Elizabeth Rivelli has nearly five years of experience covering insurance for finance publications. She has expertise in various insurance lines, including car insurance, health insurance, travel insurance, life insurance and others. In her writing, s.
Elizabeth Rivelli Insurance WriterElizabeth Rivelli has nearly five years of experience covering insurance for finance publications. She has expertise in various insurance lines, including car insurance, health insurance, travel insurance, life insurance and others. In her writing, s.
Written By Elizabeth Rivelli Insurance WriterElizabeth Rivelli has nearly five years of experience covering insurance for finance publications. She has expertise in various insurance lines, including car insurance, health insurance, travel insurance, life insurance and others. In her writing, s.
Elizabeth Rivelli Insurance WriterElizabeth Rivelli has nearly five years of experience covering insurance for finance publications. She has expertise in various insurance lines, including car insurance, health insurance, travel insurance, life insurance and others. In her writing, s.
Insurance Writer Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
| Deputy Editor, Insurance
Updated: Dec 19, 2022, 7:00am
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Health insurance is beneficial, even if you’re young and healthy. But if you’ve ever shopped for health insurance or read an explanation of benefits, you’ve probably encountered health insurance terminology that’s hard to understand.
You’re not alone if you’re confused by terms like “coinsurance” and “copayment,” or if you aren’t sure about the differences between a PPO and HMO plan. Navigating the world of health insurance is much easier when you’re familiar with some of these complex medical insurance terms. Here are explanations for many health insurance terms that you may encounter as you shop for insurance or navigate your health plan.
An employer-sponsored health insurance plan where the employer pays for the employee’s health benefits and relies on the insurance company to administer the plan only. The insurance company may process claims on behalf of the employees, but the employer typically pays the claims themselves.
A health care law, also called Obamacare, established in 2010, that expanded affordable health insurance access to individuals and families in the U.S. The ACA health insurance marketplace was launched in conjunction with the ACA, which allows eligible Americans to shop for and purchase health insurance. The health law also expanded Medicaid eligibility, allowed parents to keep their children on their health insurance until 26, prohibits lifetime monetary caps on coverage, sets annual in-network out-of-pocket maximums and requires that insurers in the ACA marketplace cover at least the 10 essential health benefits, and includes many other provisions.
The maximum amount of money a health insurance plan pays for qualifying medical services. Alternative terms for allowed amount are “eligible expense” and “payment allowance.”
The difference between what a medical provider charges for a treatment or service, and what a health insurance plan covers. In the case of balance billing, you pay the difference between what the provider charges and what your plan will cover. For instance, if the provider’s charge is $200 and your health plan covers $50, you pay the $150 difference out-of-pocket.
The length of time that an insured person can use a specific health benefit covered by their plan.
This term is often associated with Original Medicare, which refers to a fee-for-service health plan including Part A (Hospital Insurance) and Part B (Medical Insurance). When an Original Medicare recipient gets admitted to a hospital or skilled nursing facility (SNF), the benefit period begins on the day of admission and ends when the insured hasn’t received any inpatient care for 60 consecutive days.
A new benefit period begins every time the insured person enters an inpatient facility. While there is no limit to the number of benefit periods that Original Medicare provides, the insured person must pay the inpatient hospital deductible every time they enter a new benefit period.
Metal tiers, Bronze, Silver, Gold and Platinum, are used to differentiate ACA marketplace health insurance plans based on out-of-pocket costs and premiums.
A health care bill that a provider submits to an insurance company to get paid for a covered medical service they provided to a plan member.
A request for an insurance company to reconsider its decision when an insured person’s claim gets denied. If the person successfully appeals the denied health claim and it gets approved, they receive coverage for the medical treatment or service according to the plan’s terms.
A federal law, which stands for The Consolidated Omnibus Budget Reconciliation Act. COBRA allows an insured to remain enrolled in their group health insurance plan after they lose or leave their job. Not all health plans are COBRA-eligible. When an insured receives COBRA benefits, you’re usually required to pay the plan premium in full without the help from employers.
The percentage of the medical bill cost you pay after you’ve met your annual deductible. For example, if your medical bill is $500 and your plan has a 20% coinsurance, you would pay $100 out-of-pocket, if you reached your deductible. If you didn’t pay your deductible yet, you would pay the full $500 out-of-pocket.
