Insurance words, decoded
A
- Accident insurance
- A supplemental plan that pays you a set cash amount after a covered injury. You can use it for deductibles and copays or for everyday bills while you heal.
- Actuarial value
- The share of average medical costs a plan is designed to pay. A plan with a 70% actuarial value covers about 70% of typical costs, and you pay the remaining 30% through deductibles, copays and coinsurance.
- A higher number means the plan pays more; a lower number means you pay more when you get care.
- Advanced premium tax credit (APTC)
- Financial help from the federal government that reduces your monthly Marketplace premium. It is based on household income and size and is usually paid straight to your insurer each month, then reconciled on your tax return.
- Affordable Care Act (ACA)
- The 2010 federal law that shapes today's individual health insurance. It protects people with health conditions, requires plans to cover essential benefits including preventive care, and created the Marketplace where individual plans are sold.
- Agent
- A licensed professional who helps people and businesses choose and enroll in coverage. Some represent one insurer and others work with many; either way, their job is to explain options and help you apply.
- Allowed amount
- The top amount your plan recognizes for a covered service. An out-of-network provider who charges more may bill you for the gap.
- Ancillary benefits (supplemental coverage)
- Extra coverage, such as dental, vision, accident or critical illness plans, that sits next to your main health plan and pays for needs it does not fully cover.
- Annual Limit
- A yearly cap on what a plan pays for certain services. Under the ACA, plans cannot set yearly dollar caps on essential health benefits such as hospital care, prescriptions or maternity care.
B
- Balance Billing
- A bill from a provider for the gap between their full charge and what your plan allows. It is most common out of network and can arrive as a surprise.
- Brand-name drug
- A medicine sold under the name given by the company that developed it. It usually costs more than a generic with the same active ingredient.
- Broker
- A licensed professional who compares plans from several insurers and helps you enroll. A broker represents you rather than a single insurance company.
C
- COBRA
- A federal rule that lets you stay on your former employer's health plan for a limited time after leaving a job. You usually pay the full premium yourself, so it tends to be a short-term option.
- Cancer insurance
- A supplemental plan that pays you cash after a covered cancer diagnosis or during treatment. You can spend it on medical bills, lost income or other costs.
- Catastrophic plan
- A low-premium plan with a very high deductible, meant to protect against worst-case costs. It is generally open to people under 30 or to those who qualify for a hardship exemption.
- Claim
- A request sent to your insurer asking it to pay for care you received.
- Coinsurance
- Your percentage share of a covered bill after you meet the deductible. With 20% coinsurance, you pay 20% and the plan pays 80%.
- Coordination of benefits
- The process insurers use when you are covered by two plans at once, deciding which pays first so the same bill is not paid twice.
- Copay (Copayment)
- A flat fee you pay for a covered service, for example $30 for a doctor visit. The plan pays the rest.
- Cost-sharing reduction (CSR)
- Extra savings that lower your deductible, copays and coinsurance. Available only to eligible lower-income households who choose a Silver Marketplace plan.
- Covered service
- Any care or service your plan agrees to share the cost of.
- Critical illness insurance
- A separate plan that pays you a lump sum after a covered serious diagnosis, such as a heart attack, stroke or cancer. You decide how to use the money.
D
- Deductible
- The amount you pay for covered care each year before your plan starts sharing the cost.
- Dental insurance
- Coverage for dental care such as cleanings, exams, fillings and sometimes larger work like crowns. For adults it is usually a separate plan from medical coverage.
- Dependent
- A person, such as a spouse or child, who is covered under someone else's plan.
E
- Effective date
- The day your coverage starts.
- Emergency services
- Care for a sudden, serious or life-threatening condition. Plans generally cover emergency care even at an out-of-network hospital.
- Employer contribution
- Money your employer puts toward your health coverage each month. With an ICHRA, for example, your employer reimburses premiums and eligible costs up to a tax-free allowance.
- Employer-sponsored insurance (ESI)
- Health coverage offered through your job. The employer usually pays part of the premium and you pay the rest through payroll.
- Essential health benefits
- The ten categories of care every ACA individual plan must include, such as preventive care, mental health care, prescriptions and maternity care.
- Exclusive provider organization plan (EPO)
- A plan that only pays for in-network care, except in emergencies. Referrals are usually not needed to see specialists, but out-of-network care is your cost.
- Explanation of benefits (EOB)
- A statement your insurer sends after you receive care, showing what was billed, what the plan paid and what you may owe. It is a summary, not a bill.
F
- Federal Poverty Level (FPL)
- A yearly income guideline, adjusted for household size, that the government uses to decide eligibility for premium tax credits, Medicaid and other programs.
- Flexible spending account (FSA)
- An employer account that lets you set aside pre-tax pay for medical costs, up to a yearly limit. Unused money is generally lost at the end of the plan year unless your plan allows a small carryover.
- Formulary
- The list of prescription drugs a plan covers, often grouped into tiers that show what you are likely to pay.
G
- Generic drug
- A lower-cost version of a brand-name medicine with the same active ingredients, approved as equally safe and effective.
- Grace period
- Extra time to pay a missed premium before your coverage is cancelled. Coverage continues during this time, but it can end if payment is not made.
H
- Health insurance marketplace
- The official service where individuals and families compare and buy ACA plans and apply for savings. Many states use the federal site, HealthCare.gov, while others run their own.
- Health maintenance organization plan (HMO)
- A plan in which you choose an in-network primary care doctor who coordinates your care and gives referrals to specialists. Out-of-network care is not covered except in emergencies.
