Common health insurance terms: A glossary

# | A | B | C | D | E | F | G | H | I | L | N | O | P | Q | R | S | T | U | V

Form 1095 is a series of Internal Revenue Service (IRS) forms used to report information about your health insurance coverage. 1095-A, 1095-B and 1095-C forms are issued each year.

See “Premium tax credit (PTC)”

See “Premium tax credit (PTC)”

The maximum price your plan has set for a covered service (also known as payment allowance or negotiated rate). The allowed amount may be paid by you (via deductibles, coinsurances or copays), your insurer or a combination of both.

For in-network care, health care providers in your network agree to accept the allowed amount as payment in full for a service. This is due to negotiated discounts your insurer arranged. If a provider in your network charges more for a service than your plan’s allowed amount, your provider won’t be reimbursed by your insurer and can’t bill you for it (see “Provider responsibility”).

For out-of-network care, the allowed amount is instead typically based on the usual and customary charges for the service. Depending on the care you get, it’s possible your out-of-network provider may be able to bill you for the difference between the allowed amount and what they charged (see “Balance billing”).

The maximum amount your health insurance will pay for certain services. Some plans cap what they will pay for certain services within a calendar year, such as dental care or chiropractic visits. Not every service has an annual limit.

A request for a health insurance carrier to change a coverage-related decision. If you think your carrier made an incorrect decision or you want a re-evaluation of whether a procedure or medicine should be covered by your plan, you can file an appeal with your carrier for a full and fair review.

When an out-of-network provider bills you for the remaining cost of a service after your insurance has already paid. Because out-of-network providers haven’t signed a contract with your health plan, there’s no pre-established amount they’ve agreed to accept as payment for a service (see “Allowed amount”). In these situations, your plan will pay for usual and customary charges, according to any out-of-network coverage you have for the service. The provider may then bill you for the remaining balance – otherwise known as balance billing.

Amounts you pay toward balance billing don’t count toward your deductible or out-of-pocket maximum. You have certain rights and protections against surprise medical bills.

Patented medicines or drugs released by a manufacturer under trademarked names. After a drug’s patent expires, other companies can make medicines using the same formula (see “Generic medicines”). Brand-name medicines tend to be more expensive than generic medicines.

See “Covered benefit”

A network that includes a larger geographical area and more providers. A health plan with a broad network generally gives you more health care options to choose from.

A type of individual and family health insurance plan where your carrier pays about 60% of your costs and you pay the remaining 40%. These plans usually have lower monthly premiums. But when you need care, you’ll usually pay more than you would with other plans (see “Gold plan” and “Silver plan”).

A type of individual and family health insurance plan, usually for people under 30 years old, that have the lowest monthly premiums and highest yearly deductibles. These plans provide a very basic level of insurance protection.

A formal request for a service to be paid for by your insurance. A medical claim is an invoice (or bill) submitted to your health insurance company after you receive care. Most claims are generated and submitted automatically by your provider, but if you use an out-of-network provider, you may have to submit a claim yourself. Claims typically include details of your visit, including the date, provider information, services administered and more.

Your share of the cost for covered care after you’ve paid your deductible. Coinsurance is expressed as a percentage of the total cost of care you’re responsible for, while your insurer pays the rest. Coinsurance only applies after you’ve paid your plan’s deductible (if your plan has one).

For example, let’s say the allowed amounts for all services to treat an injured wrist add up to $500. If you’ve already paid your plan’s deductible this year, and the services are covered under 20% coinsurance, you can expect a bill for $100 (20% of $500). Your plan takes care of the rest.

All amounts you pay toward your coinsurance also count toward your out-of-pocket maximum.

A concern or grievance you have about your insurance. A complaint can be about your care or coverage, the service you received or how timely you received it.

The legal agreement between you and your health insurer regarding your plan. This official document includes all the details and “fine print” about your health insurance plan, your rights and responsibilities, what’s covered and not covered, and much more. A contract may also be referred to as a Summary Plan Description (SPD).

See “Secondary insurance”

A flat fee you pay for covered care. Depending on the service and your plan’s coverage, copays may apply before or after meeting your deductible (if your plan has one). If you have to pay a copay before meeting your plan’s deductible, it may not count toward your deductible. However, all amounts you pay toward your copays do count toward your out-of-pocket maximum.

