A Glossary of Health Care & Health Insurance Terms
A helpful guide to some of the terminology you may encounter when reviewing health coverage, benefits, costs, and medical care.
Health care and health insurance come with their own vocabulary. Understanding common terms can make it easier to review a health plan, compare coverage options, understand medical costs, and make more informed decisions for yourself, your family, or your employees.
Care, Coverage & Billing Terms
Co-insurance: The percentage of covered medical costs you pay after meeting your deductible.
Co-payment (Copay): A fixed amount you pay for a particular health care service, such as a primary care or specialist visit.
Deductible: The amount you pay out of pocket for covered health care services before your insurance plan begins sharing costs.
In-Network: Providers that have contracted with your insurance company. Using in-network providers typically results in lower out-of-pocket costs.
Out-of-Network: Providers that do not have an agreement with your insurance carrier. Members generally pay a larger portion of the cost when using these providers.
Out-of-Pocket Maximum: The most you will pay during a plan year for covered medical services through deductibles, copayments, and co-insurance. Once that limit is reached, the health plan typically pays 100% of covered services for the remainder of the year.
Premium: The amount paid for health insurance coverage, often on a monthly basis.
General Health Insurance Terms
COBRA: A federal law that allows individuals to continue employer-sponsored health insurance for a limited period following certain qualifying events.
Formulary: A health plan’s list of covered prescription medications.
Marketplace: A service that allows individuals and families to compare and enroll in health insurance plans.
Primary Care Physician (PCP): A primary health care provider who delivers routine care, diagnoses common conditions, coordinates treatment, and may provide referrals to specialists.
HMO (Health Maintenance Organization): A health insurance plan that generally requires members to use a specified provider network and typically involves selecting a primary care physician.
PPO (Preferred Provider Organization): A plan that provides greater flexibility to use both in-network and out-of-network providers, generally without referrals.
Summary of Benefits and Coverage (SBC): A standardized document outlining a health plan’s benefits, costs, coverage limitations, and examples of common medical expenses.
FSA (Flexible Spending Account): An employer-sponsored account that allows employees to set aside pre-tax funds for eligible expenses.
HRA (Health Reimbursement Arrangement): An employer-funded benefit that reimburses employees for qualifying medical expenses and, in some cases, health insurance premiums.
HSA (Health Savings Account): A tax-advantaged savings account available to individuals enrolled in a qualifying High-Deductible Health Plan (HDHP).
The Bottom Line
Becoming familiar with health insurance terminology can make it easier to evaluate coverage, understand costs, compare options, and make more confident decisions about health care benefits.
