Health Insurance

If you've been shopping for health insurance, you've no doubt noticed that the insurance industry has a language all its own. Insurance is confusing enough without having to learn all the jargon, so we're here to help you understand these terms to ensure your insurance needs are being met.

We've selected 25 terms that should be in everyone's health insurance tool kit; scroll down to find our complete list of 101 health insurance terms. Also, if you need more information about other types of insurance, check out our resources for homeowners, auto and life insurance.

If you're trying to make heads or tails out of a health insurance policy, or don't know where to begin looking for one, use the following 25 terms as a foundation.

Benefits

The health care services covered under a health insurance plan. The benefits that are included and excluded are defined in every health insurance plan's documents.

Cap

The maximum amount your insurance company will pay during the plan year. After your cap is reached, you are responsible for paying any additional expenses for health care costs you incur.

Coinsurance

Your share of the costs of a covered health care service—calculated as a percentage of the allowed amount for the service. For example, if your health insurance plan allows $100 for an office visit and has 20% coinsurance, then after you meet your deductible, you are responsible for paying $20. The insurance company pays the rest.

Copayment (copay)

A fixed amount (for example, $15) you pay for a covered health care service under your insurance plan.

Coverage

The extent of protection provided by a health insurance policy.

Deductible

The amount you are responsible for paying for covered health care services before your health insurance plan begins to pay. For example, if your deductible is $1,000, your plan won't pay anything until you've paid the first $1,000 for covered services. The cost of your insurance plan can vary based on how high a deductible you opt for. Generally, the higher the deductible, the lower the monthly premium.

Emergency Medical Evacuation

When a patient is transferred from one hospital to another for emergency medical treatment. Medical evacuation is an important component of a trip insurance policy for those who travel outside the United States.

Free Preventive Care

Under the Affordable Care Act, most health plans must cover preventive services — like shots and screening tests — at no cost to you. You are entitled to this preventive care whether you purchased a plan on the Marketplace or somewhere else.

Health Maintenance Organization (HMO)

A type of health insurance plan that limits coverage to care from doctors who work for or contract with the HMO. Under an HMO, you generally can't go to an out-of-network physician unless it's an emergency.

In-Network Provider

A medical service provider who has contracted with a health insurance company to provide services to plan members for specific pre-negotiated rates. Generally, your out-of-pocket cost will be less if you visit an in-network provider than an out-of-network one. Some plans may limit you to using only in-network providers; in that case, if you use an out-of-network provider, you may have to bear the entire cost.

'Metal' Categories

Plans available in the Health Insurance Marketplace are divided into four "metal" categories: Bronze, Silver, Gold and Platinum. Plans in each metal category split costs differently. Generally, the plans that cover more of your costs are more expensive.

Open Enrollment

The annual period during which you can enroll in a health insurance plan. To be covered in 2018, the Open Enrollment Period for marketplace plans is November 15 to December 15, 2017. (However, you can still qualify for coverage, even outside the Open Enrollment Period, if certain life events occur, such as if you get married, have a baby or lose other coverage. You can apply for Medicaid or the Children's Health Insurance Program (CHIP) at any time of the year.)

Out-of-Network Provider

A medical service provider who has not contracted with a health insurance company to provide services to plan members for specific pre-negotiated rates. Generally, your out-of-pocket cost is higher if you visit an out-of-network provider. Some plans may even prohibit you from using an out-of-network provider. In that case, if you use one, you may have to bear the entire cost.

Out-of-Pocket Cost

Medical expenses that you are responsible for. Out-of-pocket costs aren't reimbursed by insurance. These costs include deductibles, coinsurance and copayments for covered services, plus the cost of services that aren't covered by your plan.

Preferred Provider Organization (PPO)

A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You generally pay less if you use providers who are in the network. You can use doctors, hospitals and other providers outside of the network, but your costs will be higher.

Preapproval or Preauthorization

A decision by your health insurer that a health care service, treatment, prescription drug or durable medical equipment is medically necessary.

Pre-Existing Condition

A health problem (such as diabetes or cancer) that you had before your new health coverage started.

Premium

The cost of your health insurance plan. It can be paid (by you and/or your employer) monthly, quarterly or yearly.