The maximum amount of money an insured person is required to pay in the form of coinsurance for covered medical services. Once the coinsurance limit is met, the insurance company covers the insured’s medical bills in full.
A type of health insurance plan that’s provided by a private health insurance company, rather than a government program, like Medicaid or Medicare. Commercial health insurance can refer to a policy that is purchased through an employer (group health insurance), an individual ACA marketplace plan or an individual plan purchased outside the marketplace.
A fixed amount of money an insured person pays for a covered medical service or treatment after the plan deductible is met. Depending on the plan, copays may be required for doctor’s visits, lab testing and prescription drugs.
Any individual who is eligible to receive coverage under a health insurance plan. On a family plan, the subscriber and their dependents are considered covered individuals.
A medical treatment or service that an insurance company agrees to pay for, based on the specifications of a health insurance plan.
A type of supplemental health insurance that provides a payout if the insured person is diagnosed with a qualifying critical illness, such as a heart attack, stroke or cancer. Unlike traditional health insurance, critical illness insurance typically provides a lump sum payment, which the insured can use for any purpose.
A health insurance deductible is a fixed amount an insured person pays out-of-pocket in a year before the insurance company covers its portion of qualifying medical expenses.
After you pay your deductible, you may have to pay coinsurance, which is the percentage of the medical bill cost you pay after you’ve met your annual deductible. You may also have a copay, which is the fixed amount of money an insured person pays for a covered medical service or treatment after the plan deductible is met.
An insurance policy that pays for certain dental treatments, including annual cleanings, X-rays, fillings and extractions. Dental insurance policies are generally separate from traditional health insurance policies.
An insurance policy that provides a payout if the insured becomes sick or injured and can’t work. Disability insurance is available in short-term and long-term policies, which provide benefits for varying lengths of time. You can buy disability insurance from a private insurance company or through your employer’s group plan or through your state government.
A critical condition, including an illness, symptom or injury, that needs immediate medical treatment.
Transportation to a hospital or medical facility, usually via ambulance, when an individual is experiencing a medical emergency.
Medical treatment received in a hospital’s emergency department when an individual needs immediate treatment for a sickness, symptom or injury they are experiencing.
Inpatient or outpatient medical care that is necessary to prevent serious harm or death to an individual experiencing a medical emergency.
Medical treatments or services that aren’t covered by a health insurance plan.
A health insurance plan that usually requires members to work with a primary care provider to manage and oversee their medical care. Exclusive provider organization (EPO) plans only cover in-network care except for emergencies.
A document that an insured person receives after a health insurance claim. An EOB includes the total cost of the medical service, a breakdown of what your insurance company pays and what the insured owes. An EOB is not a bill; rather, it’s a statement that explains how much was covered, and what’s leftover.
A flexible spending account (FSA) is a way to save money for qualifying out-of-pocket medical costs, like deductibles, copayments, coinsurance, prescription drugs, over-the-counter medicine and medical devices. You can fund FSAs with tax-free contributions, but you might lose money not used in a calendar year.
A group health insurance plan where the employer buys health insurance from a commercial insurance company to cover its employees. If an employee enrolled in the plan has a claim, the insurance company provides the payout, rather than their employer.
A health insurance plan that’s offered by an employer to its employees. Employers typically subsidize group health insurance premiums, paying well more than half of costs, so premiums are much more affordable (or even free) for the employee.
An arrangement in which multiple employers or individuals purchase health insurance collectively, with the goal of lowering premiums. Group purchasing arrangements (GPAs) can be formed through state legislation or groups of employers or employees.
A category of health care services that help individuals learn and improve the skills necessary for everyday living. Examples of habilitation services include physical therapy, occupational therapy and speech-language pathology.
A legally-binding contract between a health insurance company and an individual, where the insurance company agrees to pay for specific medical services in exchange for a premium.
An individual or business that helps consumers shop for health insurance, apply for coverage and purchase a plan. A health insurance broker can provide expert recommendations for an appropriate health insurance plan based on an individual’s medical needs and/or budget.
A health insurance mandate is a law that requires residents of a state to carry health insurance. Only five states and the District of Columbia require residents to have health insurance: California, Massachusetts, Rhode Island, New Jersey and Vermont. Unless you qualify for an exemption, residents of these states (except Vermont) must pay a tax penalty.
Congress ended the federal mandate penalty in 2019, which effectively wiped out the ACA’s individual mandate.
