Health Insurance Terms & Glossary
Health insurance comes with a lot of terms that aren't used in everyday conversation. This glossary explains common health insurance terms in plain English so you can better understand your coverage and compare plans.
Learn what deductibles, copays, coinsurance, provider networks, out-of-pocket maximums, PPOs, HMOs, Marketplace tax credits and other important health insurance terms actually mean.
Simple explanations for self-employed people, 1099 workers, families and small business owners.
Common Health Insurance Terms to Know
If you're comparing plans, these are some of the most important health insurance definitions to understand first.
Browse Health Insurance Terms A–Z
A
Affordable Care Act (ACA)
A federal health care law passed in 2010. Among other things, the ACA created health insurance Marketplaces, premium tax credits and consumer protections for ACA-compliant health insurance.
ACA-Compliant Health Plan
Major medical health insurance that follows applicable Affordable Care Act requirements. Individual and small-group ACA-compliant plans include protections for pre-existing conditions and coverage of essential health benefits.
Accident Insurance
Supplemental insurance that pays benefits for certain covered accidental injuries. It is not a replacement for comprehensive major medical health insurance.
Actuarial Value
An estimate of the percentage of covered medical costs a health plan pays for an average group of members. It is used in part to categorize Marketplace plans into Bronze, Silver, Gold and Platinum.
Advance Premium Tax Credit (APTC)
The portion of a Marketplace premium tax credit used in advance to lower the amount an eligible person pays each month for Marketplace health insurance.
Agent or Broker
A licensed insurance professional who can help consumers or businesses compare insurance options, understand benefits and complete enrollment.
Allowed Amount
The maximum amount a health plan recognizes for a covered medical service. It may also be called an eligible expense, negotiated rate or payment allowance.
Ancillary Coverage
Additional coverage that complements primary health insurance. Examples may include dental, vision, accident, critical illness and other supplemental benefits.
Annual Limit
A dollar limit a plan places on certain benefits during a year. ACA rules prohibit annual dollar limits on essential health benefits for plans subject to those requirements, but other types of benefits may still have limits.
Appeal
A request asking an insurance company or health plan to reconsider a decision, such as a denied claim, denied treatment or other coverage determination.
B
Balance Billing
When an out-of-network provider bills you for the difference between the provider's charge and the amount your health plan recognizes. Federal and state laws prohibit balance billing in certain situations.
Benefit Year
The period during which a health plan's benefits, deductible and out-of-pocket limits are measured. Many plans use a calendar year, but not every plan does.
Benefits
Health care services, treatments or payments that an insurance policy or health plan agrees to cover under its terms.
Bronze Health Plan
One of the Marketplace metal categories. Bronze plans generally trade lower monthly premiums for higher cost sharing when members receive medical care. Metal categories do not measure quality of care.
C
Carrier
Another term commonly used for an insurance company that issues and administers an insurance policy.
Catastrophic Health Plan
A type of Marketplace health plan available to certain eligible people. These plans generally have lower premiums and high deductibles and are designed mainly to protect against significant medical expenses.
Children's Health Insurance Program (CHIP)
A government program that provides low-cost health coverage to eligible children and, in some states, pregnant women in families whose income is too high for Medicaid but who meet CHIP requirements.
Claim
A request for payment submitted to a health plan after a member receives a medical service, prescription, treatment or other covered care.
COBRA Continuation Coverage
A federal continuation-coverage law that can allow eligible employees and family members to temporarily keep certain employer-sponsored health coverage after job loss, reduced hours or other qualifying events. The individual usually pays the full cost of the coverage. Learn more about COBRA.
Coinsurance
The percentage of the allowed cost of a covered health care service that you pay, often after meeting your deductible. For example, 20% coinsurance means you pay 20% of the allowed amount and the plan generally pays the remaining covered portion.
Copayment (Copay)
A fixed dollar amount you pay for a covered service, such as a doctor's visit, urgent care visit or prescription.
Coordination of Benefits
Rules used when a person has more than one health plan to determine which plan pays first and which may pay second.
Cost Sharing
The portion of covered medical expenses you pay yourself, such as deductibles, copays and coinsurance.
Cost-Sharing Reduction (CSR)
Extra Marketplace savings available to certain eligible consumers that can reduce deductibles, copays, coinsurance and out-of-pocket limits. Eligible consumers generally must enroll in a Silver Marketplace plan to receive these savings.
Critical Illness Insurance
Supplemental insurance that may pay a benefit after a covered serious diagnosis, such as certain cancers, heart attacks or strokes, depending on the policy. It is not a replacement for comprehensive health insurance.
Coverage Effective Date
The date your insurance coverage begins. Medical expenses incurred before the effective date generally aren't covered by the new plan.
