A Glossary of Health Insurance Terms

A

• Affordable Care Act (ACA): This law helps more U.S. citizens get healthcare and lowers care costs.
• Allowed amount: This is the maximum amount a healthcare professional can charge for covered services. You may need to pay the difference if your healthcare professional charges more than the allowed amount. This may also be called the:
  • eligible expense
  • payment allowance
  • negotiated rate
• Annual limit: This is the total amount your health plan can pay for covered care in 1 year.
• Appeal: This is a request for your health insurer or plan to review a decision that denies part or all of a payment or benefit.

B

• Balance billing: This is when a healthcare professional bills you for the difference between the allowed amount and the healthcare professional’s charge.
• Benefits: These are the healthcare services that your health insurance plan covers.

C

• Catastrophic plan: You may be eligible for this plan type if you’re under 30 years old and qualify for a hardship or affordability exemption.
• Coinsurance: This is the share of healthcare costs you must pay. It’s usually calculable as a percentage. Generally, you pay coinsurance plus any deductibles your plan requires.
• Claim: A request you or your healthcare professional makes to your insurer to cover services or items you believe need coverage.
• Complications of pregnancy: These are conditions due to pregnancy, labor, and delivery that require medical care to prevent harm to your health or that of the fetus. Morning sickness and nonemergency cesarean delivery generally aren’t complications.
• Copayment: This is a fixed amount you pay for covered healthcare services. Generally, you make this payment at the time of service, and the amount can vary depending on the type of service provided.
• Cost sharing: This is sometimes called out-of-pocket costs. It’s your share of the costs of services that a plan covers. You must pay this amount out of pocket. Examples include:
  • coinsurance
  • copayment
  • deductible
• Cost-sharing reductions: These are discounts that can reduce the amount you pay for certain services covered by an individual plan you purchase through the Marketplace. You may receive discounts if your income falls below a certain level, you choose a Silver level care plan, or you belong to a recognized tribe, including being a shareholder in an Alaska Native Claims Settlement Act corporation.

D

• Deductible: This is an amount you owe, typically annually, for covered healthcare services before your insurance plan pays. An overall deductible applies to all or most covered items and services. However, a plan may also have only separate deductibles.
• Diagnostic test: These are tests that help a healthcare professional diagnose health issues you may have, such as X-rays.
• Durable medical equipment (DME): It’s equipment or supplies that a healthcare professional deems medically necessary for everyday or extended use. DME may include:
  • wheelchairs
  • crutches
  • oxygen equipment

E

• Effective date: This is the date, month, and year that your health insurance coverage begins.
• Emergency medical condition: This is an injury, illness, symptom, or condition that’s severe enough to risk serious harm to your health if you don’t receive medical attention quickly. If you don’t receive medical attention, you could potentially expect one of the following serious effects:
  • harm to your health
  • issues with bodily functions
  • damage to any organ or part of your body
• Emergency medical transportation: This involves ambulance services for an emergency medical condition. Types of transportation may include air, land, or sea. Your plan may pay less for certain types of transportation or may not cover all types.
• Emergency room care: This involves the emergency services you receive in an emergency room.
• Emergency services: These include evaluating an emergency medical condition and any treatment to prevent the condition from worsening.
• Employer shared responsibility payments (ESRP): These are taxes that an employer with 50 or more full-time workers must pay if the health coverage it offers doesn’t meet the basic care standards set by the ACA.
• Essential health benefits: These are a set of 10 categories that health insurance plans must cover under the ACA. They may include the following benefits, among others:
  • inpatient and outpatient hospital care
  • doctors’ services
  • prescription drug coverage
  • mental health services
  • pregnancy and childbirth
• Excluded services: These are any healthcare services that your insurance plan doesn’t pay for or cover.
• Explanation of benefits (EOB): This is a statement that shows the total charges for a visit to a healthcare professional or other healthcare provider. It helps you better understand what your plan covers and what to expect to pay when you receive a bill.