Primary Care Physician

A physician who either directly provides or coordinates health care services for a patient.

Primary Insurance

If you are covered under more than one health insurance plan, the primary insurance plan is the one that pays claims first.

Referral

A written order from your Primary Care Physician for you to see a specialist or get certain medical services. Many HMOs require you to get a referral before you can see a specialist or get medical care from anyone except the Primary Care Physician.

Renewal

The continuation of health care insurance after the initial period runs out. Some plans allow insurers to automatically renew their policies, others require insurers to elect renewal annually. Be advised to check into your plan and the general plan selection during the annual open enrollment period, even if you're satisfied with your insurance, to determine any changes made to your plan or new ones being offered.

It's a challenge to navigate the different terms used to describe insurance policies, benefits, and coverage: we've compiled a list of 101 terms that can guide you through and arrive at the best policy for your needs.

Advanced Premium Tax Credits

A tax credit that is applied when you purchase Health Insurance Marketplace coverage. The credit is based on your estimated income and you can use your premium tax credit to lower your monthly insurance premiums. If, at the end of year, you use more tax credits than allowed by your income level, you must pay the difference back when you file your federal tax return.

Affordable Care Act

The Affordable Care Act, formally known as the Patient Protection and Affordable Care Act, was signed into law in 2010. It consists of two pieces of legislation, designed to expand health insurance coverage for Americans, lower health care costs, and provide greater regulation over health insurers. Examples of the ACA reforms include the creation of a new Health Insurance Marketplace, removing lifetime insurance limits, and reducing premium costs.

Ancillary Services

Ancillary Services traditionally fall under three categories: custodial, diagnostic, and therapeutic. Custodial services include hospice care, home health care and nursing home care. Diagnostic services refer to physician or in-office support, including radiology, clinical laboratory services, and ambulatory services. Therapeutic ancillary services deal with patient-focused services, such as physical therapy, speech therapy, and occupational therapy.

Annual Limit

Annual limit refers to the maximum amount of benefits your insurance company will pay in a calendar year under a particular health insurance plan. After an annual limit has been reached, you are responsible for the remainder of health care costs for the rest of the year. The Affordable Care Act removed annual limits in 2014.

Appeal

An appeal is a formal request you file with your health insurance plan or health insurance provider to review a decision about coverage or to review a grievance you've previously filed.

Approved Health Care Facility

A facility authorized and approved by your health plan to provide health services as stipulated by their coverage regulations.

Balance Billing

Balance billing is the difference between what your health insurer pays a healthcare provider and what was billed by the health insurer. For example, if your provider charges $150 for an office visit and your insurance plan allows $80, then your provider may charge you for the outstanding $70 balance.

Benefits

Benefits are services, equipment, and items that are covered by your health insurance plan. Your plan will have a list of excluded and included services.

Cap

A set limit on insurance benefits coverage that an insurer will pay.

Carrier

A health insurer, group hospital plan, or managed care organization.

Catastrophic Health Plan

Health plans for people 30 years old and younger with a hardship exemption from having health insurance may purchase a catastrophic health plan under the Affordable Care Act. These plans have high deductibles and low monthly premiums and are a way to provide insurance in case of significant injury or illnesses.

Claim

A claim in health insurance is a payment request submitted by you or your health care provider to your health insurance company after receiving services that may be covered under your insurance plan

Coordination of Benefits

If you have more than one health insurance policy, your health insurance companies use the Coordination of Benefits as a way to determine which plan will be the primary payer for a claim and to which amount the other plans will contribute to coverage.

COBRA

COBRA is a federal law that allows you and/or your dependents to maintain your health coverage temporarily after you lose coverage when your employment ends. You are responsible for paying 100% of COBRA premiums, including administrative fees.

Coinsurance (copay)

Coinsurance refers to the costs associated with a health care service that is usually expressed as a percentage (e.g. 25% of the allowed amount). Depending your plan, you're required to pay coinsurance after you've met your yearly deductible. For example, if your health insurance plan allows $85 for an X-ray and you've met your deductible, your 25% coinsurance payment would be $21.25 and your health insurance company would pay the remainder.