D
Deductible
The amount you pay for certain covered health care services before your insurance plan begins paying its share. Some services may be covered before the deductible is met.
Dental Insurance
Coverage designed to help pay for dental services such as cleanings, exams, fillings and other covered dental care. Benefits, waiting periods and annual maximums vary by plan.
Dependent
A spouse, child or other eligible person who may qualify to receive coverage under another person's health plan.
Disability Insurance
Insurance designed to replace a portion of income when an eligible insured person cannot work because of a covered illness or injury. Disability insurance is different from medical health insurance.
E
Emergency Services
Medical services used to evaluate or treat an emergency medical condition. Federal protections may limit certain out-of-network charges and cost sharing for covered emergency care.
Essential Health Benefits (EHB)
Ten broad categories of health care services ACA-compliant individual and small-group plans must cover, including hospitalization, prescription drugs, emergency services, preventive care and other required categories.
Explanation of Benefits (EOB)
A statement from your insurance company explaining how a medical claim was processed, what the provider charged, what the plan allowed, what the plan paid and what you may owe. An EOB is not itself a medical bill.
Exclusive Provider Organization (EPO)
A health plan that generally requires members to use the plan's provider network for non-emergency care. Out-of-network care is usually not covered except in limited circumstances.
Exclusion
A medical service, condition, treatment, event or expense that a particular insurance policy does not cover.
F
Fixed Indemnity Insurance
Insurance that pays fixed cash benefits for specified covered events, services or periods of care according to the policy. Fixed indemnity coverage is generally considered supplemental coverage and is not a substitute for comprehensive major medical insurance.
Formulary
The list of prescription drugs covered by a health plan. Drugs are often placed into different cost-sharing tiers.
Flexible Spending Account (FSA)
An employer-sponsored account that allows eligible employees to use pre-tax money for certain qualified health care expenses. FSAs have federal rules regarding contributions and unused funds.
Fully Insured Group Health Plan
An employer health plan in which the employer pays premiums to an insurance company and the insurance company assumes the financial risk for covered member claims.
G
Gold Health Plan
A Marketplace metal category that generally has higher monthly premiums and lower cost sharing when members receive care than Bronze plans. Metal categories describe cost sharing, not quality of medical care.
Grace Period
A limited period after a premium is due during which coverage may remain in force even though the payment has not yet been received. Rules vary by type of coverage and circumstances.
Group Health Insurance
Health coverage offered through an employer or other eligible group to employees or members and, when allowed, their dependents. Learn about small business health coverage.
Guaranteed Issue
A requirement or policy provision under which eligible applicants cannot be denied coverage because of their health status. ACA-compliant individual major medical plans are guaranteed issue during valid enrollment periods.
Guaranteed Renewable
A policy provision or legal protection that generally allows coverage to be renewed as long as applicable requirements, including premium payments, are met. Exact renewal rights depend on the policy and type of coverage.
H
Health Care Sharing Program / Health Share
An arrangement in which members contribute money that may be used to help share eligible medical expenses. Health care sharing programs are not health insurance and payment of medical bills is not guaranteed in the same way as insurance benefits. Learn about health share programs.
Health Insurance
A contract under which an insurer agrees to pay some or all eligible health care costs according to the terms of the policy in exchange for premium payments. Explore health insurance options.
Health Insurance Marketplace
A service where individuals and families can compare and enroll in qualified health plans. The federal Marketplace is HealthCare.gov, while some states operate their own Marketplace.
Health Reimbursement Arrangement (HRA)
An employer-funded arrangement that reimburses eligible employees for certain qualified medical expenses up to amounts established by the employer and applicable federal rules.
Health Savings Account (HSA)
A tax-advantaged account available to certain eligible individuals enrolled in an HSA-qualified high deductible health plan. HSA money can be used for qualified medical expenses and generally remains with the account owner.
High Deductible Health Plan (HDHP)
A health plan meeting federal deductible and out-of-pocket requirements. An HSA-qualified HDHP is one requirement for most people who want to contribute to a Health Savings Account.
Health Maintenance Organization (HMO)
A health plan that typically uses a defined provider network and may require members to coordinate care through a primary care provider. Non-emergency out-of-network coverage is usually limited.
Hospital Indemnity Insurance
Supplemental insurance that pays fixed benefits for certain covered hospital events or periods of hospitalization according to the policy. It is not comprehensive major medical insurance.
I
Individual Coverage HRA (ICHRA)
An employer-funded Health Reimbursement Arrangement that can reimburse eligible employees for individual health insurance premiums and certain medical expenses. Employees generally must have qualifying individual health insurance or Medicare to participate.
In-Network
A doctor, hospital, pharmacy or other provider that has a contractual relationship with your health plan. Using in-network providers generally results in lower member costs.