F

• Formulary: This is a list of prescription drugs that your health insurance plan covers. Your plan may divide covered drugs into different cost-sharing levels or tiers. The formulary may or may not include your share for each covered drug.

G

• Generic drugs: These medications work the same as brand-name drugs and must meet the same high standards to receive approval from the Food and Drug Administration (FDA). Generic drugs often cost less than brand-name drugs.
• Grievance: This is a complaint you give to your health insurance provider or plan.
• Guaranteed issue: This is a requirement under the ACA that health insurance plans must permit you to enroll regardless of age, gender, health status, or other factors that might predict your use of healthcare services. However, not all states limit the number of charges you may receive if you enroll.

H

• Habilitation services: These are healthcare services that help you keep, learn, or improve skills and functions for daily living. These services may include:
  • physical therapy
  • occupational therapy
  • speech-language pathology
  • other services for people with disabilities
• Health insurance: This is a contract that requires your health insurer to pay some or all of your healthcare costs in exchange for a premium. This may also be known as a policy or a plan.
• Home healthcare: This involves healthcare services you receive at home. These services don’t generally include nonmedical tasks, such as cooking, cleaning, or driving.
• Hospice services: These are services provided for comfort and support in the last stages of a terminal illness for you and your family.
• Hospitalization: This is care that you receive in a hospital as an inpatient that typically requires an overnight stay. However, some plans may consider an overnight stay for observation as outpatient care instead of inpatient care.
• Hospital outpatient care: This is care you receive in a hospital that doesn’t require an overnight stay.

I

• Individual responsibility requirement: This is sometimes called the individual mandate. It’s the duty you may have to enroll in health coverage that provides the minimum essential coverage. If your plan doesn’t provide this coverage, you may have to pay a penalty with your federal taxes unless you qualify for a health coverage exemption.
• In-network: This is a list of doctors, hospitals, and other healthcare providers who work with your insurance plan to offer you care at the best possible prices.
• In-network coinsurance: This is your percentage of the total cost for covered healthcare services. Typically, you’ll pay less for using in-network services and providers.
• In-network copayment: This is a fixed amount you pay for covered healthcare services. Typically, you pay this to the provider at the time of service and pay a lower copayment amount for in-network services and providers.

M

• Marketplace: This is also known as the Exchange. In some states, the state runs the Marketplace. In others, the federal government runs it. The Marketplace is a website that allows you to:
  • learn about plan options
  • compare plans based on costs, benefits, and other important features
  • apply for financial help with premiums and cost sharing based on your income
  • choose a plan and enroll in coverage
• Maximum out-of-pocket limit: This is a yearly amount set by the federal government that’s the maximum amount you or your family may need to pay for cost sharing during the plan year for covered, in-network services. This amount may be higher than the stated out-of-pocket limits for your plan.
• Medicaid: This is a federal program that offers low or no-cost health plans for people in low income households, families and children, pregnant people, and people with certain chronic disabilities.
• Medicare: This is a federal health insurance program that offers coverage to certain groups. Typically, these groups include people 65 years or older, people with certain disabilities, and those with amyotrophic lateral sclerosis (ALS) or end stage renal disease (ESRD).
• Medically necessary: This involves healthcare services or supplies that are necessary to prevent, treat, or diagnose an illness, injury, or its symptoms and that meet the accepted standards of medicine.
• Minimum essential coverage: This is health coverage that meets the individual responsibility requirement. It includes health insurance from the Marketplace, other individual market polices, Medicare, Medicaid, and certain other types of coverage.
• Minimum value standard: This is a basic standard to measure the percentage of permitted costs that the plan covers.

N

• Network: This is the healthcare professionals, facilities, and suppliers that your health insurance plan contracts with to provide healthcare services.
• Non-covered services: These are services that your health insurance plan doesn’t pay for or cover.
• Non-preferred providers (out-of-network providers): These are providers that doesn’t contract with your health insurance plan to provide services. Generally, you’ll pay more to visit a non-preferred provider.