Coverage

Insurance coverage is issued by a health insurer and is an amount of risk that insurer is willing to cover in the event of an illness, injury or other circumstance.

Deductible

Your deductible is a set amount you owe prior to your health insurance plan starts paying benefits. For example, if your deductible is $500, you will not receive health benefits until you've met the required $500 deductible.

Department of Health and Human Services (HHS)

The US Department of Health and Human Services is a federal agency responsible for administering programs that promote the well-being of Americans. An umbrella agency, HHS has 11 total operating agencies across public health services and three human service agencies.

Dependent

A dependent is a child or other person for whom you may cover on your health insurance plan and claim a personal exemption tax deduction.

Donut Hole

If you have Medicare Part D (Prescription Coverage), your plan will have a coverage gap known as the "donut hole." The donut hole occurs when you have spent a maximum amount for covered drugs under your prescription plan; you are therefore responsible for the remainder of the out-of-pocket expenses for your prescriptions. Once you reach a yearly limit, the coverage gap (donut hole) ends and the drug plan can once again pay for your prescriptions.

Eligibility Assessment

The Health Insurance Marketplace may not make the ultimate decision regarding Medicaid eligibility in certain states. In some states, the Marketplace will conduct an assessment and send your application to the state's Medicaid agency to make a decision about your coverage eligibility.

Emergency Medical Evacuation

Emergency medical evacuation refers to the transportation and movement of injured patients from a scene of an accident or from a medically underserved area to facilities that are equipped to provide ongoing, in-patient care for illnesses, injuries, and other medical issues.

Emergency Medical Services

Emergency medical services are out-of-hospital medical care for patients with injuries or illnesses that require transport to a hospital or other care setting.

Employer Shared Responsibility Payment

Employers that have at least 50 full-time (or their equivalent) employees are required to offer health insurance coverage to those employees and their dependents under the affordable Care Act.

Essential Health Benefits

The Affordable Care Act established a series of essential health benefits, a comprehensive list of services and care that health care plans are required to provide to their members. To be certified insurers in the Health Insurance Marketplace, insurance policies must cover essential health benefits. These benefits must be provided across 10 categories: Prescription drugs; Laboratory services; Hospitalization; Ambulatory care services; Pediatric services; Mental health and substance use disorder services (including behavioral health); Maternity and newborn care; Emergency services; Rehabilitative services; and Preventative, wellness, and chronic disease management.

Exchange

Known as a "Health Insurance Marketplace," an exchange is a health insurance resource where you can learn more about individual insurance plans; compare their benefits, costs, and features; select a plan; and apply for coverage. Depending on the state, the exchange may be operated by the federal government or by the state itself.

Excluded Services

Excluded services are a list of health care services that your health insurer does not cover under your plan.

Exclusive Provider Organization (EPO) Plan

An EPO plan is a managed care plan that only pays for services (except for emergency care) if you go to medical providers that are within the EPO network.

Exemption

Under the Affordable Care Act, you must have coverage under a qualified health plan. If you do not have coverage, you are required to pay a penalty at the end of year with your federal income tax. However, you may qualify for an exemption that is based on special circumstances, such as financial hardship and some life events. These exemptions means you do not have to pay the penalty for not having coverage.

Exemption Certificate Number (ECN)

If you qualify for a health insurance exemption, you will receive an Exemption Certificate Number from the Health Insurance Marketplace. You will receive a notice by mail that includes the ECN—a unique identifier—that you can use when you file your taxes. Each household member will receive their own ECN.

Flexible Benefits Plan

Also called an IRS 125 or Cafeteria Plan, a flexible benefits plan is a program that allows employees to select among an array of benefits, from health insurance to retirement plans, child care to life insurance. A common set of benefits may be assigned under the plan, but you are allowed to choose how you distribute your remaining benefit dollars among the different plan options.

Flexible Spending Account

Flexible spending accounts allow you to set aside tax-free money to pay for out-of-pocket medical expenses, such as copayments and deductibles, prescriptions, and medical devices. You select

Formulary

The list of medications approved to be prescribed to enrollees under a certain health insurance plan. Plans with a tiered formulary have drugs classified within one of several "tiers": generic drugs tend to be in Tier 1. For drugs not on the formulary, enrollees may be a higher percentage of the cost, potentially the entire cost.