Individual Health Insurance
Health insurance purchased by an individual or family rather than obtained through an employer-sponsored group health plan.
Inpatient Care
Medical care received when a patient is formally admitted to a hospital or other qualifying facility.
J
Job-Based Health Plan
Health insurance or health coverage offered to an employee through an employer. The employer may pay part of the premium.
L
Level-Funded Health Plan
A type of employer health plan that is generally structured as self-funded but uses predictable monthly payments to fund expected claims, administrative costs and stop-loss protection. The employer typically retains some claims risk.
Lifetime Limit
A maximum dollar amount a plan will pay over an insured person's lifetime for specified benefits. ACA rules prohibit lifetime dollar limits on essential health benefits for plans subject to those protections, but other benefits or coverage types may have limits.
Limited-Benefit Health Coverage
Coverage designed to pay for specific services, events or expenses rather than provide comprehensive major medical protection. Benefits and limits should be reviewed carefully.
M
Major Medical Insurance
Health insurance designed to cover a broad range of significant medical expenses such as physician services, hospital care and other covered medical treatment, subject to the policy's terms.
Marketplace
Another name for the Health Insurance Marketplace where eligible individuals and families can compare qualified health plans and determine whether they qualify for financial assistance.
Medicaid
A joint federal and state health coverage program for eligible people based on income and other requirements. Eligibility and benefits vary by state.
Medical Underwriting
The process of reviewing an applicant's health information when determining eligibility, pricing or coverage terms for insurance products that are legally permitted to use medical underwriting. ACA-compliant individual major medical plans do not use medical underwriting to deny coverage or price premiums based on health status.
Medically Necessary
Health care services or supplies that meet a health plan's standards for appropriate diagnosis or treatment of a medical condition. Plans may define medical necessity in their policy documents.
Metal Levels
The Bronze, Silver, Gold and Platinum categories used for Marketplace health plans. Metal levels reflect how costs are generally shared between the member and the plan, not the quality of doctors or medical care.
Minimum Essential Coverage (MEC)
A federal classification for certain types of health coverage. Examples can include many employer plans, Marketplace plans, Medicare, Medicaid and other qualifying coverage. It is different from the federal "minimum value" standard.
Minimum Value
A federal standard used to evaluate certain employer-sponsored health plans. Whether employer coverage provides minimum value can affect an employee's eligibility for Marketplace premium tax credits.
Modified Adjusted Gross Income (MAGI)
A federal income calculation used for determining eligibility for Marketplace premium tax credits and certain health programs. It is based on adjusted gross income with specific modifications.
N
Network / Provider Network
The doctors, hospitals, clinics, pharmacies and other providers that contract with a health insurance plan. Network size and geographic reach can significantly affect how easy it is to use your coverage.
Negotiated Rate
A price agreed upon between a health plan and an in-network medical provider for covered services. It may also be called a contracted rate or allowed amount.
No Surprises Act
A federal law that provides protections against certain unexpected out-of-network medical bills, including many emergency services and some services received at in-network facilities.
Non-ACA Coverage
An informal term sometimes used to describe coverage that is not ACA-compliant individual major medical insurance. Depending on the product, this can include short-term insurance, fixed indemnity coverage and other limited or supplemental arrangements. Benefits and consumer protections can differ significantly.
O
Open Enrollment Period
The yearly period when eligible consumers can generally enroll in or change individual Marketplace health insurance without needing a qualifying life event.
Out-of-Network
A provider that does not have a contract with your health plan. Depending on the plan, out-of-network services may cost more or may not be covered except in certain situations.
Out-of-Pocket Costs
Health care expenses you pay yourself, such as deductibles, copays and coinsurance, plus costs for services your plan does not cover.
Out-of-Pocket Maximum
The most you must pay during a plan year for covered services that count toward the plan's limit. After reaching it, the plan generally pays 100% of covered in-network benefits for the rest of that plan year. Premiums and many non-covered or out-of-network expenses usually do not count toward this limit.
P
Preferred Provider Organization (PPO)
A health plan that generally gives members access to a network of preferred providers and may also provide benefits for out-of-network care. Out-of-network care usually costs more, and exact benefits vary by plan.
Point of Service (POS) Plan
A health plan that combines features of HMO and PPO coverage. Members may need a primary care provider and referrals while still having some ability to use out-of-network providers, depending on the plan.
Pre-Existing Condition
A health condition that existed before new coverage began. ACA-compliant major medical plans cannot deny coverage or charge a higher premium because of a pre-existing condition. Other coverage types may follow different rules.
Premium
The amount paid to keep health insurance coverage active, usually charged monthly. The premium is separate from medical expenses such as deductibles, copays and coinsurance.