How covered care is paid for between you and your insurance company. Cost sharing describes the way your care costs are split. It includes what you pay toward your deductible, coinsurance, copays and out-of-pocket maximum.

A health service or product that is paid for partially or entirely by your health plan. A doctor’s office visit, lab work and a walking cast for a broken foot are all examples of care that often qualify as covered benefits – or simply, “covered” – under a health plan. For example, preventive services are 100% covered at no cost to you when you see an in-network provider.

What you pay for all covered care before your plan starts to help pay. For example, if your deductible is $800, your plan won’t start helping pay for your covered care until you’ve paid $800 toward that care. Deductibles reset at the end of each plan year. Premiums don’t count toward your deductible.

Even if you must first pay a deductible, you still benefit from the discounts your insurer negotiates with providers on your behalf (see “Negotiated discount”). In addition, most plans help pay for some care before your deductible, such as preventive services or prescription drugs. All amounts you pay toward your deductible also count toward your out-of-pocket maximum.

A member of your household who’s eligible for covered benefits under the policyholder’s health insurance. Health insurance plans often allow policyholders to extend coverage to members of their household, typically family, for an additional premium. These dependents are then eligible for covered benefits under the plan.

See “Formulary”

What you pay for a dependent’s covered care before your plan starts to help pay. If your health insurance plan includes dependents, you may have multiple deductibles you have to meet before your plan starts to help pay: one for each dependent and one for everyone on the plan combined (see “Deductible”). The amount for an individual is called their embedded deductible.

Embedded deductibles can save you money if some dependents on your plan have higher medical costs than you or your other dependents. This is because once you’ve paid a dependent’s embedded deductible, your plan will start to help pay for that dependent’s care, even if the deductible for you and all your dependents combined hasn’t been paid yet. In addition, once the deductible for you and all your dependents combined has been paid, your plan will start to help pay for everyone’s care, even if you or your dependents haven’t reached your own embedded deductibles yet.

A type of private health insurance plan that’s offered through your work. Your employer helps cover much of the cost of these plans as part of your employee benefits.

A statement from your insurance company outlining care you received, what your insurance company paid for it under your plan and any remaining amounts you’re responsible for paying. Explanations of Benefits are usually mailed or delivered electronically after a doctor or hospital visit, lab, or medication refill. EOBs have line-by-line details of the care and services you received as well as their costs. Your EOBs will also list what amount was covered by your plan, why that amount was paid and any amounts you’re responsible for.

An EOB is not a bill, and you do not pay your insurance company for the care you received. Instead, you’ll receive a bill from your provider for the amount your EOB shows you’re responsible for paying.

A type of health insurance plan that typically includes a narrow network of providers, doesn’t require a PCP, doesn’t require referrals and doesn’t include out-of-network coverage. In an EPO, you typically don’t need to have a PCP, and you don’t need a referral to see any provider in your network. Out-of-network care is usually not covered (except for emergencies). EPOs help reduce health plan costs.

Services that aren’t covered by your health insurance plan. These are usually detailed in your insurance plan’s documents.

See “Deductible”

A way that health care providers are reimbursed by health insurance plans. When providers are paid on a fee-for-service basis, your health plan pays the provider an amount that corresponds to the type of service they provide, such as lab tests or doctor visits.

Pretax money you can set aside to pay for eligible health care expenses. If your employer offers them, you can open different types of flexible savings accounts (FSAs) and contribute money toward them to help you save for things like medical expenses, vision care and dental care you have to pay for out of pocket (including deductibles, coinsurance and copays). FSA money you don’t spend may be lost at the end of the year.

The list of medications covered by your health plan. Every health plan with prescription drug coverage has a formulary (also known as an approved drug list) that includes medications covered by the plan, plus any particular rules or limits on that coverage. Your health plan’s formulary often includes generic alternatives to brand-name drugs (See “Brand-name medicines” and “Generic medicines”).

A type of health insurance through an employer where the employer purchases a group insurance plan for its employees. The health insurance company processes the plan’s claims and pays the claim expenses.