O

• Open enrollment period: This is a limited period of time once each year when you can join a health insurance plan.
• Out-of-network coinsurance: This is your percentage of the allowed amount for covered healthcare services from providers who don’t contract with your health insurance plan. This amount is usually higher than that of in-network coinsurance.
• Out-of-network copayment: This is a fixed amount you pay for covered healthcare services to providers who don’t contract with your health insurance plan. Typically, this amount is higher than copayments for in-network providers.

P

• Physician services: These are healthcare services that a licensed medical physician, such as a Medical Doctor (MD), Doctor of Osteopathic Medicine (DO), coordinates or provides.
• Preauthorization: This is sometimes called prior authorization, prior approval, or pre-certification. It’s a decision by your health insurance plan that a healthcare service, prescription drug, treatment, or DME is medically necessary. Your health insurance plan may require preauthorization for certain services.
• Preferred provider (network provider): This is a provider that has a contract with your health insurance plan to provide you with services at a discounted price.
• Premium: This is the amount you must pay to use your healthcare insurance. You or your employer will generally pay this monthly, quarterly, or annually.
• Premium tax credits: These provide financial help that lowers your taxes to help you pay for private health insurance. You can qualify for these if you get health insurance through the Marketplace and your income is below a certain limit.
• Prescription drug coverage: This is coverage under your health insurance plan that helps pay for your prescription drugs.
• Prescription drugs: These are drugs and medications that are only available with a prescription from a healthcare professional.
• Preventive care (services): This is routine care, screenings, counseling, and checkups that can help prevent or discover disease, illness, or other health problems.
• Provider: This is an individual or facility that provides healthcare services.

R

• Reconstructive surgery: This is surgery and any follow-up treatment required to improve or correct a part of your body due to an accident, injury, birth irregularity, or medical condition.
• Referral: This is a written order from your primary care physician for you to get certain healthcare services or see a specialist. In certain health insurance plans, you must have a referral before you get healthcare services from anyone besides your primary care physician, or your plan won’t pay for the services.
• Rehabilitation services: These are healthcare services that can help you keep, get back, or improve skills and functions for daily living that you may have lost or had impaired due to illness, injury, or disability. Rehabilitation services may include:
  • physical therapy
  • occupational therapy
  • speech-language pathology
  • psychiatric rehabilitation services, either inpatient or outpatient

S

• Screening: This is a type of preventive care that involves exams or tests to detect the presence of something. A healthcare professional usually does this when you’re not experiencing any symptoms, signs, or prevailing medical history of an illness or condition.
• Skilled nursing care: This involves services performed by a licensed nurse in your home or a nursing home.
• Specialist: This is a healthcare professional who focuses on a specific group of people or area of medicine to diagnose, manage, prevent, or treat certain symptoms or conditions.
• Specialty drug: This is a type of prescription medication that typically requires specialty handling or ongoing assessment and monitoring by a healthcare professional, or may be difficult to dispense. These types of prescription drugs are usually the most expensive on a plan’s formulary.
• Summary of Benefits and Coverage (SBC): This easy-to-read summary allows you to compare the cost and coverage of different plans. You can receive an SBC when you shop for a health insurance plan on your own or through your work, renew or change your coverage, or request one from a specific company.

U

• Usual, customary, and reasonable (UCR): This is the amount paid for a medical service in a certain geographical area, based on what healthcare providers in the area typically charge for the same or similar services. The UCR can sometimes help determine the allowed amount from insurance plans.
• Urgent care: This is care for an injury, illness, or condition that may be serious enough to get care right away, but it’s not severe enough to require care in an emergency room.

W

• Waiting period: This is a time period before your health insurance goes into effect for you and any dependents when you receive coverage through your work.

Takeaway

Understanding some commonly used words and phrases can help you navigate the world of health insurance more easily.