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Glossary
Allowable amount
The maximum amount a plan will pay for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.” If your provider charges more than the plan’s allowed amount, you may have to pay the difference.
Benefit
The health care items or services covered under a health insurance plan. Covered benefits and excluded services are defined in the health insurance plan's coverage documents. In Medicaid or CHIP, covered benefits and excluded services are defined in state program rules.
Benefit year
The 12-month period for which health insurance benefits are calculated, not necessarily coinciding with the calendar year. Health insurance companies may update plan benefits and rates at the beginning of the benefit year.
Claim
A request for payment that you or your health care provider submits to your health insurer when you get items or services you think are covered.
Coordination of benefits
A system used in group health plans to eliminate duplication of benefits when you are covered under more than one group plan. Benefits under the two plans usually are limited to no more than 100% of the claim.
Coinsurance
The percentage of costs of a covered health care service you pay (20%, for example) after you've paid your deductible.
Copayment
A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.
Deductible
The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself.
After you pay your deductible, you usually pay only a copayment or coinsurance for covered services. Your insurance company pays the rest.
Dependent
A child or other individual for whom a parent, relative, or other person may claim a personal exemption tax deduction. Under the Affordable Care Act, individuals may be able to claim a premium tax credit to help cover the cost of coverage for themselves and their dependents.
Drug formulary/list
A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits.
Effective date
The date on which a policyholder's coverage begins.
Employee Retirement Income Security Act (ERISA)
A federal law that sets standards for most voluntary established retirement and health plans in the private industry to provide protection for individuals in these plans.
Excluded services
Health care services that your health insurance or plan doesn’t pay for or cover.
Explanation of benefits
Group health insurance
A written explanation from the health insurance company, of how a medical claim was paid. It contains detailed information about what the company paid and what portion of the costs you are responsible for.
In general, a health plan offered by an employer or employee organization that provides health coverage to employees and their families.
Health Maintenance Organization (HMO) plan
A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.
Health Savings Account (HSA)
A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums.
While you can use the funds in an HSA at any time to pay for qualified medical expenses, you may contribute to an HSA only if you have a High Deductible Health Plan (HDHP) — generally a health plan (including a Marketplace plan) that only covers preventive services before the deductible. For plan year 2022, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family. When you view plans in the Marketplace, you can see if they’re "HSA-eligible."
In-network provider
Individual health insurance
A health care professional, hospital, or pharmacy that is part of a health plan’s network of preferred providers. You will generally pay less for services received from in-network providers because they have negotiated a discount for their services in exchange for the insurance company sending more patients their way.
Policies for people that aren't connected to job-based coverage. Individual health insurance policies are regulated under state law.
Medicaid
Insurance program that provides free or low-cost health coverage to some low-income people, families and children, pregnant women, the elderly, and people with disabilities. Many states have expanded their Medicaid programs to cover all people below certain income levels.
Whether you qualify for Medicaid coverage depends partly on whether your state has expanded its program. Medicaid benefits, and program names, vary somewhat between states.
You can apply anytime. If you qualify, your coverage can begin immediately, any time of year.
Medicaid is funded by the federal and state governments and managed by the states.
Medicare
The federal health insurance program that provides health benefits to Americans age 65 and older. Signed into law on July 30, 1965, the program was first available to beneficiaries on July 1, 1966, and later expanded to include disabled people under 65 and people with certain medical conditions. Medicare has two parts; Part A, which covers hospital services, and Part B, which covers doctor services.
It also covers people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).
If you have Medicare coverage you don’t have to make any changes. You’re considered covered under the health care law.
Network
The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.
Out-of-network provider
A health care professional, hospital, or pharmacy that is not part of a health plan's network of providers. You will generally pay more for services received from out-of-network providers.
Out-of-pocket cost
Your expenses for medical care that aren't reimbursed by insurance. Out-of-pocket costs include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren't covered.
Out-of-pocket maximum
The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits.
The out-of-pocket limit doesn't include:
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Your monthly premiums
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Anything you spend for services your plan doesn't cover
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Out-of-network care and services
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Costs above the allowed amount for a service that a provider may charge
Pension
A wage paid under given conditions to a person following retirement from service or to surviving dependents.
Point-of-Service plan (POS)
A type of plan in which you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. POS plans also require you to get a referral from your primary care doctor in order to see a specialist.
Preauthorization
A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.
Pre-existing condition
A health problem, like asthma, diabetes, or cancer, you had before the date that new health coverage starts. Insurance companies can't refuse to cover treatment for your pre-existing condition or charge you more.
Preferred Provider
A provider who has a contract with your health insurer or plan to provide services to you at a discount. Check your policy to see if you can see all preferred providers or if your health insurance or plan has a “tiered” network and you must pay extra to see some providers. Your health insurance or plan may have preferred providers who are also “participating” providers. Participating providers also contract with your health insurer or plan, but the discount may not be as great, and you may have to pay more.
Preferred Provider Organization (PPO) plan
Premium
A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
The amount you or your employer pays each month in exchange for insurance coverage.
Provider
Any person (i.e., doctor, nurse, dentist) or institution (i.e., hospital or clinic) that provides medical care.
Prescription Drug Coverage
Health insurance or plan that helps pay for prescription drugs and medications.
Prescription Drugs
Primary Care Physician
Primary Care Provider
Retirement Plan
Rider
Roth 401k
Roth IRA
Specialist
Traditional 401k
Traditional IRA
Underwriting
Waiting Period
Wellness Program
Drugs and medications that by law require a prescription.
A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine) who directly provides or coordinates a range of health care services for a patient.
A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine), nurse practitioner, clinical nurse specialist or physician assistant, as allowed under state law, who provides, coordinates or helps a patient access a range of health care services.
A system for saving money for use during retirement.
Coverage options that enable you to expand your basic insurance plan for an additional premium. A common example is a maternity rider.
An employer-sponsored retirement savings account that is funded using after-tax dollars. Income tax is paid immediately on the earnings that the employee deducts from each paycheck and puts into the retirement account. Meaning withdrawals from a Roth 401k account are tax free upon retirement.
A retirement savings account, that anyone with an earned income can contribute to, in which income taxes on certain deposits and on all gains are taxed immediately. Meaning any withdrawals will be tax free upon retirement.
A physician specialist focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent or treat certain types of symptoms and conditions. A non-physician specialist is a provider who has more training in a specific area of health care.
An employer-sponsored retirement savings plan that allows employees to make pre-taxed contributions from their salaries. Funds deposited to a traditional 401k plan are not taxed until withdrawn.
A retirement savings account, that anyone with an earned income can contribute to, in which income taxes on certain deposits and on all gains are deferred until withdrawals are made.
The process by which health insurance companies determine whether to extend coverage to an applicant and/or set the policy's premium.
The period of time that an employer makes a new employee wait before he or she becomes eligible for coverage under the company's health plan. Also, the period of time beginning with a policy's effective date during which a health plan may not pay benefits for certain pre-existing conditions.
A program intended to improve and promote health and fitness that's usually offered through the workplace, although insurance plans can offer them directly to their enrollees. The program allows your employer or plan to offer you premium discounts, cash rewards, gym memberships, and other incentives to participate. Some examples of wellness programs include programs to help you stop smoking, diabetes management programs, weight loss programs, and preventative health screenings.
Sources
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Merriam-Webster: America's Most Trusted Dictionary
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Roth 401(k) vs. 401(k): What’s the Difference?
* These terms are for educational purposes only, for more detailed information about one’s coverage, please see your health plan document and consult your employer or health care insurance agent.