The estimated cost of a health insurance plan. A health insurance quote is generated before you purchase an insurance plan. Quotes for an ACA marketplace plan are affected by a variety of personal factors, including age, tobacco use and plan metal tier.
A health insurance plan that requires you to work with a primary care provider to manage your care and get specialist referrals. Health maintenance organization (HMO) members can only receive care from providers and facilities that contract with the HMO network. If members get care out-of-network, they’re responsible for the full cost of the service (except for emergency care).
An health insurance plan that covers the cost of various medical services for policyholders.
An account that allows individuals or families to pay for certain health care expenses. Health reimbursement arrangements (HRAs) are owned and managed by a member’s employer, and only the employer can make contributions to the account. HRA contributions are tax-free, but the employer has control over how the HSA funds can be spent and what happens to unused funds. You typically can’t take an HRA with you when you change jobs.
An account that allows individuals or families to save money for qualifying medical expenses. Individuals make health savings account (HSA) contributions on a pre-tax basis and employers can also contribute to the accounts. Only people with a high-deductible health insurance plan can contribute to an HSA.
A health insurance plan with a minimum deductible of $1,500 for an individual or $3,000 for a family. High-deductible health plans (HDHPs) have lower premiums, but you generally pay more when you need medical care. Any health insurance plan, like an HMO or PPO, can be a HDHP.
Medical care that you receive in your home, rather than a hospital or health care facility. Home health care is provided by nurses or other licensed health care professionals.
A type of medical care for people who are experiencing an advanced illness and are nearing the end of their life. Hospice focuses on quality of life and palliative care, rather than disease treatment. Patients can receive hospice care in their private home, in a long-term care facility or in a hospital.
When a patient is admitted to a hospital for inpatient treatment. Hospitalization usually requires staying at least one night.
A supplemental health insurance plan that covers some of the cost of hospital stays. Most hospital indemnity insurance plans cover hospitalizations with or without surgery, as well as intensive care and critical care hospital stays. This type of plan pays out based on the number of days you stay in the hospital.
The percentage of the cost of a medical bill you pay when you receive treatment from a medical provider that contracts with your plan’s network. You only pay in-network coinsurance once you’ve met your deductible.
The amount of money that an insured person pays for a medical service when you visit a provider that contracts with your health plan’s network. In-network copayments are generally less expensive than out-of-network copayments.
A doctor, specialist or hospital that contracts with your health insurance company. These professionals agree to get paid a discounted rate for every service they provide, in exchange for being part of the network. In most cases, health plan members pay less when they visit an in-network provider.
Medical services or treatment that an individual receives when you’re admitted to the hospital and stay overnight.
A type of supplemental health insurance that helps you pay for long-term health care. Many long term care insurance plans will pay for nursing homes, adult day care and home health aides. To use long term care benefits, most policies require adults to need help with at least two activities of daily living (ADLs) for more than 60 days. It also covers adults with cognitive impairment.
A federal- and state-funded health insurance program that provides benefits to low-income individuals and families, and those with disabilities. Medicaid eligibility and costs are based on income.
Medicare is a federal health insurance program for individuals who are over age 65 and younger people with qualifying disabilities. People who are eligible can choose between Original Medicare and Medicare Advantage.
Original Medicare includes Part A (hospital coverage), Part B (medical coverage) and Part D (prescription coverage). Medicare Advantage, also called Part C, includes Part A and Part B and often has prescription drug benefits integrated in the plans. Private health insurance companies offer Medicare Advantage plans, which often provide enhanced benefits not found in Original Medicare, including dental and vision, and even help with nutrition, pest control, transportation for non-medical needs and other enhanced services.
Medical debt is the amount of money you owe in unpaid medical bills.
A form of healthcare that is required or necessary to diagnose or treat an illness or injury, or is otherwise essential to a patient’s recovery. Many health insurance companies only pay for medical services that are deemed medically necessary by a healthcare professional.
A health insurance plan in which an employer and insurance company decide that the employer pays all claims up to a specific amount, and the insurance company pays the rest. With an MPP, the insurance company is usually required to process claims and administer the plans.
A federal law that shields people from paying unexpected medical bills when you accidentally or unknowingly get treatment from an out-of-network provider. The No Surprises Act bans surprise billing in a few situations, including receiving emergency services at an out-of-network facility and receiving non-emergency services at an in-network hospital, but with an out-of-network provider.
