on behalf of a health plan to administer the plan, but is not responsible for decisions such as who is eligible for insurance or plan design/benefit levels. Simply put, the TPA follows the rules of the health plan which are established by the plan sponsor. The actual plan sponsor may be the government, an insurance carrier, or a large employer who chooses to self-fund its employee health insurance.  

If you found these insurance acronyms helpful, check out our guide to personal lines and commercial lines acronyms as well.

These acronyms are, of course, only one area of pedantry in the insurance industry that can make it seem daunting to newcomers. If you want to shorten that learning cycle for your compliance or operations teams, see what AgentSync can do for you.