- Health reimbursement arrangement (HRA)
- An employer-funded account that reimburses eligible medical costs tax-free. All the money comes from the employer, not your paycheck.
- Health savings account (HSA)
- A savings account for medical costs that you can open if you have an eligible high-deductible plan. Money goes in tax-free, stays yours, and carries over from year to year.
- High-deductible health plan (HDHP)
- A plan with a lower premium and a higher deductible, so you pay more before coverage begins sharing costs. It can be paired with a health savings account.
I
- In-network
- Doctors, hospitals and other providers that have agreed rates with your plan. Using them usually costs you less than going out of network.
- Individual Coverage Health Reimbursement Arrangement (ICHRA)
- An employer benefit that gives you a set allowance to buy your own individual plan. You choose the plan, pay the premium and are reimbursed up to the allowance.
- Individual mandate
- A former federal rule that charged a penalty for going without coverage. The federal penalty is now zero, but a few states have their own requirement.
L
- Lifetime limit
- A cap on what a plan will pay over your lifetime. ACA plans cannot set lifetime dollar limits on essential health benefits.
M
- Marketplace
- The official place to compare and buy ACA health plans.
- Maximum out-of-pocket (MOOP)
- The most you pay for covered care in a plan year. After you reach it, the plan pays 100% of covered costs for the rest of the year.
- Metal tiers (Bronze, Silver, Gold, Platinum)
- Labels that show how you and the plan share costs. They do not reflect the quality of care.
- Bronze has the lowest premiums and the highest costs when you get care; Platinum has the highest premiums and the lowest costs. Silver and Gold fall in between.
N
- Network
- The group of providers and facilities your plan has contracts with. Care inside the network usually costs you less.
- No Surprises Act
- A federal law that protects you from many surprise bills, such as when an out-of-network doctor treats you at an in-network hospital without your choice.
O
- Open enrollment period (OEP)
- The yearly period when anyone can enroll in or change a Marketplace plan. On HealthCare.gov it usually runs from November 1 to January 15, and some states set different dates. Outside it, you need a qualifying life event.
- Out-of-network
- Providers without a contract with your plan. The plan pays less or nothing, so your costs are higher.
- Out-of-pocket costs
- The costs you pay yourself when you get care, such as deductibles, copays and coinsurance.
- Out-of-pocket estimate
- An advance estimate of what you will pay for a service, based on your coverage, deductible and the provider's rates. It is approximate but helps you plan.
- Out-of-pocket maximum
- The yearly ceiling on what you pay for covered in-network care. Once you reach it, the plan pays 100% of covered costs until the plan year ends.
P
- Plan year
- The 12-month period your coverage runs.
- Point of service plan (POS)
- A plan that mixes HMO and PPO features: a primary care doctor manages your care and referrals, but you can use out-of-network providers at a higher cost.
- Pre-authorization
- Approval your plan must give before it pays for certain services or drugs. Your provider sends the request and the plan decides whether to approve it. Also called prior authorization.
- Pre-existing condition
- A health condition you had before your new coverage begins, such as asthma, diabetes or a past cancer.
- Preferred provider organization plan (PPO)
- A plan that covers care both in and out of network, usually without referrals. Staying in network costs less.
- Premium
- What you pay each month to keep your coverage.
- Prescription drug tier
- A level in a plan's drug list. Lower tiers, usually generics, cost less; higher tiers, such as brand-name and specialty drugs, cost more.
- Preventive care
- Care that helps you stay healthy or find problems early, such as yearly checkups, vaccines and screenings. Marketplace plans cover recommended preventive care in network at no cost to you.
- Primary care provider (PCP)
- Your main doctor for everyday health needs. Depending on your plan, they may also coordinate your care and refer you to specialists.
- Prior authorization
- Approval your plan must give before it pays for certain services or drugs. Also called pre-authorization.
- Provider directory
- A plan's list of in-network providers and facilities. Listings can change, so confirm with the provider or plan before your visit.
Q
- Qualifying life event (QLE)
- A major change, such as moving, marriage, a new baby or losing job-based coverage, that lets you enroll outside Open Enrollment.
R
- Referral
- Approval from your primary care doctor to see a specialist. Some plans will not pay for the visit without one.
- Rollover
- A feature some FSAs offer that lets you carry a limited amount of unused money into the next year instead of losing it.
S
- Special enrollment period (SEP)
- A window outside Open Enrollment when you can sign up after a qualifying life event, such as a move, marriage or birth.
- Specialist
- A doctor who focuses on one area of health, such as a cardiologist or dermatologist. Some plans require a referral before covering the visit.
- Subsidy
- Government financial help that lowers the cost of coverage. Whether you qualify and how much you get depends mainly on income and household size.
- Summary of benefits & coverage (SBC)
- A standard document every plan provides that summarizes what it covers, what it costs and how costs are shared.
- Supplemental benefits (ancillary coverage)
- Extra coverage, such as dental, vision, accident or critical illness plans, that sits next to your main health plan and pays for needs it does not fully cover.
T
- Tiered network
- A network that sorts in-network providers into cost levels. All are in network, but some tiers cost you more than others.
U
- Urgent care
- Care for problems that need quick attention but are not emergencies, such as sprains or a sudden fever. It is usually faster and cheaper than the emergency room.
V
- Virtual care (telehealth)
- A visit with a clinician by video or phone instead of in person. Useful for minor illnesses, follow-ups and quick questions.
- Vision insurance
- Coverage for routine eye care, such as exams, glasses and contacts. It is usually separate from your health plan.
W
- Waiting period
- Time between enrolling and when certain benefits start. A dental plan, for example, may cover cleanings right away but wait several months before paying toward crowns.
