Health insurance can be confusing. It doesn’t help that health insurance terms are often unfamiliar, as well.

The following health insurance glossary serves as a guide to some of the most common medical insurance terms. Get familiar with these words so you can use your plan with confidence.

Claim

A bill that your healthcare provider submits to your insurance company.

Coinsurance

Your share of the costs of a covered healthcare service, calculated as a percentage (for example, 20%) of the allowed amount for the service. You pay coinsurance plus any deductibles you owe and the health insurance plan pays the rest of the allowed amount.

Copay/copayment

The fixed dollar amount you pay for certain medical services, prescription drugs or doctor visits. The amount can vary by service. Often, you’ll pay the copay when you receive the service.  

Deductible

The amount you pay each year during your plan’s benefit period before your plan begins paying
for certain covered medical services. Some medical costs you pay each year will not apply to
the deductible, such as a doctor visit copay.

Explanation of Benefits (EOB)

Your insurance company creates this document to outline what costs your insurance policy will
cover for recent services and what you may owe. While it may look like a bill, it is not a bill.

Flexible Spending Account (FSA)

A special savings account set up by your employer that allows people with employer-sponsored plans to set aside money, without paying taxes, to pay for healthcare costs. FSA funds must be spent by the end of the plan year.

Formulary

A list of prescription medications—both name brand and generic—that are covered by your health plan.

Health Maintenance Organization (HMO)

A type of health insurance plan in which a primary care provider (PCP) manages your care and must write referrals for you to see other providers in order for those services to be covered by the plan.

Health Savings Account (HSA)

An account that allows you to set aside money, tax-free, to pay for healthcare expenses, and the funds can roll over from one year to the next. To use an HSA, the member must be enrolled in an eligible high-deductible plan.

In-network provider

Health insurance companies have agreements with particular medical groups, hospitals and/or specific providers to offer services at an agreed-upon rate. Those are referred to as in-network providers. Whereas out-of-network is a provider or facility not on that list, and whom may not be covered by your health insurance plan, or may cost more. 

Inpatient care (or hospitalization)

Health services that require the patient to stay overnight in a hospital or other care setting.

Open enrollment

A window of time every year when you can sign up for a new health insurance plan or make changes to your existing coverage.

Out-of-pocket maximum

A cap on the amount of money that you are required to pay out of your pocket for your
healthcare costs. This amount does not include your monthly premium. Once you reach the
Out-of-Pocket Maximum, eligible, in-network services are covered at 100%.

Outpatient care

Treatment you receive that doesn’t involve an overnight at a hospital or other care facility.

Preauthorization

The decision by your health insurer that a health service, treatment, medication or equipment is medically necessary. This is also called prior authorization.  

Preferred Provider Organization (PPO)

A type of health insurance plan that allows you to choose providers inside and outside of your network without needing a referral from a PCP.

Premium

This is the amount you pay monthly for your health insurance. For some people who have an
insurance plan through their employer, the employer may pay a portion of the premium.

Preventive care

Routine health services such as screenings, check-ups and vaccinations that aim to prevent or diagnose health conditions.

Primary Care Physician (PCP)

A PCP provides care and also helps coordinate health services for a patient. Usually this is a Medical Doctor (MD) or a Doctor of Osteopathic Medicine (DO).

Referral

An order from a PCP to see a healthcare specialist or another provider who is not your PCP for specific services. HMO plans often require referrals in order to cover the service.