Glossary of Health Coverage and Medical Terms

Understanding Your Health Insurance Costs

Allowed Amount

The allowed amount is the maximum payment your health plan will pay for a covered health care service. This term may also appear in your plan documents as:

Eligible expense
Payment allowance
Negotiated rate

Example: If your provider charges $200 for a service but the allowed amount is $110, your plan will only recognize $110 as the basis for payment calculations.

Deductible

A deductible is the amount you must pay during a coverage period (typically one year) for covered health care services before your plan begins to pay.

Key Points:

An overall deductible applies to all or almost all covered items and services
Some plans have separate deductibles that apply to specific services or groups of services
Until you meet your deductible, you pay 100% of covered costs, and your plan pays 0%

Example: If your deductible is $1,000, your plan won't pay anything until you've paid $1,000 for covered health care services subject to the deductible.

Coinsurance

Coinsurance is your share of the costs for a covered health care service, calculated as a percentage of the allowed amount.

How It Works:

You generally pay coinsurance PLUS any deductibles you owe
Coinsurance typically applies after you've met your deductible

Example: If your plan's allowed amount for an office visit is $100 and you've met your deductible, your 20% coinsurance payment would be $20. Your health insurance or plan pays the remaining $80 (80% of the allowed amount).

Copayment (Copay)

A copayment is a fixed amount (for example, $15 or $30) you pay for a covered health care service, usually when you receive the service.

Important Details:

The copayment amount can vary by the type of covered health care service
Sometimes called "copay" in plan documents
Different services may have different copayment amounts

Cost Sharing

Cost sharing refers to your share of costs for services that a plan covers, which you must pay out of your own pocket (also called "out-of-pocket costs").

Examples of Cost Sharing Include:

Copayments
Deductibles
Coinsurance

Family Cost Sharing: The combined share of deductibles and out-of-pocket costs that you and your spouse and/or children must pay from your own pocket.

What's NOT Considered Cost Sharing:

Your monthly premiums
Penalties you may have to pay
The cost of care your plan doesn't cover

Out-of-Pocket Limit

The out-of-pocket limit is the most you could pay during a coverage period (usually one year) for your share of covered services costs.

After You Meet This Limit:

Your plan will usually pay 100% of the allowed amount for covered services
This helps you plan for and manage health care costs

What's NOT Included in This Limit:

Your premium
Balance-billed charges
Health care services your plan doesn't cover
Some plans don't count all copayments, deductibles, coinsurance payments, out-of-network payments, or other expenses toward this limit

Maximum Out-of-Pocket Limit

This is a yearly amount set by the federal government as the maximum each individual or family can be required to pay in cost sharing during the plan year for covered, in-network services.

Key Information:

Applies to most types of health plans and insurance
This federal maximum may be higher than the out-of-pocket limits stated in your specific plan

Premium

The premium is the amount that must be paid for your health insurance or plan.

Payment Schedule: You and/or your employer usually pay it:

Monthly
Quarterly
Yearly

Understanding Billing and Payment Terms

Balance Billing

Balance billing occurs when a provider bills you for the balance remaining on the bill that your plan doesn't cover. This is the difference between the actual billed amount and the allowed amount.

Example: If the provider's charge is $200 and the allowed amount is $110, the provider may bill you for the remaining $90.

When This Happens:

Most often when you see an out-of-network provider (non-preferred provider)
A network provider (preferred provider) may NOT balance bill you for covered services

Claim

A claim is a request for a benefit (including reimbursement of a health care expense) made by you or your health care provider to your health insurer or plan for items or services you think are covered.

Appeal

An appeal is a request that your health insurer or plan review a decision that denies a benefit or payment (either in whole or in part).

Grievance

A grievance is a complaint that you communicate to your health insurer or plan.

Understanding Providers and Networks

Provider

A provider is an individual or facility that provides health care services.

Examples Include:

Doctor
Nurse
Chiropractor
Physician assistant
Hospital
Surgical center
Skilled nursing facility
Rehabilitation center

Note: The plan may require the provider to be licensed, certified, or accredited as required by state law.

Network

The network includes the facilities, providers, and suppliers your health insurer or plan has contracted with to provide health care services.

Network Provider (Preferred Provider)

A network provider is a provider who has a contract with your health insurer or plan and has agreed to provide services to members of the plan.

