The Top Health Insurance Terms to Know
Posted: June 16, 2023
Understanding common health insurance terms and definitions can prepare you when signing up for a new plan or re-applying to your current insurance. Learn what medical insurance terms and abbreviations you should know in our guide to health insurance terminology 101.
1. Premium
This is one of the most common terms used in insurance. A health insurance premium is the amount you pay monthly, quarterly or annually to the insurance company. In return, you are given the benefits of a health insurance plan. In some cases, you might be able to claim a tax credit for plans through the ACA or ask your employer to share in the costs.
2. Deductible
A deductible is an annual amount you pay before the insurance starts to pay for coverage. The insurance company will not pay for bills until this set amount has been met. Doctor’s visits are often covered by insurance despite deductible requirements.
3. Copayment
A copayment, or copay, is the amount you owe when receiving specific care or medication. For example, some plans charge a set amount when you see your general care practitioner. Comparatively, you might be charged a $15 copay for brand-name medication or a $70 copay for a specialist visit. Remember that the amount will vary depending on the service — copayments usually do not count toward your deductible.
4. Coinsurance
Your coinsurance applies after you meet your yearly deductible. In many cases, you may still have to pay for part of your medical bills, but the amount will be lower once you meet your deductible.
5. Medicare
Medicare is a health insurance program funded by the federal government. It applies to individuals 65 years and older or those with qualifying disabilities. It acts as a hospital and medical insurance plan, providing services and care like hospice, skilled nursing care, medical supplies and physical assistance.
6. Health Savings Account (HSA)
A health savings account lets you save a set amount as pre-tax dollars for medical expenses. You can use the money anytime for qualified medical services — the money withdrawal is tax-free. An HSA is different from a flexible spending account (FSA) because an FSA is connected to your employment and only allows you to use the money towards out-of-pocket expenses.
7. High-Deductible Health Plan (HDHP)
A high-deductible health plan means paying a higher deductible and out-of-pocket cost. Your insurance won’t cover many services and expenses until you meet the deductible.
However, with an HDHP, your premium won’t be as high as other plans, and you might qualify for an HSA account. Many young people use HDHPs due to their low monthly costs and reduced need for medical care.
8. Health Maintenance Organization (HMO)
A health maintenance organization plan is a health care plan from a medical insurance group that offers health services for a set annual fee. Anyone with an HMO can only access care from an established group of providers. Moving out of the city or switching a job could result in loss of coverage.
9. Out-of-Pocket Maximum
The out-of-pocket maximum is the total cost you will pay each year, including coinsurance, copayments and the deductible. The amount varies between singles and families. Once you meet your maximum, your insurance company will pay for the rest of your essential care.
10. Preferred Provider Organization (PPO)
In a preferred provider organization plan, the insurance company pays part of the bill when you visit an out-of-network provider. You also do not need a referral, though your bills might be higher than seeing an in-network physician.
11. Point-of-Service (POS)
A point-of-service plan means you cannot receive care from a specialist without a referral. Your expenses will rise if you use an out-of-network provider without a referral.
12. Preexisting Condition
A preexisting condition is a disability, condition or disease you have before enrolling in an insurance plan. In most cases, denying coverage based on preexisting conditions is illegal. However, there are a few instances where health insurance plans, such as short-term health plans, might deny coverage based on your medical history.
13. Health Insurance Marketplace
The Health Insurance Marketplace is a federally-run service that provides those in the United States with health insurance plans and coverage. You can also find help with enrollment and finances. Covered California is the state-run version of the marketplace for California.
14. Medi-Cal
Medi-Cal is the California version of federal Medicaid. It offers free or low-cost coverage for adults and children with limited income. You can apply for Medi-Cal through Health for California.
15. Open Enrollment
The open enrollment period is when individuals and employees can sign up for new insurance, change their plan or re-apply for the same one. This period only happens once a year.
16. Special Enrollment
A special enrollment period allows individuals to apply for health insurance outside of the open enrollment period. You must have a qualifying life event, such as a loss of a job resulting in loss of health coverage, getting married, moving out of state or having a child, to be able to sign up for health insurance outside of the open enrollment period.
17. Network
A network is a group of medical providers like doctors or hospitals your insurance company covers. Many companies offer a variety of companies within a certain network. It is best practice to search which doctors and specialists apply, as seeing an out-of-network professional could result in more expenses, depending on your health plan.
18. Allowed Amount
For those with a PPO plan, the allowed amount refers to the amount an insurance might pay to cover out-of-network costs. One of the benefits of a PPO plan is that it will enable you to see providers outside your network.
However, these plans do not usually fully cover medical costs. Many PPO insurance plans have a set limit for how much the provider visit will cost, meaning you will have to pay the difference yourself.
19. Household Size
Your household size is an important term to know when signing up for a new insurance plan. While many might consider the number of people in their household to be the number of people they physically live with — such as roommates, partners or family members — it only refers to the people you claim on your tax return.
If you have children and are married, you will claim those individuals on your tax return. If you are single with no children, your household size only includes you.
20. Bronze, Silver, Gold and Platinum Plans
The type of health plan you have is usually divided into one of four categories — bronze, silver, gold and platinum. The categories help differentiate each type of coverage from the other. While your benefits may remain the same, the plans usually vary on monthly premiums and out-of-pocket costs.
For example, by purchasing a bronze health insurance plan, you will likely pay a low monthly premium but experience high out-of-pocket costs. In comparison, platinum plans are known for their high monthly premiums but extremely low out-of-pocket costs.
Find the Right Insurance Through Health for California
Health for California is a health insurance agency that has been operating in California since 2004. We help California residents find the right insurance plan to fit their needs while making the application and enrollment process quick and easy.
All of our insurance agents are licensed by the California Department of Insurance and Covered California and have the knowledge and talent to make insurance purchasing easy. We can also help you calculate government subsidies or explore cost sharing.
Contact us to speak to a representative or get a quote today.