Glossary A–Z

Allowed amount

The negotiated price, not the sticker price

The rate your insurer has agreed to pay an in-network provider. Your share is calculated from this number, not from the hospital's billed charge.

Billed $1,800, allowed amount $640. Your coinsurance is figured on the $640.

Annual limit

A cap on what the plan will pay

Most ACA-compliant plans cannot cap essential health benefits, but non-compliant plans (short-term, fixed-indemnity) often do. Check before assuming coverage is unlimited.

Appeal

Formally asking the plan to reconsider a denial

If a claim or prior authorization is denied, you can appeal internally and then request an external review by an independent third party.

Balance billing

The provider bills you for the leftover

When an out-of-network provider charges you the difference between their price and what your insurer paid. Federal rules now block this for most emergency care and many surprise situations.

Claim

The bill your provider sends the plan

After a visit, the provider submits a claim. The plan prices it, applies your cost sharing, and sends you an Explanation of Benefits.

COBRA

Keeping your job's plan after you leave

Federal law lets many people continue employer coverage for a limited time after leaving a job, but you pay the full premium plus a fee.

A plan that cost you $150 a month can cost $650 a month on COBRA.

Coinsurance

Your percentage share after the deductible

Once you have met the deductible, you pay a percentage of the cost and the plan pays the rest, until you hit the out-of-pocket maximum.

20% coinsurance on a $1,000 allowed amount means you owe $200 and the plan pays $800.

Coordination of benefits

Which plan pays first when you have two

If you are covered by two plans, they decide which is primary and which is secondary. The secondary plan may cover part of what the first one left.

Copay

A flat fee per visit

A fixed dollar amount you pay for a specific service, like $30 for a primary care visit. Some plans charge copays even before the deductible is met.

Deductible

What you pay first, before the plan starts sharing costs

A yearly amount you pay out of your own pocket before the plan begins paying its share for most services. Preventive care is usually covered before you meet it.

With a $2,000 deductible, the first $2,000 of covered care in the year is yours. After that, cost sharing kicks in.

Dependent

A family member covered under your plan

Usually a spouse or child. Children can generally stay on a parent's plan until age 26.

EOB (Explanation of Benefits)

Not a bill

A statement from your insurer showing what was billed, what they allowed, what they paid, and what may be left for you. Compare it against the provider's bill before you pay anything.

EPO

Network-only, but no referrals needed

An Exclusive Provider Organization covers in-network care only, like an HMO, but you usually do not need a referral to see a specialist.

Essential health benefits

The ten categories ACA plans must cover

Includes emergency care, hospitalization, maternity, mental health, prescriptions, preventive care, and more. Non-ACA plans may skip these.

Explanation of covered services

The plan document that lists what is covered

Also called Evidence of Coverage. It is the detailed legal description of what the plan pays for and under what conditions.

Formulary

The plan's covered drug list

A tiered list of prescriptions the plan covers. Higher tiers cost you more, and drugs not on the list may not be covered at all.

FSA

Use-it-or-lose-it pretax health spending account

A Flexible Spending Account funded through payroll deductions. Money is tax-free for medical costs but is usually forfeited if unused by year end.

Some employers allow a small carryover or a short grace period — confirm yours.

Grace period

Extra time to pay a late premium

A window after a missed premium during which coverage continues. Claims during a grace period may be held or denied until you catch up.

HDHP

High-deductible plan that pairs with an HSA

Lower monthly premium, higher deductible, and eligibility to open a Health Savings Account. Good for low-usage years, expensive in high-usage ones.

HMO

Lower cost, network-only, referrals required

A Health Maintenance Organization keeps costs down by limiting you to its network and routing specialist care through a primary care physician.

HSA

A tax-free savings account for medical costs

Available with an HDHP. Contributions are pretax, growth is tax-free, and the balance rolls over year to year and stays yours if you change jobs.

In-network / Out-of-network

Whether your plan has a contract with that provider

In-network providers agreed to discounted rates. Out-of-network providers did not, so you pay more, and on many plans nothing counts toward your in-network out-of-pocket maximum.

Medically necessary

The standard the plan uses to approve care

Services must meet the plan's clinical criteria. A doctor recommending something does not guarantee the plan will consider it medically necessary.

Network

The providers your plan has contracted with

In-network providers accepted negotiated rates. Out-of-network providers did not, so you pay much more, and sometimes the whole bill.

Open enrollment

The yearly window to pick or change a plan

Outside this window you generally cannot change plans unless you have a qualifying life event.

Out-of-pocket maximum

The ceiling on what you can pay in a year

The most you will pay for covered, in-network care in a plan year. Once you reach it, the plan pays 100% of covered in-network care for the rest of the year. Premiums, out-of-network charges, and non-covered services do not count toward it.

PPO

Higher cost, wider access, no referrals

A Preferred Provider Organization lets you see specialists directly and offers partial out-of-network coverage, usually for a higher premium.

Premium

Your monthly bill for having insurance

What you pay every month just to keep the plan, whether you see a doctor or not. It does not count toward your deductible or out-of-pocket maximum.

Paying $320 on the 1st of every month, even in a month you never go to the doctor.

Premium tax credit

A subsidy that lowers your marketplace premium

Income-based help paid directly to your insurer. If your income changes during the year, the amount is reconciled at tax time.

Preventive care

Screenings and checkups covered at no cost

ACA plans cover a list of preventive services in-network with no cost sharing.

If a screening turns diagnostic during the visit, it can be billed as diagnostic and cost you money.

Primary care physician

Your main doctor and, on some plans, your gatekeeper

HMOs require you to name one and get referrals through them. PPOs do not require it, but it still helps coordinate care.

Prior authorization

Permission needed before care

Your insurer must approve certain services in advance or they can refuse to pay, even if the service was medically necessary. Getting it in writing beforehand protects you.

Qualifying life event

A change that reopens enrollment for you

Marriage, birth or adoption, job loss, moving, or losing other coverage. You usually have 60 days to act.

Referral

A gate you pass through, usually on an HMO

Written approval from your primary care doctor to see a specialist. HMO plans typically require one; PPO plans typically do not.

Summary of Benefits and Coverage

The standardized plan comparison sheet

A short document every plan must provide in the same format, so you can compare deductibles, cost sharing, and coverage examples side by side.

Telehealth

Virtual visits by video or phone

Often has its own copay, sometimes lower than an office visit. Coverage rules vary by plan and by state.

Tier (drug tier)

Which pricing band your prescription falls into

Formularies group drugs into tiers. Tier 1 generics cost the least; specialty tiers can require coinsurance instead of a flat copay.

Urgent care vs emergency room

Two very different cost levels

Urgent care is typically a modest copay. An ER visit often carries a large copay plus deductible and coinsurance.