Benefits:

You will pay less if you see a provider in the network
Also called "preferred provider" or "participating provider"

Out-of-Network Provider (Non-Preferred Provider)

An out-of-network provider is a provider who doesn't have a contract with your plan to provide services.

Cost Implications:

If your plan covers out-of-network services, you'll usually pay more to see an out-of-network provider than a preferred provider
Your policy will explain what those costs may be
May also be called "non-preferred" or "non-participating" provider

In-Network Copayment

A fixed amount (for example, $15) you pay for covered health care services to providers who contract with your health insurance or plan.

Key Point: In-network copayments usually are less than out-of-network copayments.

Out-of-Network Copayment

A fixed amount (for example, $30) you pay for covered health care services from providers who do NOT contract with your health insurance or plan.

Key Point: Out-of-network copayments usually are more than in-network copayments.

In-Network Coinsurance

Your share (for example, 20%) of the allowed amount for covered health care services.

Key Point: Your share is usually lower for in-network covered services.

Out-of-Network Coinsurance

Your share (for example, 40%) of the allowed amount for covered health care services to providers who don't contract with your health insurance or plan.

Key Point: Out-of-network coinsurance usually costs you more than in-network coinsurance.

Types of Health Care Providers

Primary Care Provider

A physician (M.D. - Medical Doctor or D.O. - Doctor of Osteopathic Medicine), nurse practitioner, clinical nurse specialist, or physician assistant (as allowed under state law and plan terms) who provides, coordinates, or helps you access a range of health care services.

Primary Care Physician

A physician (M.D. - Medical Doctor or D.O. - Doctor of Osteopathic Medicine) who provides or coordinates a range of health care services for you.

Specialist

A specialist is a provider focusing on a specific area of medicine or a group of patients to diagnose, manage, prevent, or treat certain types of symptoms and conditions.

Referral

A referral is a written order from your primary care provider for you to see a specialist or get certain health care services.

Important for HMO Plans:

In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get health care services from anyone except your primary care provider
If you don't get a referral first, the plan may not pay for the services

Physician Services

Physician services are health care services a licensed medical physician (M.D. - Medical Doctor or D.O. - Doctor of Osteopathic Medicine) provides or coordinates.

Types of Health Care Services

Emergency Medical Condition

An emergency medical condition is an illness, injury, symptom (including severe pain), or condition severe enough to risk serious danger to your health if you didn't get medical attention right away.

Without Immediate Medical Attention, You Could Reasonably Expect:

Your health would be put in serious danger; OR
You would have serious problems with your bodily functions; OR
You would have serious damage to any part or organ of your body

Emergency Room Care / Emergency Services

Emergency services include services to check for an emergency medical condition and treat you to keep an emergency medical condition from getting worse.

Where Provided:

Licensed hospital's emergency room
Other places that provide care for emergency medical conditions

Emergency Medical Transportation

Emergency medical transportation includes ambulance services for an emergency medical condition.

Types May Include:

Transportation by air
Transportation by land
Transportation by sea

Important Note: Your plan may not cover all types of emergency medical transportation, or may pay less for certain types.

Urgent Care

Urgent care is care for an illness, injury, or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.

Hospitalization

Hospitalization is care in a hospital that requires admission as an inpatient and usually requires an overnight stay.

Note: Some plans may consider an overnight stay for observation as outpatient care instead of inpatient care.

Hospital Outpatient Care

Hospital outpatient care is care in a hospital that usually doesn't require an overnight stay.

Home Health Care

Home health care includes health care services and supplies you get in your home under your doctor's orders.

Services May Be Provided By:

Nurses
Therapists
Social workers
Other licensed health care providers

Important Note: Home health care usually doesn't include help with non-medical tasks, such as cooking, cleaning, or driving.

Hospice Services

Hospice services provide comfort and support for persons in the last stages of a terminal illness and their families.

Preventive Care (Preventive Service)

Preventive care includes routine health care services such as:

Screenings
Check-ups
Patient counseling

Purpose: To prevent or discover illness, disease, or other health problems.

Screening

Screening is a type of preventive care that includes tests or exams to detect the presence of something.

Characteristics:

Usually performed when you have no symptoms, signs, or prevailing medical history of a disease or condition

Diagnostic Test

Diagnostic tests are tests to figure out what your health problem is.

