Navigating health insurance terminology can feel overwhelming, especially when deciphering bills or understanding your policy’s coverage. With terms like “coinsurance,” “deductible,” and “formulary,” it’s no surprise that many people feel lost. A 2020 Policygenius survey revealed that one in four Americans avoided care due to confusion about coverage, with low-income individuals being disproportionately affected.
Understanding these terms is vital to advocating for your health and securing necessary services. To help, here’s a simplified glossary of common insurance terms that will empower you to take charge of your healthcare.
Allowable Charge
This is the maximum amount your insurance company will pay for a specific service. If a provider charges more than this, you may be responsible for the difference.
Claim
A claim is essentially a bill sent to your insurance provider, listing the costs of services or treatments you’ve received. It’s how healthcare providers get reimbursed.
Condition
This term covers any injury, illness, or health disorder, whether temporary or chronic.
Copay
A copay is a fixed fee you pay for specific services, like doctor visits or prescription medications. Different services often have varying copays, so reviewing your policy can prevent surprises.
Coinsurance
After meeting your deductible, coinsurance kicks in. It’s the percentage of costs you pay for services, while your insurance covers the rest. For example, with 20% coinsurance, you’d pay $20 of a $100 bill.
Deductible
The deductible is the set amount you must pay out of pocket before your insurance starts covering costs. If your deductible is $1,500, you’ll need to pay that amount before coverage begins.
Diagnostic Test
These tests, like X-rays or blood work, help doctors determine the cause of a health issue. They are crucial for accurate diagnoses.
Drug Formulary
This is the list of medications your insurance plan covers, including both generic and brand-name options.
Explanation of Benefits
An Explanation of Benefits (EOB) is a summary from your insurance company detailing what they’ve covered for a recent service. While it looks like a bill, it’s not—just a record for your files.
Inpatient Services
These are services provided after being admitted to a hospital, requiring at least one overnight stay under medical care.
Network
Your insurance works with specific doctors, clinics, and hospitals to provide services at discounted rates. These are your “in-network” providers, and using them can save you money.
Non-Covered Charges
These are services not covered by your insurance, like elective procedures or alternative therapies. Always check your policy for details.
Out-of-Network
Seeing a provider outside your insurance network means you may pay more—or the entire cost—depending on your plan.
Out-of-Pocket Maximum
This is the most you’ll pay in a year for covered services. Once you hit this limit, your insurance covers all additional costs.
Outpatient Services
These services don’t require an overnight hospital stay. Examples include minor procedures or tests performed in a doctor’s office.
Premium
The premium is the monthly fee you or your employer pays to maintain your insurance coverage.
Preventive Care Services
Preventive care includes services like vaccinations, screenings, and annual check-ups. Many plans cover these fully, with no copay or deductible required.
Primary Care Physician
Your primary care physician (PCP) is your go-to doctor for general health concerns and routine care. They can also provide referrals to specialists if needed.
Prior Authorization
Certain procedures or treatments require insurance approval before they’re performed. This step ensures coverage but can delay care if not obtained promptly.
Provider
A provider is any healthcare professional, like a doctor, nurse practitioner, or specialist, who delivers medical care.
Referral
For some plans, such as HMOs, you’ll need a referral from your PCP to see a specialist. This ensures coordination of your care.
Speak Up and Advocate for Yourself
Health literacy is a skill that empowers you to make informed decisions. If you’re unsure about a term or process, don’t hesitate to ask your healthcare provider or insurance company for clarification. Understanding these terms is a step toward managing your health confidently and effectively.
This content has, in part, been generated with the aid of an artificial intelligence language model. While we strive for accuracy and quality, please note that the information provided may not be entirely error-free or up-to-date. We recommend independently verifying the content and consulting with professionals for specific advice or information. We do not assume any responsibility or liability for the use or interpretation of this content.