Health Insurance Glossary
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Quick definitions for 22 common health plan terms used in cost comparisons.
Use this page to clarify terminology while modeling plan options and annual costs.
Deductible
The amount of medical bills you need to pay in a year before insurance starts splitting the bills with you.
Coinsurance %
After you reach your deductible, this is the percent of each bill you pay while insurance pays the remainder.
Out-of-pocket max
The most you pay for covered medical bills in a year. After this, insurance pays 100% of covered costs.
HSA
Typically paired with high-deductible plans. Contributions are pre-tax, roll over yearly, and can be invested.
Copay
A fixed dollar amount you pay for certain services (like office visits or prescriptions). Copay plans often have higher premiums but lower costs for routine care. Copays usually do not count toward your deductible, but they typically count toward your out-of-pocket maximum.
Network type
HMOs often need referrals and in-network care. EPOs stay in-network without referrals. PPOs allow broader access.
In-network vs. out-of-network
In-network providers have negotiated rates. Out-of-network services are usually much more expensive.
Preventive care
Most plans cover preventive care at no extra cost when you use in-network providers.
FSA
Flexible Spending Account. An employer-sponsored pre-tax account for medical or dependent care expenses. Generally use-it-or-lose-it within the plan year, with limited carryover allowed by some plans.
HDHP
High-Deductible Health Plan. A plan with a higher deductible (set by IRS minimums each year) and typically lower premiums. HSA contributions require enrollment in an HSA-eligible HDHP.
COBRA
Federal law that lets you continue your former employer's group health plan for a limited time after job loss or certain other qualifying events, typically at the full premium plus a 2% admin fee.
Open enrollment
The annual window when you can sign up for or change health plan coverage without a qualifying life event. For most employers, it runs 2 to 4 weeks between October and December.
Qualifying life event
A change in your life or household (marriage, birth, job loss, move, etc.) that opens a limited special enrollment period to change health coverage outside the annual open enrollment window.
Special enrollment period
A limited window (typically 30 days for employer plans, 60 days for the ACA Marketplace) that opens after a qualifying life event, during which you can enroll in or change health coverage.
Balance billing
When an out-of-network provider bills you for the difference between their full charge and what your insurer pays. Generally illegal under the federal No Surprises Act for emergency care and for out-of-network providers at in-network facilities.
No Surprises Act
Federal law effective January 2022 that protects patients from surprise out-of-network bills in three situations: emergency services, out-of-network providers at in-network facilities, and air ambulance services.
Summary of Benefits and Coverage (SBC)
A standardized 4 to 8 page document every health plan must provide, summarizing premiums, deductible, out-of-pocket max, covered services, and three required coverage examples for plan-to-plan comparison.
Formulary
The list of prescription drugs your health plan covers, organized into tiers by cost share. Drugs not on the formulary may not be covered or may require an exception process.
Step therapy
An insurer requirement that you try one or more lower-cost medications first before they cover a preferred drug. Exceptions can be requested based on medical necessity.
Specialty drug
A high-cost medication used to treat complex conditions like cancer or autoimmune disease. Typically placed in the highest formulary tier, often requires a specialty pharmacy and may need prior authorization.