Health Insurance Glossary

Choosing the right healthcare plan can be difficult, not just because you are confronted with an overwhelming number of options, but also because common health insurance terms can be confusing. To help you better understand important facts about health insurance and assist you in making the right decisions for you and your family, we’ve created this healthcare glossary of some common terms you will hear while shopping for plans.

Allowed Amount

The highest amount that an insurer will pay for a medical service. This is typically a discounted rate agreed to by providers in your insurance network.

Actuarial Value

The percentage of total costs that a health insurance plan will cover. For example, Marketplace “Silver” plans cover an average of 70% of healthcare costs, and therefore have an average actuarial value of 70%. That would leave you responsible for paying the remaining 30% of medical costs.

Brand Name Drug

A prescription drug sold under a specific brand name and protected by a trademark.

Benefit

Any services, supplies, and equipment covered by your health insurance plan. Benefits can include covered doctor’s appointments, medications, and procedures.

Broker

A health insurance agent or broker is a person who helps you sign up for a health insurance plan. They make plan recommendations based upon your income, health needs, and other factors. They can then provide you multiple insurance quotes and help you narrow down the best options for you. Brokers are licensed and regulated by state laws, and can answer any health insurance questions you might have.

Claim

A request made to your health insurer to pay for covered items or services.

Coinsurance

What you have to pay for a covered service after you’ve met your deductible. Your insurance pays for any remaining expenses. You may have to pay coinsurance in addition to a copay.

Coinsurance Maximum

The most you will pay for coinsurance during a benefit year before your plan covers 100% of covered medical expenses. You may still have to pay a copay for services even after you reach the coinsurance maximum.

Copayment (Copay)

A payment made to a healthcare provider when you receive medical services. This is typically a fixed dollar amount you pay each time. Some plans don’t have copays.

Cost-Sharing Reduction

A discount on costs for deductibles, copayments, and coinsurance. People with household incomes between the federal poverty line and 250% of the federal poverty line are eligible for a cost-sharing reduction if they choose a “Silver” plan.

Covered Person

Anybody covered by your insurance plan.

Deductible

The amount you pay for healthcare services in a year before your insurer pays. For example, if you have a $5,000 deductible, you will have to pay for $5,000 worth of medical services before your insurer begins to pay for your medical expenses.

Dependent Coverage

Coverage of legal dependents, such as your children.

Emergency Medical Condition

An injury or illness so severe that it requires immediate attention in an emergency room.

Essential Health Benefits

The minimum benefits that your healthcare plan is required to provide. Healthcare plans must provide coverage in at least the following ten categories:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

Excluded Services

Healthcare services that your health insurance does not pay for.

Formulary

A list of prescription drugs covered by a health insurance plan.

Generic Drug

A prescription drug that has the same active ingredients as a brand name drug. These drugs are typically more affordable, and are as safe and effective as brand name drugs.

HMO (Health Maintenance Organization)

A healthcare plan that provides covered services only within a network of HMO providers. Under an HMO plan, you select a primary care physician who refers you to other HMO providers as needed. These plans usually don’t cover out-of-network services unless there is an emergency.

HSA (Health Savings Account)

A financial account designed to let you save money for future medical costs. Funds placed in an HSA are not federally taxed.

Individual Mandate

A law that requires almost everyone in the United States to have health insurance or pay a tax penalty as part of the Affordable Care Act.

In-network Provider

A healthcare provider who is part of a plan’s network.

Inpatient Care

Healthcare you receive after being admitted to a medical facility, such as a hospital.

Legal Guardian

The legal caretaker of a minor. The legal guardian makes medical decisions for minors in their custody.

Lifetime Limit

The maximum dollar amount your insurance provider will pay for benefits. Insurance plans may set a lifetime limit for all benefits, and/or for a specific kind of benefit.

Marketplace / Exchange

Also known as the health insurance “exchange,” the Marketplace is a resource that allows people to learn about and enroll in an ACA-compliant healthcare plan. Many states offer their own Health Insurance Marketplace, but there is also an exchange run by the federal government.

Medicare

A national health insurance program for Americans aged 65 and older, as well as younger people with disabilities.

“Metal” Plans

The four levels of health insurance coverage you can buy on the marketplace. In addition to the four metal plans, there is also “catastrophic coverage,” which has limited availability.