Example: An x-ray can be a diagnostic test to see if you have a broken bone.

Specialized Health Services

Rehabilitation Services

Rehabilitation services are health care services that help a person keep, get back, or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt, or disabled.

These Services May Include:

Physical therapy
Occupational therapy
Speech-language pathology
Psychiatric rehabilitation services

Settings: Available in a variety of inpatient and/or outpatient settings.

Habilitation Services

Habilitation services are health care services that help a person keep, learn, or improve skills and functioning for daily living.

Examples:

Therapy for a child who isn't walking or talking at the expected age

These Services May Include:

Physical therapy
Occupational therapy
Speech-language pathology
Other services for people with disabilities

Settings: Available in a variety of inpatient and/or outpatient settings.

Skilled Nursing Care

Skilled nursing care includes services performed or supervised by licensed nurses in your home or in a nursing home.

Important Distinction: Skilled nursing care is NOT the same as "skilled care services," which are services performed by therapists or technicians (rather than licensed nurses) in your home or in a nursing home.

Reconstructive Surgery

Reconstructive surgery includes surgery and follow-up treatment needed to correct or improve a part of the body because of:

Birth defects
Accidents
Injuries
Medical conditions

Pregnancy-Related Coverage

Complications of Pregnancy

Complications of pregnancy are conditions due to pregnancy, labor, and delivery that require medical care to prevent serious harm to the health of the mother or the fetus.

What's Generally NOT Considered Complications:

Morning sickness
Non-emergency caesarean section

Prescription Drug Coverage

Prescription Drugs

Prescription drugs are drugs and medications that by law require a prescription.

Prescription Drug Coverage

Prescription drug coverage is coverage under a plan that helps pay for prescription drugs.

Formulary Tiers: If the plan's formulary uses "tiers" (levels), prescription drugs are grouped together by type or cost. The amount you'll pay in cost sharing will be different for each "tier" of covered prescription drugs.

Formulary

A formulary is a list of drugs your plan covers.

What It May Include:

How much your share of the cost is for each drug
Different cost-sharing levels or tiers

Example: A formulary may include generic drug and brand name drug tiers, with different cost-sharing amounts applying to each tier.

Specialty Drug

A specialty drug is a type of prescription drug that, in general, requires:

Special handling, OR
Ongoing monitoring and assessment by a health care professional, OR
Is relatively difficult to dispense

Cost: Generally, specialty drugs are the most expensive drugs on a formulary.

Medical Equipment and Devices

Durable Medical Equipment (DME)

Durable Medical Equipment includes equipment and supplies ordered by a health care provider for everyday or extended use.

DME May Include:

Oxygen equipment
Wheelchairs
Crutches

Orthotics and Prosthetics

Orthotics and prosthetics include:

Leg, arm, back, and neck braces
Artificial legs, arms, and eyes
External breast prostheses after a mastectomy

These Services Include:

Adjustment
Repairs
Replacements required because of breakage, wear, loss, or a change in the patient's physical condition

Plan Authorization and Approval

Preauthorization

Preauthorization is a decision by your health insurer or plan that a health care service, treatment plan, prescription drug, or durable medical equipment (DME) is medically necessary.

Also Called:

Prior authorization
Prior approval
Precertification

Important Notes:

Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency
Preauthorization is NOT a promise your health insurance or plan will cover the cost

Medically Necessary

Medically necessary refers to health care services or supplies needed to prevent, diagnose, or treat an illness, injury, condition, disease, or its symptoms, including habilitation, that meet accepted standards of medicine.

Types of Health Plans and Coverage

Health Insurance

Health insurance is a contract that requires a health insurer to pay some or all of your health care costs in exchange for a premium.

Also Called:

Policy
Plan

Plan

Plan refers to health coverage issued to you directly (individual plan) or through an employer, union, or other group sponsor (employer group plan) that provides coverage for certain health care costs.

Also Called:

Health insurance plan
Policy
Health insurance policy
Health insurance

Minimum Essential Coverage

Minimum essential coverage generally includes:

Plans through the Marketplace
Other individual market policies
Medicare
Medicaid
CHIP (Children's Health Insurance Program)
TRICARE
Certain other coverage

Important: If you are eligible for certain types of minimum essential coverage, you may not be eligible for the premium tax credit.

