Understanding Health Insurance Acronyms

Our guide to understanding health insurance acronyms can help guarantee you're always in the know when healthcare is being discussed. Some of these health insurance acronyms simply identify different specifications of how a process is handled or define how the insured party is to be reimbursed for any personal expenses incurred. Scroll down to learn more.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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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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It is hard to understand all of the acronyms in healthcare today. It can be difficult to know what people are talking about when they throw all the sets of letters around in conversation. It is
interesting to note that most of these acronyms refer to the same basic kind of coverage. Some of these acronyms simply identify different specifications of how a process is handled or how the
insured party is to be reimbursed, if reimbursement is required, for any personal expenses incurred.

  • Table of Contents

    SDHP

    SDHP stands for Self Directed Health Plan; this is a refinement of a type of group health insurance that is also known as a Cafeteria Plan. This nickname comes from the fact that this is a
    strictly employer-sponsored plan. These plans used to be discussed in the company cafeteria or other meeting areas.

  • CDHP

    CDHP stands for Consumer Directed Health Plan, which is very much like an SDHP, except that it includes individual and family health insurance plans. These plans are most often provided by the
    employer and is well liked for the ability to adapt to the needs and requirements of group members. The remaining types of coverage that are discussed are variations of CDHP.

  • FSA

    An FSA, or Flexible Spending Account, is the most well-known type of CDHP, it is occasionally known as a 125 plan; in reference to the IRS code that ensures the exemption of this type of
    savings account. These plans are usually used as a health reimbursement fund that is commonly deposited via direct payroll deposits for each employee.

  • HRA

    HRA stands for Health Reimbursement Account, this is one of the oldest of the group health coverage plans. Many times HRA is confused with FSA plans, as they have some similarities. Employees
    pay weekly or monthly from their paychecks, these payments go into a fund that reimburses any personal expenses incurred from doctor visits or other obligations.

  • HSA

    Another popular plan is the has or Health Savings Account. This is generally a high deductible health plan, which means that a large amount of out of pocket payments are associated with this
    type of coverage. HSAs are usually associated with standard PPO and HMO plans.

Having discussed these different options, you are now prepared to have informed discussions about health coverage without feeling that you are being marginalized due to a lack of knowledge. The
differences in these varying healthcare saving plans are minimal, however, knowing which one is best for you can save you a lot of money.

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