Common Terms of Health Insurance

Premium: The amount you pay, usually monthly, to maintain your health insurance coverage.

Deductible: The amount you must pay out-of-pocket for covered medical services before your insurance begins to pay.

Copayment (Copay): A fixed amount you pay for a covered service, such as a doctor visit or prescription, usually at the time of service.

Coinsurance: The percentage of costs you pay for a covered service after meeting your deductible.

Out-of-Pocket Maximum: The most you will pay in a plan year for covered services, including deductibles, copayments, and coinsurance; after reaching this limit, insurance pays 100% of covered costs.

Network: A group of doctors, hospitals, and other providers contracted with your insurance plan to provide services at negotiated rates.

In-Network: Providers and facilities that are part of your plan’s network and usually cost less to use.

Out-of-Network: Providers and facilities not in your plan’s network, which often result in higher costs or no coverage.

Pre-Existing Condition: A medical condition that existed before the start of your health insurance coverage.

Prior Authorization: Approval from your insurance plan required before certain services or prescriptions are covered.

Formulary: A list of prescription drugs covered by your insurance plan.

Medically Necessary: A service or treatment considered appropriate and essential for diagnosing or treating a medical condition.

Special Enrollment Period (SEP): A limited time outside the annual Open Enrollment period when you can sign up for health insurance due to qualifying life events, such as marriage, birth, or loss of coverage.

Open Enrollment: The yearly period when anyone can enroll in or make changes to a health insurance plan without needing a qualifying event.

ACA (Affordable Care Act) Plan: A health insurance plan that meets the standards set by the Affordable Care Act, including essential health benefits and coverage for pre-existing conditions.