Health Insurance Glossary for Consumers

Our health insurance glossary is compiled of need-to-know health insurance terms and definitions that will help you search for and buy the right health insurance plan. Understanding the health insurance terms that most companies use can save you from losing the benefits you need most from an insurance policy. Check out our health insurance glossary below to learn more.

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Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent

UPDATED: Jul 16, 2021

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Health insurance gives peace of mind, but understanding some of the terminology used by health insurance companies can give you a headache. The terms are important you need to understand your policy to make sure you get the benefits you are entitled to. It is also essential you comply with the requirements of your health insurance so services you receive will be properly covered. This glossary will help you keep your relationship with your health insurance healthy.

Allowed Charge – The amount an insurance company will reimburse for a covered service. If the service is provided through a participating provider in the network, the provider cannot bill the member for any difference in the amount billed above what the network paid them.

Annual Limit The total dollar amount an insurance company will pay out for a benefit in a year. Annual limits could be on specific services, prescriptions or hospitalizations. Once the annual limit is reached, the member has to pay themselves for any further cost for the rest of the plan year.

Benefits Benefits are the covered health care services from an insurance company. This could include doctor visits, prescriptions, emergency room visits, and cost of medical equipment.

Biosimilar Biological Products– Non brand name drugs with the identical active ingredients as brand name medication also known as generic drugs.

Care Coordination Management of a member’s health care when they are receiving services from multiple providers, or for multiple conditions. There are several differently named models for this coordination.

Catastrophic PlanHealth insurance plan meant to cover necessary and extremely expensive care, often with a very high deductible before the insurance begins to pay for services

Children’s Health Insurance Program (CHIP) A joint Federal/state health insurance program for low income children; it may also be available for pregnant women who are not eligible for Medicaid but unable to afford health insurance.

Chronic Disease ManagementMembers with chronic illnesses are monitored and educated to help them control their disease and minimize acute intervention. This improves their life and reduces health care costs.

Claima submission to an insurance company to have a covered benefit paid by the company. They can come from a provider or from the member, if they paid for the service before submitting the claim.

COBRAA Federal law requiring the option to allow continuation of health insurance benefits through an employer of 20 or more, when the member is no longer eligible for the benefit. The member pays the entire premium, and may need to pay an administration. It is for a limited time.

Co-insuranceCo-insurance is the share of the payment for a claim due from the member. It is a percent of the charge rather than a fixed amount like a copayment.

Conversion Converting insurance from an employer’s plan to an individual plan when no longer eligible for the employee insurance plan.

Copayment A fixed contribution from the member for a benefit service; it may be different for different services.

Cost Sharing The portion of health insurance costs for services which is the member’s responsibility. It is also known as out-of-pocket costs. Premiums are not considered in the total except for Medicaid and CHIP.

Creditable Coverage Health Insurance coverage from a wide variety of different types of providers, providing member eligibility for prior insurance coverage requirements for pre-existing conditions, and limiting or eliminating exclusions in some plans for new insurance coverage.

Deductible The portion of your health care costs you must pay before the health insurance starts paying. The deductible may be different for different types of coverage, and some care may not have a deductible.

Dependent Coverage Coverage for other members of your immediate family: children, step-children, spouse, domestic partner.

Disability A condition or factors which make some or all normal living activities impractical or impossible for the individual, either temporarily or permanently.

Exclusions Services or items not covered by your health insurance. Health insurance companies usually spell out excluded care.

Family and Medical Leave Act (FMLA) Federal law allowing a qualified employee leave for up to 12 weeks for certain family emergencies, disability or the birth of a child. You remain eligible to continue your insurance through your employer while on leave.

Fee for Service The amount paid to a provider per specific service.

Flexible Spending Account (FSA) A selected amount of an employee’s pre- tax dollars put by the employer into an account for the employee, allowing the employee to use the money for out-of-pocket health care. The amount must be used in a specific time frame, or the money is forfeited to the IRS. Sometimes the employer will contribute a share to a flexible spending account.

Formulary Drugs covered by your health insurance, if they cover prescriptions.

Guaranteed Renewal Health insurance companies must continue your coverage in all circumstances, as long as premiums are paid, although the rate may change with renewal.

Health Maintenance Organization (HMO) Care through a network of providers, with almost all care taking place in network except for emergency situations. Providers in the plan are in the same geographic area. Care is coordinated, usually through a primary care physician, with a focus on preventative care.

Health Status Your total health, including current conditions, treatment, prior medical history, and whether you are insured.

Home Health Care Care and items provided to you in your home under a doctor’s order; health insurance may not cover all home care that a doctor orders.