Minimum Value Standard

The minimum value standard is a basic standard to measure the percent of permitted costs the plan covers.

Key Point: If you're offered an employer plan that pays for at least 60% of the total allowed costs of benefits, the plan offers minimum value and you may not qualify for premium tax credits and cost-sharing reductions to buy a plan from the Marketplace.

Financial Assistance Programs

Premium Tax Credits

Premium tax credits are financial help that lowers your taxes to help you and your family pay for private health insurance.

Eligibility:

You can get this help if you get health insurance through the Marketplace
Your income must be below a certain level

Advance Payments: Tax credit payments can be used right away to lower your monthly premium costs.

Cost-Sharing Reductions

Cost-sharing reductions are discounts that reduce the amount you pay for certain services covered by an individual plan you buy through the Marketplace.

You May Get a Discount If:

Your income is below a certain level AND you choose a Silver level health plan; OR
You're a member of a federally-recognized tribe, which includes being a shareholder in an Alaska Native Claims Settlement Act corporation

Marketplace

The Marketplace is a marketplace for health insurance where individuals, families, and small businesses can:

Learn about their plan options
Compare plans based on costs, benefits, and other important features
Apply for and receive financial help with premiums and cost sharing based on income
Choose a plan and enroll in coverage

Also Known As: Exchange

Who Runs It:

The state in some states
The federal government in others

Additional Services: In some states, the Marketplace also helps eligible consumers enroll in other programs, including Medicaid and CHIP.

Access: Available online, by phone, and in-person.

Other Important Terms

Excluded Services

Excluded services are health care services that your plan doesn't pay for or cover.

UCR (Usual, Customary and Reasonable)

UCR is the amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service.

Usage: The UCR amount is sometimes used to determine the allowed amount.

Practical Example: How Cost Sharing Works Throughout the Year

Jane's Plan Details:

Deductible: $1,500
Coinsurance: 20%
Out-of-Pocket Limit: $5,000
Coverage Period: January 1 - December 31

Phase 1: Before Meeting the Deductible

Situation: Jane hasn't reached her $1,500 deductible yet

Office visit costs: $125

Jane pays: $125 (100%)
Her plan pays: $0 (0%)

Explanation: Her plan doesn't pay any of the costs until the deductible is met.

Phase 2: After Meeting the Deductible

Situation: Jane reaches her $1,500 deductible, coinsurance begins

Jane has seen a doctor several times and paid $1,500 in total, reaching her deductible. So her plan pays some of the costs for her next visit.

Office visit costs: $125

Jane pays: $25 (20% of $125)
Her plan pays: $100 (80% of $125)

Explanation: After meeting the deductible, Jane only pays her 20% coinsurance, and the plan covers the remaining 80%.

Phase 3: After Meeting the Out-of-Pocket Limit

Situation: Jane reaches her $5,000 out-of-pocket limit

Jane has seen the doctor often and paid $5,000 in total. Her plan pays the full cost of her covered health care services for the rest of the year.

Office visit costs: $125

Jane pays: $0 (0%)
Her plan pays: $125 (100%)

Explanation: Once the out-of-pocket limit is reached, the plan covers 100% of covered services for the remainder of the coverage period.

Important Notes and Disclaimers

About This Glossary

This glossary defines many commonly used terms but isn't a full list
These glossary terms and definitions are intended to be educational
Terms and definitions may be different from those in your specific plan or health insurance policy
Some terms might not have exactly the same meaning when used in your policy or plan
In any case, your policy or plan document governs
See your Summary of Benefits and Coverage for information on how to get a copy of your policy or plan document

Regulatory Information

This document was created under the following government oversight:

Department of Treasury (DT):

OMB Control Number: 1545-0047
Expiration Date: 12/31/2019

Department of Labor (DOL):

OMB Control Number: 1210-0147
Expiration Date: 5/31/2022

Department of Health and Human Services (HHS):

OMB Control Number: 0938-1146
Expiration Date: 10/31/2022

Need More Help?

If you have questions about any of these terms or how they apply to your specific health insurance plan:

Review your Summary of Benefits and Coverage
Contact your health insurance provider directly
Consult your policy or plan document
Speak with your employer's benefits administrator (if applicable)

Remember: The specific terms, definitions, and coverage details in your actual health insurance policy or plan document take precedence over this general educational glossary.