Unbranded versions of brand-name medicines, made with the same active ingredients. After a drug’s patent expires, other companies can make medicines using the same formula (see “Brand-name medicines”). Generic medicines tend to be less expensive than, but just as effective as, brand-name medicines.

A type of individual and family health insurance plan where your carrier pays around 80% or more of your costs and you pay the remaining 20% or less. These plans usually have higher monthly premiums. But when you need care, you’ll usually pay less than you would with other plans (see “Bronze plan” and “Silver plan”).

See “Complaint”

See “Health insurance marketplace”

A health insurance marketplace is a public website where you can shop for individual and family health insurance plans in your state. You can compare the prices, quality and benefits of many health plans in one place. Some states set up their own health insurance marketplaces, like Minnesota with MNsure . Other states use the federal marketplace, like Wisconsin with HealthCare.gov .

Pretax money your employer gives you to pay for health care expenses. Your employer determines which health care expenses are eligible for reimbursement under your health reimbursement account (HRA). You can’t contribute your own money toward an HRA. HRA money you don’t spend may be lost at the end of the year.

Pretax money you can use to pay for health care expenses. If you have a high-deductible health plan, you can open a health savings account (HSA) and contribute pretax money toward it to save for things like medical expenses, vision care and dental care you have to pay for out of pocket (including deductibles, coinsurance and copays). HSA money is yours forever.

A health plan with a lower premium and higher deductible. If you have a high-deductible health plan (HDHP), you can open a health savings account (HSA) to help with medical expenses you must pay before you reach your deductible. The criteria for what’s considered an HDHP varies each year.

A type of health insurance plan that typically includes a narrow network of providers, requires a PCP, requires referrals and doesn’t include out-of-network coverage. In a Health Maintenance Organization (HMO), you typically need to have a PCP, and you must get referrals from your PCP for specialty or other care before it can be covered. Out-of-network care is usually not covered (except for emergencies). HMOs help reduce health plan costs.

See “Embedded deductible”

See “Network”

A spending account that can help you pay for eligible expenses to improve your physical, mental and financial health. A Lifestyle Spending Account (LSA) is completely funded by your employer and helps you pay for helpful things that health insurance usually doesn’t cover. Eligible expenses can vary but usually cover items and services to help with your physical, financial and emotional well-being.

A health plan with a more limited network. With a narrow network, the amount of in-network providers available to you is smaller. However, plans with narrow networks also tend to have lower costs.

The arrangement between your insurance company and in-network providers to save you money. Health insurance companies negotiate discounted rates with in-network providers to help their members save money. Buying things in bulk reduces cost – this is one of the most important benefits of having health insurance. Negotiated discounts result in allowed amounts (see “Allowed amount”).

See “Allowed amount”

Health care providers with which your health insurance plan has established negotiated discounts. All health plans carefully evaluate the quality of health care providers and make special price arrangements with those they want to make easily accessible to their members. All together, these providers are called a plan’s “network”; specific providers are then said to be “in network.”

Different plans from the same insurance company often use different networks. It’s always a good idea to confirm that your providers are in your particular plan’s network before getting care.

By seeing doctors and receiving services in your plan’s network, you can take better advantage of your insurance plan’s benefits (see “Out of network”).

A health plan that doesn’t have a deductible. With a no-deductible health plan, you only pay a copay or coinsurance when you get care. Sometimes this kind of plan is called zero-deductible health insurance or $0 health insurance.

An annual opportunity for you to sign up for or change your health insurance plan for any reason. Depending on your plan, open enrollment usually occurs during the fall so you can select a plan for the upcoming calendar year.

Health care providers not included in your health plan’s network. If you get care from an out-of-network provider, you’ll likely pay more than from an in-network provider. Some plans don’t cover any out-of-network care at all (except for emergencies).

Health care costs you’re responsible for paying as part of your plan. These include deductibles, coinsurance and copays. Your out-of-pocket costs count toward your out-of-pocket maximum. Premiums generally aren’t considered out-of-pocket costs, even though you pay them to maintain your plan’s coverage.

The most you’ll pay for all covered care under your plan. Once you’ve paid enough to reach your plan’s out-of-pocket maximum, your plan will pay 100% of any other covered care for the rest of your plan year. Out-of-pocket maximums reset at the end of each plan year.