Free Preventive Care

Under the Affordable Care Act, if you started a new health insurance plan after September 23, 2010, you are eligible for a range of preventative care services at no cost from in-network providers. These services range from diabetes screenings to cholesterol testing.

Generic Drug

A generic drug is a prescription drug that is typically less expensive than a brand-name drug but includes the same formula and ingredients as the name-brand drug.

Grandfathered Plan

Under the Affordable Care Act, a grandfathered plan is a group health plan or individual health insurance policy that was in place prior to March 23, 2010. These plans are exempt from policy changes established by the Affordable Care Act.

Grievance

A grievance is a complaint you file with your health insurance plan or company.

Group Health Plan

A group health plan is an employer or employee organization-sponsored health plan available to employees and their dependents and families.

Guaranteed Issue

Health plans must allow you to enroll, without discrimination against your age, gender, health status or other factors that may influence how you use their health services.

Health Maintenance Organization (HMO)

A Health Maintenance Organization is an insurance plan that provides coverage only for a network of doctors and medical providers that contract specifically with the HMO. An HMO typically does not provide coverage out-of-network services, except in an emergency.

Health Reimbursement Account (HRA)

An HRA is a group health plan that is funded by employers and reimburses employees (tax-free) for approved medical expenses, up to a specified limit each year.

Health Savings Account (HSA)

A Health Savings Account is a type of medical savings account available if you are participating in a High Deductible Insurance Plan. Funds are deposited pre-tax and roll over from year to year.

High-Risk Pool Plan

High-risk pool plans are self-funded, private insurance plans that are administered at the state level and are available to individuals who cannot get coverage through traditional group insurance or do not meet standard enrollment criteria.

Home and Community-Based Services (HCBS)

Daily task services, such as bathing and dressing, are covered and provided by state-based Medicaid programs in either your home or community and—in some cases—by your family members.

Household

By definition, the household includes you, your spouse, and your tax dependents.

Hospitalization

Any health care services that require inpatient care and admission in a hospital.

Hospital Readmissions

Hospital readmission describes a situation where you end up returning to a hospital after being discharged within the past 30, 60 or 90 days and receive similar care as your previous visit.

In-Network Provider

An in-network provider is a doctor or other medical professional directly contracted with a health insurance plan or company to provide services to that plan's members at pre-negotiated rates.

Individual Policy

Individual policies are health care plans regulated by state law that are not directly connected to employment-based coverage.

Job-based Plan

Job-based health care plans are a type of coverage extended to an employee (and typically their family) by an employer.

Lapse

Any period where you do not have health insurance.

Lifetime Limit

The lifetime limit refers to the cap on benefits you may receive from your insurance company. A limit may be applied to the entire plan or for a specific service (e.g. organ transplants). Once a lifetime limit is reached, the insurance plan will no longer pay for coverage.

Limited Cost Sharing Plan

These plans are only available for individuals under the Alaska Native Claims Settlement Act (ANCSA) and federally recognized tribes. Under these plans, members do not pay deductibles, copayments or coinsurance when using an Indian health care provider, do not require a referral, and do not require income verification for eligibility.

Medicaid

A state-administered health care insurance plan for low-income individuals and families, children, seniors, pregnant women, and people with disabilities. Benefits vary by state.

Medical Underwriting

Insurance companies use medical underwriting to determine what coverage you provide you with, how much to charge, what services should be excluded, and the limits to place on your coverage.

Medicare

Medicare is a Federal health insurance program available to individuals at least 65 years old, certain individuals with disabilities, and people who have end-stage renal disease.

Medicare Advantage

Medicare Advantage is a Medicare health insurance plan from private companies that provides Medicare Part A and Medicare Part B benefits. Example plans include private fee-for-service plans and health maintenance organizations (HMOs).

Medicare Part D

Known as Medicare Drug Coverage, it is a program that covers prescription drugs for individuals with Medicare.

Medigap

Medigap is a form of additional health insurance that you can purchase from a private insurer for services not covered under Medicare. Medigap plans are only available to individuals who have Medicare Part A and Medicare Part B.