A non-preferred provider is a medical professional that doesn’t contract with your insurance company. You usually pay more when you visit a non-preferred provider.
Obamacare is another term for the Affordable Care Act (ACA), a federal law passed in 2010 that expanded access to affordable health insurance in the U.S.
The time period when eligible individuals and families can enroll in or modify an ACA marketplace health insurance plan or other types of health insurance plans. Open enrollment happens annually starting in the beginning of November and ending in mid-January of the following year in most states for ACA plans. Employers with group health insurance set their own open enrollment periods.
Medical services or procedures that don’t require an overnight stay in a hospital or medical facility.
The percentage of the medical bill you pay after meeting your deductible when you get treatment from a doctor or at a hospital that doesn’t contract with your insurance company. Out-of-network coinsurance is usually more expensive than in-network coinsurance.
The amount of money you pay for medical services when you receive medical care from a provider that isn’t part of your health plan’s network. Out-of-network copayments are generally higher than in-network copayments.
A doctor, specialist or hospital that doesn’t contract with your health insurance company. Depending on your plan, you may have to pay the full medical bill if you get treatment out-of-network. Other plans cover a smaller portion of your medical expenses when you go out-of-network.
The portion of your medical expenses that aren’t covered by insurance. Examples of out-of-pocket costs include deductibles and coinsurance.
The out-of-pocket maximum amount of money you pay out-of-pocket for covered medical services in a year. After you’ve reached the limit, your insurance company pays 100% of your qualifying medical expenses. Some of the costs that count toward the out-of-pocket limit are deductibles, copayments and coinsurance for in-network care.
Expenses that don’t count toward the out-of-pocket limit include your premiums, the amount you spend for medical services that your plan doesn’t cover and out-of-network medical care.
The out-of-pocket max in the ACA marketplace is $9,100 for single coverage and $18,200 for family coverage.
Any service that is provided by a licensed Medical Doctor (M.D.) or Doctor of Osteopathic Medicine (D.O.).
A group comprised of hospitals and physicians that work together to manage and coordinate patient care. The entities in a PHO may also provide covered services to the subscribers of a health insurance plan.
A point of service (POS) is a type of health insurance plan that is a hybrid of an HMO and PPO. POS plans allow individuals to receive care in-network or out-of-network, but members are required to work with a primary care provider to get referrals for specialists. POS plans aren’t nearly as common as PPO, HMO and EPO plans.
A health insurance company may require that you get a preauthorization before getting specific treatments, medications, medical devices or other medical services. Insurers use preauthorizations as a way to potentially reduce unnecessary care.
Medical providers that contract with your insurance company’s network and provide services at a discounted rate.
A type of health insurance plan that allows members to get medical care in-network or out-of-network. Preferred provider organization (PPO) members aren’t required to get a referral before seeing a specialist, so these plans have more flexibility than an HMO or EPO, but that generally comes at a higher cost.
A health insurance premium is the cost of keeping your health insurance plan in force. It is the monthly fee you pay for the health insurance plan you choose. You may lose coverage if you stop paying your premium.
Any health insurance plan that covers the cost of prescription medications. All health plans purchased through the ACA marketplace cover prescription drugs. Original Medicare recipients can get drug coverage through Part D.
A healthcare professional who oversees and manages your basic medical care. Some health insurance plans require PCPs to provide referrals to specialists.
Private health insurance refers to any health plan that’s provided by a health insurance company, rather than a state or federal government program.
The group of healthcare professionals and hospitals that your health insurance plan contracts with and provides covered services to plan members.
A surgical procedure that’s required to correct parts of the body following an accident, injury, medical condition or birth defect.
Health care services designed to help you keep and/or improve the essential skills needed to function in daily life. Rehabilitation services are often necessary after an illness, injury or disability, where daily living skills have been compromised or lost.
Reinsurance is a system that financially protects insurance companies that face expensive claims. Rather than pay an entire claim in full, the insurance provider can hire a reinsurance company to pay for a portion of the claim once a monetary limit is met. Reinsurance systems are designed to keep insurance premiums more affordable and reduce insurers’ risk.
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Insurance WriterElizabeth Rivelli has nearly five years of experience covering insurance for finance publications. She has expertise in various insurance lines, including car insurance, health insurance, travel insurance, life insurance and others. In her writing, she aims to make insurance more approachable and understandable for people in all stages of life. Elizabeth also writes for several insurance company blogs.
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