One of the most important parts of staying healthy and paying the bills is having health insurance. But if you’re new to the world of health insurance, their policies, coverage, and premiums are likely to confuse you. Even when looking into a plan, there are many words and phrases you are unfamiliar with, and it is important to understand what you are buying. To make sure you pick a health insurance plan that fits your needs, we’ve put together this beginner health insurance guide, offering up the most important insurance lingo definitions.
With that come the words and phrases of health insurance policies. Here at this health insurance glossary section, we try to explain some of the key terms you may see in any plan document.
The amount that you pay each month to keep your health insurance alive is called a premium. It’s an access fee to your plan, whether you use medical services that month or not.
Your deductible is the point at which you pay for your medical expenses until the insurance company starts paying a portion of the costs. For example, say your deductible is $1,000; you will have to pay $1,000 before your insurance ever kicks in for covered services.
Copayment, or copay for short, is an amount you pay for a medical service or medication. For instance, a doctor’s visit might cost you $20; a prescription drug might cost $10. How much you pay depends on the service and your plan.
After your deductible has been met, you and your insurance company share the costs, and you will be paying this portion of the costs as coinsurance (a percentage). Say I have 20% coinsurance, I pay 20% of the bills and they, 80%.
This is the most you’ll have to pay in a year for covered services. Once you reach this amount, your insurance covers 100% of the costs for the rest of the year. It helps protect you from very high medical bills.
If you’re just starting with health insurance, this section of our beginner health insurance guide will help you understand the basics of how plans work and what to consider when choosing one.
Health insurance is more than just a safety net. It helps you pay for medical care, including doctor visits, hospital stays, and prescriptions. Without insurance, these costs can add up quickly and become overwhelming.
Health insurance works by sharing the cost of your medical bills between you and the insurance company. You pay a premium each month and, when you get care, you may also pay a deductible, copayments, or coinsurance.
When you’re new to health insurance, comparing plans can be tricky. Think about what’s important to you, like which doctors you want to see or how much you’re comfortable paying each month.
Let’s dive deeper into more insurance lingo definitions that are common in policies and can help you understand your benefits better.
A network is a group of doctors, hospitals, and clinics that have a contract with your insurance company to provide care at lower costs. Staying “in-network” can save you money because the insurance company has negotiated discounts with these providers.
If you see a doctor or go to a hospital that isn’t part of your insurance network, it’s called “out-of-network.” Out-of-network care usually costs more, and some plans might not cover it at all.
Preauthorization is when your insurance company requires you to get approval before certain services, like surgeries or specialized tests. If you don’t get preauthorization, your insurance might not cover the care.
A formulary is a list of medications that your insurance plan covers. Drugs on the formulary usually cost less than drugs not on the list. If you take prescription medication, check your plan’s formulary to see what’s covered.
After you get medical care, you’ll get a document called an Explanation of Benefits. It’s not a bill—it shows how much the insurance company paid and how much you owe.
Understanding insurance terms can help you avoid surprises and feel more confident when using your plan. Here, we’ll go over some additional insurance lingo definitions and how they affect your coverage.
A Primary Care Physician is the main doctor you see for most health needs. Many insurance plans require you to choose a PCP who manages your care and refers you to specialists if needed.
A specialist is a doctor who focuses on a specific area of medicine, like a cardiologist or dermatologist. Some plans require a referral from your PCP to see a specialist.
Preventive care includes routine checkups, vaccines, and screenings that help you stay healthy and catch problems early. Many health insurance plans cover preventive care at no cost to you.
An emergency room is for life-threatening conditions, while urgent care is for problems that need care quickly but aren’t emergencies. Knowing the difference can save you time and money.
All this comes down to deciding on a plan that understands its capabilities. First off, let’s take a look at the plan vocabulary explained so that you can pick the right plan for you with confidence.
An HMO plan forces you to visit doctors and hospitals in the plan’s network. You usually need a referral from your PCP to see a specialist. The lower premiums and out-of-pocket costs are the reason why HMO plans are likely to be the cheapest.
With a PPO plan, you get to choose any doctors in or out of your network. You don’t need to have a referral to see a specialist. While HMOs tend to be cheaper, PPO plans are more flexible and generally cost more.
An EPO is like an HMO, but you often don’t need a referral to see a specialist. But it only applies to care within the plan’s network; care received out of network will rack up a hefty bill.
HDHPs possess high deductibles but low monthly premiums. Here's the deal: You can pair these plans together to help pay for medical expenses with a Health Savings Account (HSA).
First time looking at the options for a health insurance plan can be daunting, but therein lies an opportunity. After all, it’s hard to feel confident about what you’re choosing when you don’t understand the lingo — that’s why we created this health insurance glossary and insurance lingo definitions guide.
However, by taking the time to learn about your plan and the terms that come with it, you’re better able to make good choices for you, your health, and your budget. Employer health insurance does more than generate paper that you hope you’ll never have to use; it allows you to put the blank check away for the rest of your life. Please reach out to your insurance company or a trusted health advisor whenever you’re not sure.
This content was created by AI