Premium Tax Credit (PTC)
A federal tax credit available to eligible consumers that can reduce the cost of qualified health insurance purchased through the Marketplace. Eligibility is based on household information, income and other available coverage.
Preventive Care
Health care intended to prevent illness or identify health problems early, such as certain screenings, vaccinations and preventive checkups. ACA-compliant plans generally cover specified preventive services without member cost sharing when requirements are met.
Primary Care Provider (PCP)
A doctor or other medical professional who provides routine health care and may coordinate treatment with specialists. Some health plans require members to select a PCP.
Prior Authorization
Approval a health plan may require before certain medications, procedures, treatments or services will be covered. Approval does not necessarily guarantee payment because other plan requirements may still apply.
Prescription Drug Tier
A category used by a health plan's formulary to determine member costs for medications. Generic, preferred brand, non-preferred and specialty medications may be placed in different tiers.
Q
Qualified Health Plan (QHP)
A health insurance plan certified to meet applicable Marketplace requirements and offered through a Health Insurance Marketplace.
Qualifying Life Event (QLE)
A life change that may make you eligible for a Special Enrollment Period outside regular Open Enrollment. Examples can include losing qualifying health coverage, getting married, having a baby or certain changes in residence.
Qualified Small Employer HRA (QSEHRA)
A Health Reimbursement Arrangement available to certain eligible small employers that meet federal requirements. It can reimburse employees for qualifying individual health insurance premiums and medical expenses up to applicable limits.
R
Referral
Authorization or direction from a primary care provider to receive care from a specialist. Some health plans require referrals while others do not.
Renewal
The continuation of an insurance policy into a new coverage period. Premiums, networks, benefits and other plan terms may change at renewal depending on the coverage.
Rider
An attachment or amendment that changes, adds or limits certain terms or benefits of an insurance policy.
S
Self-Funded Health Plan
An employer health plan in which the employer assumes financial responsibility for employee medical claims rather than transferring all claim risk to a health insurance company.
Special Enrollment Period (SEP)
A period outside regular Open Enrollment when an eligible person may enroll in Marketplace coverage because of a qualifying life event or another qualifying circumstance.
Short-Term Limited-Duration Insurance
Temporary health insurance designed primarily to help fill certain gaps between other coverage. Short-term insurance is generally not subject to all ACA individual-market requirements, and coverage for pre-existing conditions and other benefits may be limited. Availability and duration vary by state and current law. Learn about short-term coverage.
Silver Health Plan
One of the Marketplace metal categories. Silver plans occupy the middle of the standard Bronze, Silver, Gold and Platinum cost-sharing structure and are the category used for eligible consumers receiving cost-sharing reductions.
Specialist
A medical provider who focuses on a particular area of medicine, such as cardiology, dermatology, oncology or orthopedics.
Specialty Drug
A prescription medication that may be used for complex or chronic conditions and may require special handling, monitoring, prior authorization or use of a specialty pharmacy.
Step Therapy
A prescription drug requirement under which a member may need to try one medication before the plan will cover another, typically more expensive, medication.
Stop-Loss Insurance
Insurance purchased by a self-funded employer or health plan to limit financial exposure when individual or total claims exceed specified thresholds. It generally protects the employer or plan rather than directly insuring employees.
Subsidy
An informal term often used for financial assistance that lowers Marketplace health insurance costs. Assistance may include premium tax credits and, for eligible consumers, cost-sharing reductions.
Summary of Benefits and Coverage (SBC)
A standardized document designed to help consumers understand and compare health plan benefits, costs, exclusions and coverage examples.
Supplemental Health Insurance
Additional insurance designed to provide benefits beyond a primary health plan. Examples can include accident, critical illness and hospital indemnity policies. Supplemental coverage does not necessarily replace comprehensive health insurance. Learn about supplemental coverage.
T
Telehealth / Telemedicine
Health care delivered remotely through phone, video or other technology. Services available through telemedicine depend on the provider, health plan and state rules. Learn about telemedicine.
Third-Party Administrator (TPA)
A company that performs administrative services for a health plan, such as processing claims, maintaining eligibility records or providing other plan administration. TPAs are commonly used with self-funded plans.
U
Underwriting
The process an insurance company uses to evaluate an application and determine eligibility, pricing or policy terms when the type of insurance is legally permitted to use underwriting.
Urgent Care
Medical care for conditions that need prompt attention but are generally not severe enough to require a hospital emergency room. Network rules and member cost sharing vary by plan.
V
Vision Insurance
Coverage designed to help pay for certain eye exams, glasses, contact lenses or other covered vision services according to the plan.
W
Waiting Period
A period that must pass before certain coverage or benefits become available. Waiting periods vary by type of insurance, benefit and plan.
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