  • Bronze Plan - In bronze plans, insurance covers an average of 60% of expenses and policy holders must pay the remaining 40%.
  • Silver Plan - In silver plans, insurance covers an average of 70% of expenses and policy holders must pay the remaining 30%.
  • Gold Plan - In gold plans, insurance covers an average of 80% of expenses and policy holders must pay the remaining 20%.
  • Platinum Plan - In platinum plans, insurance covers an average of 90% of expenses and policy holders must pay the remaining 10%.
  • Catastrophic Coverage - Catastrophic coverage is only available to people under 30 and people who meet certain hardship requirements. These plans meet all healthcare requirements of essential coverage, but don’t cover any benefits besides 3 primary care visits per year. This type of plan has the most affordable premium but has the highest out-of-pocket costs.

The best insurance plan for you will depend on your personal circumstances. A broker can help you decide which plan best fits your needs.

Minimum Essential Coverage

The medical services that an ACA-compliant insurance plan must cover under the Affordable Care Act.

Non-Covered Charges

Healthcare services that are not covered by your healthcare plan. Seeking these services will require you to pay for them out-of-pocket.

Open Enrollment Period

A set window of time when individuals can enroll in an ACA-compliant health insurance plans. People may sign up for a health plan outside of Open Enrollment under special circumstances, such as a qualifying life event.

Out-of-network Provider

A healthcare provider whose services are not covered by your healthcare plan.

Out-of-pocket Cost

What you directly pay for healthcare. This can include care you receive before you reach your deductible, copays, coinsurance, and care from an out-of-network provider.

Outpatient Services

Any medical services that do not involve being admitted to a medical institution such as a hospital.

Patient Protection and Affordable Care Act

A major piece of healthcare legislation that is commonly referred to as the Affordable Care Act (ACA) or Obamacare. This is a federal statute, signed on March 23, 2010, which had a major impact on the health insurance industry. It dictates who must have health insurance, how insurance must be sold, and what coverage must be included in a health insurance plan.

PPO (Preferred Provider Organization)

A healthcare plan that has a network of “preferred” healthcare providers you can choose from. Unlike an HMO, a PPO does not require you to select a primary care physician, and you do not need referrals to see other providers within the network.

Pre-existing Condition

A health condition that was diagnosed before the start of health insurance coverage. Starting January 1, 2014, no one can be denied health insurance coverage due to a pre-existing condition.

Premium

The payment you make to your health insurance provider in order to maintain your coverage.

Premium Tax Credit

A tax credit that lowers your monthly health insurance premiums. People with household incomes between the federal poverty line and 400% of the federal poverty line are eligible for a premium tax credit.

Prescription Drug

Medicine that is distributed by a pharmacist.

Prevention

Healthcare services designed to help prevent illness, such as checkups and screenings.

Primary Care Physician (PCP)

A physician who directly provides for the care of a patient. People who chose an HMO plan must choose a primary care physician.

Qualified Health Plan

A certified health insurance plan that meets all the requirements under the Affordable Care Act. A qualified health plan must cover these essential health benefits:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

Qualifying Life Event

A major life change that makes you eligible to enroll in healthcare coverage outside of the Open Enrollment Period. Qualifying life events include:

  • Marriage
  • Divorce or legal separation
  • Birth of a child
  • Adoption of a child
  • Loss of coverage under employer
  • Move outside your insurance provider’s service area
  • Change in spouse’s employment status
  • Loss of coverage because of spouse’s death
  • Becoming a U.S. citizen
  • Turning 26, the age for becoming ineligible for coverage under a parent or guardian

Short-term Insurance

Health insurance that provides coverage for a limited time — typically six months or less. These plans are usually purchased to fill a gap in existing coverage.

Special Enrollment Period

A period of time, outside the Open Enrollment Period, when you may enroll in health coverage because of a qualifying life event. The Special Enrollment Period lasts up to 60 days after a qualifying life event.

Subsidy

A government tax credit or cost-sharing reduction that helps you pay for health insurance. The amount of your total subsidy will depend on your income, family size, and location.

Summary Of Benefits And Coverage (SBC)

An overview of what your plan covers and what it costs.

Urgent Care

Care for a health condition so severe it requires you to seek care right away, but not severe enough to warrant a visit to the emergency room.

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