The language of health insurance can be confusing. Words like "deductible", "flexible spending account" and "provider" are not easy to understand.
About 55 percent of Americans had health insurance coverage from their employer in 2010. Surveys also show that only about half of Americans know what common insurance terms mean.
Stay informed. Learn the terms that describe your health care and insurance coverage. Some words may differ among insurers so use the summary of benefits and coverage that comes with your insurance plan.
This glossary is a good place to start.
Accountable Care Organization (ACO) - A group of health care workers, such as doctors and hospitals, that works together to treat Medicare patients. Its payment depends on health care quality and the outcomes of patient care.
Benefit Package - All of the services that are covered by a health insurance plan such as:
- Doctor visits
- Prescription drugs
Chronic Disease Management - Health support for patients with chronic conditions, like diabetes and asthma.
Claim - A request sent to health insurance to pay for a medical service.
COBRA - This allows an employee to keep health insurance for up to 18 months after losing a job according to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
Co-Insurance - The percentage of allowed charges for covered services a patient pays.
Consumer-Directed Health Plans – Insurance plans that usually have high deductibles. They are often paired with a Health Savings Account (HSA) or Health Reimbursement Account (HRA) to help pay for medical services.
Co-Op Plan - A health insurance plan that will be sold through non-profit exchanges when they open in 2014.
Copayment - A flat fee a patient pays every time they receive a medical service, if required by their plan.
Cost Sharing - Medical fees a person pays for according to their insurance plan. Examples are:
Covered Expenses - The medical services that health insurance pays for.
Deductible - The amount of money a patient pays each year before their health insurance policy starts to help pay for care.
Dependent - A family member (spouse, child, partner) of the person with a health insurance policy.
Employer Responsibility - If employers with at least 50 full-time employees don't offer affordable health insurance and their employees use tax credits to pay for insurance through an exchange, employers must pay a fee to help cover the cost of the credits. This starts in 2014.
Essential Health Benefits - The basic package of benefits that all health insurance plans sold after 2014 must have. Some benefits will include:
- Emergency care
- Outpatient services
- Prescription drugs
- Preventive care and maternity care
Exchange - A health insurance marketplace where people and small businesses can buy affordable plans.
Exclusive Provider Organization - A plan where services are covered by insurance. They are only covered if a patient goes to doctors, specialists and hospitals in the plan's network (except in an emergency).
Fee For Service - A system where physicians and other providers are paid for each service they provide.
Flexible Spending Account (FSA) - A financial account that an employee can contribute money to tax-free from their paycheck. The money in an employee's FSA can be used to pay for eligible medical care.
Grandfathered Plan - An insurance plan that was purchased on or before March 23, 2010. They are exempt from most changes required by the Affordable Care Act. New employees or new family members may be added to them.
Guaranteed Issue-- Health insurers are required to sell a health insurance policy to any person who requests it.
Health Insurance - A contract where a health insurer pays all or some of a person's health care costs in exchange for a premium.
Health Maintenance Organization (HMO) - A prepaid health plan that a patient pays a monthly premium for. A patient must use the doctors and hospitals chosen by the HMO. HMOs typically cover:
- Doctors' visits
- Hospital stays
- Emergency care
- Lab tests
Health Reimbursement Account (HRA) - Accounts that employers set up to help employees pay for eligible medical expenses. The HRA pays until the funds are gone. Employees typically have a high-deductible insurance plan to help cover additional medical costs.
Health Savings Account (HSA) - A medical savings account for people enrolled in a high-deductible health plan. A person can contribute money tax-free and use the funds to pay for eligible medical expenses. The employee owns the funds in an HSA even if he/she leaves a company; so unused funds roll over year-to-year.
High-Deductible Health Plan (HDHP) - A plan that has higher deductibles, but lower premiums than traditional insurance plans. They can be combined with an HSA or HRA to help pay for eligible out-of-pocket medical expenses.
Individual Insurance Market - Where people who are not part of an employer's insurance plan can purchase his or her own insurance.
In-Network - A health care provider that is contracted to be part of a care system such as an HMO or PPO.
Medicare - Health insurance from the federal government for people over age 65 and some younger people with disabilities.
Minimum Essential Coverage - The minimum insurance a person needs to meet the Affordable Care Act individual responsibility requirement.
Multi-State Plan - A health insurance plan that will be available through exchanges in every state. The Patient Protection and Affordable Care Act created the plan, which will be available starting in 2014.
Network - The doctors, professionals and facilities the health insurer has contracts to work with to provide health services.
Open Enrollment Period - A period of time each year when people can make changes to their health insurance plan.
Out-of-Pocket Costs - Medical expenses that a patient is responsible for because they are not covered by health insurance.
Out-of-Pocket Limit - The maximum amount a patient will pay in a year for insurance-covered health costs.
Out-of-Network Provider - A provider who does not have a contract with the health insurance company.
Patient Protection and Affordable Care Act (PPACA) - Commonly referred to as the health reform law. President Obama signed the act on March 23, 2010.
Preferred Provider Organization (PPO) - A type of insurance plan that gives care through a network of doctors, hospitals and others.
Premium - The amount a person or employer pays periodically to an insurer for health insurance coverage.
Preventive Care - Routine health care that includes:
- Patient counseling to prevent illnesses or disease
- Other health problems
Provider - A doctor, health care professional or health care facility (hospital, clinic).
Qualified Health Plan - A health insurance plan sold through an Exchange.
Waiting Period - The time before a health insurance plan starts to help pay for eligible medical services.
Created on 10/15/2007
Updated on 10/23/2012
- Healthcare.gov. What’s changing and when.
- Healthcare.gov. Accountable care organizations: improving care coordination for people with Medicare.
- Healthcare.gov. Glossary.
- National Association of Insurance Commissioners. Glossary of health insurance terms.