Individual Health Insurance Policy Health insurance with the member directly paying the company, rather than through an employer.

Job-based Health Plan Health insurance through an employer.

Life Event An event that changes the health insurance coverage needed by the insured. Life events include birth, adoption, marriage, divorce, and death.

Lifetime Limit A maximum dollar limit for coverage. It may be for specific services, such as hospice care or orthodontics, or a total lifetime amount for all services paid by the company.

Long-Term Care Medical and other services for people unable to meet their own basic daily needs whether at home or in assisted living. Most health insurance plans specifically exclude long term care, as does Medicare. It is possible to get insurance specifically to cover long term care.

Medicaid A state program providing insurance to groups without insurance, including children and pregnant women, low-income families, and the disabled. States receive some Federal money and must follow some Federal rules, but can also include some of their own policies, so some plan specifics may differ depending on the state.

Medically Necessary Services or supplies considered appropriate and necessary for treating medical conditions, for standard medical care.

Medicare A Federal program that provides insurance both to the elderly and some disabled younger people.

Nondiscrimination A requirement that insurance coverage through an employer cannot be refused to an employee because of a current or pre-existing medical condition. The employee also cannot be charged more for insurance because of existing conditions.

Out-of-Pocket Limit (OOP) A limit on the total costs to be paid by the member during a plan year. This includes copayments and deductibles.

Open Enrollment Period A period of time each year where you can change your benefit plan, Unless there is a qualifying life event, changes can only be made once a year

Out-of-Pocket Costs Costs which are paid by the individual, and not covered by insurance. This can include copayments, deductibles for the plan year, and care not covered under the health insurance policy.

Plan Year Twelve month period of coverage under a health insurance policy through an employer. Not all plan years are the same as a calendar year.

Point-of-Service Plan (POS) Plan Health insurance that lets members pay reduced out-of-pocket costs if they get medical services from providers in the company’s network. Their primary care provider must make a referral if they need to see a specialist.

Policy Year A twelve month period of benefits for individual policies.

Pre-Existing Condition (Job-based Coverage) A medical condition or disability, which can be physical or mental, for which you had any medical care of any type in the six months before your enrollment in a new health plan. Pregnancy, as well as health of newborns or adopted children on the policy, cannot be excluded as a pre-existing condition.

Preferred Provider Organization (PPO) a network of providers who have contracts with the health insurance company and accept specified payments for their services. Getting services from them costs members less than services from providers not in the network.

Premium The cost for health insurance coverage. Employers generally deduct the employee share of the premium from employee paychecks. Individuals also pay a premium for their health insurance cost.

Prevention Health care that is meant to prevent more severe health conditions.

Preventive Services – Insurance companies may have programs to keep existing health problems from becoming more severe or acute. This can include well care visits for children, and services for monitoring and controlling asthma, diabetes, heart problems and other chronic conditions.

Primary Care A physician or other caregiver who is generally the first provider for care. They may act as a gatekeeper when additional treatment is needed from specialists.

Prior Authorization Drugs or services a doctor prescribes, which must be individually approved by the insurance company to be covered.

Rate Review A mandatory state review of changes in insurance rates, which must be completed before health insurance costs or premiums can be increased or changed.

Rider An addition or change to an insurance policy. For instance, a rider could cover dependent care beyond age 18 if the dependent is a full time student, even though coverage would normally end on the 19th birthday.

Rider (exclusionary rider) A change to an individual insurance policy excluding any care for a specific medical condition or part of the body. This does not apply to children, and no longer will be allowed for anyone, beginning in 2014.

Self-Insured Plan A form of health insurance where the employer acts as the insurance company and pays the claims; they may have the plan administered by an insurance company.

Skilled Nursing Facility Care Full time daily care, therapy or similar services which cannot be provided as home care, on a short term basis. Health Insurance plans usually limit the total skilled nursing care days available to a member.

Special Enrollment Period Employers must allow employees 30 days after a life event to make changes in their policy or coverage, outside of the normal once a year enrollment period.

Special Health Care Need Special Needs children need care, including medical care, beyond ordinary care given by parents, because of some sort of disability or health condition.

Uncompensated Care Care for which a provider is not paid. This can happen when people are unable to pay their bills and do not have insurance policies.

Waiting Period (Job-based coverage) Employers may require a waiting period before health insurance is useable by new employees, even when they are eligible for the insurance.

Well-baby and Well-child Visits Coverage for routine care visits for babies and children, including regular checkups, vaccinations, and assessment exams, throughout the period they are eligible for dependent coverage.

Wellness Programs Programs meant to promote and keep people healthy; they may include preventive care programs. Employees may get incentives from employers or the insurance company when they participate in the program.

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