All amounts you pay toward your deductible, coinsurance and copays count toward your out-of-pocket maximum. Premiums don’t count toward your out-of-pocket maximum.

See “Allowed amount”

The money your plan paid to your provider for your care or services. This amount on your Explanation of Benefits (EOB) shows how much your provider was paid directly for your care. This amount can be affected by things like the type of care or service you got, whether your provider was in network or not, how much you’ve paid toward your plan’s deductible and out-of-pocket maximum, whether any coinsurance or copay applies to your care or service, and more.

A type of health insurance plan that typically includes a narrow network of providers, requires a PCP, requires referrals and includes out-of-network coverage. In a POS plan, you typically need to have a PCP, and you must get referrals from your PCP for specialty or other care before it can be covered. Out-of-network care may be covered, but less favorably than in-network care. POS plans help reduce health plan costs.

The primary person listed on a health insurance plan. As a policyholder, you’re the primary beneficiary of your plan, but you may be able to add dependents (see “Dependent”).

Pre-approval from your health plan for care or medicine your insurance may not cover otherwise. Many plans won’t cover certain services and medicines unless your doctor first gets pre-authorization. Pre-authorization helps your insurer make sure you’re getting evidence-based, medically necessary care.

A type of health insurance plan that typically includes a wide network of providers, doesn’t require a PCP, doesn’t require referrals and includes out-of-network coverage. In a Preferred Provider Organization (PPO), you typically don’t need to have a PCP, and you don’t need a referral to see any provider in your network. Out-of-network care may be covered, but less favorably than in-network care.

See “Network”

The set amount you pay for your health plan each month or each pay period. Whether you use your plan or not, you must pay your premium to retain your health plan. Depending on your plan, you might pay your premium automatically from your paycheck at work, or you might pay it directly to an insurance company. Premium payments don’t count toward your deductible or out-of-pocket maximum.

Financial help to help lower the cost of plans available on your state’s health insurance marketplace. If you’re eligible, you can use these health insurance subsidies either to reduce the amount you pay for your plan’s premium each month or to get more money back when you file your federal taxes.

When your plan includes coverage for medications prescribed by a health care professional. Many health plans include prescription drug coverage as part of their covered benefits. The prescriptions that are covered by your plan can be found in your plan’s formulary.

A health expert, such as a family medicine or internal medicine doctor, trained to treat nearly all ages of patients for a wide range of health conditions. These doctors are usually the first health care professionals you talk to when you have a health issue.

It’s a good idea to choose a regular primary care physician for you and your family so they can get familiar with your unique health and well-being over time. Some insurance plans, such as HMOs and POS plans, require you to select a PCP.

The insurance that pays first for a covered service. Primary insurance is the insurance plan that’s billed first when you receive medical or dental care.

For most services, your primary insurance would be your health insurance plan. However, many people are covered by multiple insurance plans, and in certain circumstances another type of insurance should pay first for your health care. For example, if you’re injured in a car accident, your auto insurance might pay primary and your health insurance might pay secondary to help with any costs not covered by your auto insurance (See “Secondary insurance”).

Confirmation from your health plan that a procedure or service will be covered. Doctors often submit prior authorization requests on your behalf to determine if your plan will cover care that’s normally a covered benefit. Prior authorization helps your insurer make sure you’re getting evidence-based, medically necessary care.

Health insurance managed by a private company. Types of private health insurance include health insurance through work, through the health insurance marketplace or directly from an insurance company.

Health insurance managed by the government. Types of public health insurance include Medicaid (a state-run program for people with lower incomes) or Medicare (a federal program people who are at least 65 years old or who have certain health conditions).

A general term for doctors, specialists and other health care professionals. Locations where providers work – such as clinics, specialty centers and hospitals – are also often referred to as providers. Depending on your plan, a specific provider may be in network or out of network (See “Network” and “Out of network”).

The amount your provider charged for a service in excess of your plan’s allowed amount. Generally, when seeing an in-network provider, you can’t be billed for the provider responsibility unless you agreed to it beforehand. However, if you see an out-of-network provider for non-emergency services, your provider may be allowed to bill you for the provider responsibility amount (see “Balance billing”).