"Metal" Categories

Plans sold in the Health Insurance Marketplace are grouped into four different "metal" categories: Bronze, Silver, Gold, and Platinum. These categories do not refer to the quality of care, but how costs are divided between you and your insurance company. For example, under a Bronze plan, you pay 40% and the insurance company pays 60%. Under a Platinum plan, you pay 10% and the insurance company pays 90%.

Minimum Essential Coverage

Minimum essential coverage (MEC) describes any insurance plan that meets Affordable Care Act standards. With minimum essential coverage, you are not required to pay a penalty for not having health insurance. Examples of MEC plans include job-based health plans, Medicare, COBRA, Tricare, and Medicaid.

Minimum Value

Health plans that pay at least 60% of the total cost of a medical service, has benefits that cover physician and inpatient hospital services, is considered to meet minimum value. If you work for an employer that offers a minimum value plan, you are not eligible for a premium tax credit.

Modified Adjusted Gross Income (MAGI)

Modified Adjusted Gross Income is a figure used to determine your eligibility for reduced service costs in the Healthcare Marketplace, Medicaid, and Children's Health Insurance Program. To determine MAGI, your adjusted gross income including any foreign income, interest and tax-exempt Social Security are calculated.

Multi-State Plan

Sold through a Health Insurance Marketplace, a multi-state plan is a private insurance plan that is contracted between an individual insurance company and the US Office of Personnel Management. These plans are required to provide a minimum of essential health benefits and cover any additional state-required benefits.

Network Plan

A network plan is a health insurance plan that establishes contracts with various doctors, pharmacies, hospitals (and hospital networks), and other types of medical providers to offer plan members with discounted services.

Non-Preferred Provider

A non-preferred provider is a health care provider who is not contracted to provide services under your health plan. Typically, services from a non-preferred provider are more expensive than services from a preferred provider.

Not Yet Accredited Plan

A "Not Yet Accredited Plan" is a health plan that hasn't been shown to meet national quality standards. The reasons vary, such as the age of the health plan and the plan has not completed the accreditation process with an accrediting agency.

Open Enrollment

Open enrollment is a period that occurs each year when you can enroll in a health insurance plan. Enrollment periods vary from plan-to-plan and you may be able to enroll outside of the open enrollment period in special circumstances, such as having a child or getting married.

Out-of-Network Provider

A doctor or other medical provider who has contracted with a health insurance plan to provide services to members under that plan at pre-arranged rates.

Out-of-Pocket Cost

An out-of-pocket cost is an expense that you are responsible for when a service is not covered by or reimbursed by your insurance company. Example out-of-pocket costs include deductibles, coinsurance, and services that are not covered by your health plan.

Out of Pocket Limit/Maximum

The out-of-pocket maximum is the limit you will have to pay for health services covered under your plan (typically in a calendar year). After reaching the maximum, your health insurer will pay for 100% of your covered services.

Penalty

Under the Affordable Care Act, you are required to enroll in a health plan that meets minimum coverage requirements. If you do not have coverage, you may have to pay a penalty (also known as a "fee," "fine," or "individual mandate") for every month you're uncovered. The maximum penalty in 2017 is $2,085 and it is paid on your federal income tax return.

Plan ID

In the health care marketplace, each plan is assigned a 14-character ID that includes both letters and/or numbers.

Preferred Provider Organization (PPO)

A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You generally pay less if you use providers who are in the network. You can use doctors, hospitals and other providers outside of the network, but your costs will be higher.

Preapproval or Preauthorization

A preauthorization is a required approval step prior to receiving a health care service, prescription, treatment or medical equipment. Also called preapproval, your health insurance company may review the request to ensure it is medical necessity. Overall, preauthorization is not a guarantee your health plan will cover the cost of the request.

Pre-Existing Condition

A health problem that existed before you enrolled in or started new health care coverage.

Pre-Existing Condition Exclusion Period

A timer period where a health care plan will not pay for your care related to a pre-existing condition. Under employment-based coverage, this period cannot exceed 12 months for a standard applicant or 18 months for someone who enrolls late to the plan.

Premium

The premium is the total amount you must pay for your health insurance plan, which is traditionally paid by both you and your employer—either monthly, quarterly, or yearly.

