Navigating the world of health insurance can be confusing, especially when you encounter unfamiliar terms and jargon. To help you better understand your health insurance options, we've compiled the ultimate health insurance glossary for 2023. Use this guide to decode insurance terminology and make informed decisions about your healthcare coverage.
A premium is an amount you pay, usually monthly, for your health insurance coverage. Premiums vary based on factors such as the type of plan, coverage level, and the insurance company.
A deductible is an amount you must pay for healthcare services before your insurance starts to cover costs. Deductibles reset annually and can vary widely between plans.
A co-payment, or co-pay, is a fixed amount you pay for a covered healthcare service, such as a doctor's visit or prescription medication. Co-pays vary depending on the plan and the type of service.
Co-insurance is the percentage of a healthcare service's cost that you're responsible for paying after meeting your deductible. For example, if your co-insurance is 20%, you would pay 20% of the cost of a covered service, while your insurance would cover the remaining 80%.
The out-of-pocket maximum is the most you'll have to pay for covered healthcare services in a plan year. Once you reach this limit, your insurance will cover 100% of eligible costs for the rest of the year.
A network is a group of healthcare providers, such as doctors, hospitals, and pharmacies, that have agreed to provide services at negotiated rates to members of a specific health insurance plan.
In-Network vs. Out-of-Network:
In-network providers are those within your insurance plan's network, offering services at lower, negotiated rates. Out-of-network providers are those not part of your plan's network, and their services are typically more expensive and may not be covered by your insurance.
Health Maintenance Organization (HMO):
An HMO is a type of health insurance plan that requires you to select a primary care physician (PCP) and obtain referrals for specialist care. HMOs usually only cover care provided by in-network providers.
Preferred Provider Organization (PPO):
A PPO is a type of health insurance plan that allows you to see any healthcare provider, but offers lower costs for in-network providers. PPOs typically do not require referrals for specialist care.
Exclusive Provider Organization (EPO):
An EPO is a type of health insurance plan that only covers services from in-network providers, except in emergencies. EPOs usually do not require referrals for specialist care.
High-Deductible Health Plan (HDHP):
An HDHP is a health insurance plan with a higher deductible than traditional plans. These plans typically have lower monthly premiums and can be paired with a Health Savings Account (HSA).
Health Savings Account (HSA):
An HSA is a tax-advantaged savings account available to individuals with a qualifying high-deductible health plan (HDHP). Funds contributed to an HSA can be used to pay for qualified medical expenses, and unused funds roll over year-to-year.
Flexible Spending Account (FSA):
An FSA is a tax-advantaged account offered by some employers that allow you to set aside pre-tax dollars for eligible healthcare expenses. Unlike HSAs, FSAs typically have a "use it or lose it" policy, meaning unused funds do not roll over to the next year.
Prior authorization is a process in which your insurance company must approve certain healthcare.