A qualified health plan (QHP) is a type of health insurance plan that’s certified by a health insurance marketplace. All QHPs meet the Affordable Care Act's requirements for health coverage, so enrollees know they're getting a plan that meets national standards.

When your doctor sends you to a different doctor, often a specialist, for a specific condition or service. If a doctor determines that you need a higher or more specialized level of care or treatment than they can provide, they may refer you to another provider.

Some insurance plans, like HMOs and POS plans, require a referral from a PCP before specialty or other care will be covered. Other insurance plans don’t require a referral before covering specialty or other care. It’s best to review your plan documents to see which coverage (if any) requires a referral first.

You’ll also want to check if the doctor or specialist you’re referred to is part of your plan’s network. If you’re referred to an out-of-network provider, it’s important to understand how out-of-network care will be covered under your plan (if at all). Referrals do not guarantee in-network coverage from your insurer.

The insurance that pays second when a service is covered by multiple insurance plans. Secondary insurance is the insurance plan that’s billed second when you receive medical or dental care. Examples of secondary insurance include another health insurance plan you’re a beneficiary of, or voluntary or supplemental coverage you bought to extend your coverage.

If you have secondary insurance, it’s important to respond to any coordination of benefits (COB) requests from your insurance companies. COB processes help your insurers determine which insurance is primary and which is secondary in order to pay your claims.

A type of health insurance through an employer where the employer delegates administration of its group insurance plan to a third-party administrator. The third-party administrator processes your plan’s claims, but your employer pays claim expenses.

A type of individual and family health insurance plan where your carrier pays about 70% of your costs and you pay the remaining 30%. These plans usually have moderate monthly premiums. When you need care, you’ll also usually pay a moderate amount (see “Bronze plan” and “Gold plan”).

An opportunity for you to sign up for or change your health insurance plan outside of open enrollment. SEPs are usually triggered by qualifying life events, such as changes in your job status, family status or residence.

An overview of information about your plan’s covered benefits. All SBCs from all insurers contain the same information in the same format, including deductibles, coinsurances and copays. That makes it easier to use SBCs to compare different plans.

Because they’re meant to be overviews, SBCs are much shorter than contracts and summary plan descriptions (SPDs). In the unusual case of a discrepancy between an SBC and a plan’s contract or SPD, the contract or SPD would be correct.

See “Contract”

When you receive an unexpected balance bill. See “Balance billing.” You have certain rights and protections against surprise medical bills.

How plans, covered benefits or in-network providers are sometimes organized. For example, a gold plan might be considered to be in a higher tier than a silver plan because gold plans have lower deductibles. Medications under your prescription drug coverage might be sorted into four or five different tiers that each have their own copay or coinsurance amounts, from low to high. And in-network providers might be split into two or three different tiers with lower or higher primary care copays. Tiers can help you more quickly understand and compare relative levels of coverage.

The price your plan has set for a covered service based on what health care providers in the same geographic area usually charge for the same or similar service. These are also known as usual, customary and reasonable (UCR) fees.

When you get out-of-network care, your insurer doesn’t have a contract with your provider, so your insurer hasn’t negotiated discounts with your provider. Usual and customary charges are then relied on to help determine what the allowed amount should be for your care. In most cases, the usual and customary charges amount is set as the allowed amount.

For example, let’s say 99 clinics charge $150-$200 for a type of X-ray in the area where you live, while one clinic charges $5,000. Since the typical fair market rate for this type of X-ray is $150-$200, your insurer considers that the usual and customary charge for the service, and they’ll set $150-200 as the allowed amount for out-of-network care.

If you have out-of-network coverage with your plan, the allowed amount for out-of-network care may be paid by you (via deductibles, coinsurances or copays), your insurer or a combination of both. However, depending on the care you get, your out-of-network provider may be able to bill you for the difference between the allowed amount and what they charged (see “Balance billing”).

If you don’t have out-of-network coverage with your plan, usual and customary charges don’t apply, and you’ll be responsible for the full cost of what your provider charged (except for emergencies).

Value-based pricing for covered care. Variable copay plans change your copay amounts based on things like the providers you choose, the quality of their care and how much their care costs. These plans often have no deductible and no coinsurance for in-network care. Plus, whenever you need care, it’s common to be able to look up what you’ll pay ahead of time.