Preventive Services

Preventative services include a range of medical screenings and other services that are now required to be covered at no cost by health care insurers under the Affordable Care Act. Examples include depression screening, blood pressure testing, and immunization vaccines.

Primary Care Physician

A primary care physician is a first point-of-contact for your health care needs, ranging from wellness visits to getting care for a sore throat. HMOs require you to select an in-network primary care physician who then can refer you to a specialist for additional services.

Primary Insurance

For individuals with primary and secondary insurance coverage, primary insurance coverage is provided through the plan where they are a member—typically through their employer.

Referral

A referral is an order written by your primary care physician that allows you to receive specific medical services or to see a specialist. If you do not receive a referral prior to receiving those services, your plan may deny the charges and you will be required to pay the entire amount for care. Many Health Maintenance Organizations (HMOs) no longer require you to get a referral for services.

Renewal

If you are covered under a qualified Health Insurance Marketplace plan, you must renew your coverage each year to continue receiving insurance benefits.

Rescission

Rescission is a term that describes the retroactive cancellation of your health insurance policy by your insurer. For example, a company may cancel your policy if you made a mistake during your initial application. Changes under the Affordable Care Act no longer allow rescission to occur, except in cases of fraud or misrepresentation.

Rider

In short, a rider is a change—known as an amendment—made to your health insurance policy. A rider may extend or exclude certain types of coverage (e.g. maternity coverage for pregnant women). However, the Affordable Care Act no longer allows riders to be used in any health insurance policy.

Risk Adjustment

When applying for or enrolling in a health plan, the insurer uses statistical processes to account for your health issues and potential health care costs prior to issuing coverage or setting premiums.

Secondary Insurance

If you are covered under more than one health insurance plan, the secondary insurance plan is the one that pays after payment by the primary insurance plan.

Self-Insured Plan

A type of insurance plan where employers manages the insurance plan administration, collecting premiums and paying medical claims for employees and their dependents. Employers wither self-administer the enrollment and claims processing, but in some cases outsource administration to a third party company.

Short-Term Plan

Short-term health plans can be used as temporary insurance plans during coverage gaps, but are not qualified under the Affordable Care Act as meeting minimum essential coverage requirements.

Special Enrollment Period

A time outside of the open enrollment period during which you can sign up for health coverage. In the Marketplace, you qualify for a special enrollment period 60 days after certain life events that involve a change in family status (for example, marriage or birth of a child) or loss of other health coverage. Job-based plans must provide a special enrollment period of 30 days.

Specialist

A physician who limits his or her practice to a specific type of medicine, such as cardiology or dermatology. A specialist has additional education and training in that specific area.

State Health Insurance Assistance Program (SHIP)

A state-based program funded by the Federal government that provides local health care counseling at no cost to individuals who have Medicare.

Student Health Fee

A mandatory fee paid by students to the college or university they attend. This fee may—but does not always—cover health care services at the school. Some schools charge both a Student Health Fee and a fee for health care coverage.

Subsidized Coverage

Subsidized coverage is a type of health care coverage that is supported through financial assistance programs for individuals who have low-to-middle incomes.

Summary of Benefits and Coverage

A Summary of Benefits and Coverage allows you to compare the differences between health plans, comparing costs, benefits, and other health plan features.

Total Cost Estimate

The total cost estimate is the amount you are expected to pay for coverage under a health plan, which is estimated prior to coverage being extended or you having any health expenses under your plan.

Usual, Customary and Reasonable Rate

The amount paid for a particular medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount is often used to determine the amount that your insurance company allows for covered services.

Waiting Period

Waiting period is a set amount of time you have to wait before your job-based health care becomes effective.

Worker's Compensation (Worker's Comp)

Worker's compensation is a special type of insurance that is required by employers to protect their employees who get injured or fall sick while on the job.

Zero Cost Sharing Plan

A specialized health plan open to individuals under the Alaska Native Claims Settlement Act and federally recognized tribal members who have income that ranges between 100% and 300% of the federal poverty income levels. Under the plan, members qualify for tax credits and do not pay deductibles, coinsurance or co-payment.