Glossary of Health Care Terms
A
Affordable Care Act
The Affordable Care Act (ACA), sometimes called “Obamacare,” is a U.S. law enacted in 2010 that expanded access to health insurance, introduced protections for people with pre-existing conditions, and established minimum standards for health coverage. It also created marketplaces where individuals and families can compare and purchase insurance plans, often with financial assistance based on income.
Allowable Charge
An allowable charge is the maximum amount an insurance company will consider eligible for payment for a covered healthcare service. If a provider charges more than this amount, the insured person may be responsible for paying the difference unless the provider has agreed to the insurance company’s rates.
Annual Deductible
An annual deductible is the amount a policyholder must pay out of pocket for healthcare services each year before their insurance plan starts sharing the cost. Until you meet your deductible, you’ll typically pay for most services yourself, except for preventive care that many plans cover without requiring a deductible.
Annual Limit
An annual limit is a cap that some insurance plans place on the amount they will pay for covered healthcare services within a single year. Under the Affordable Care Act, most health plans are prohibited from setting annual dollar limits on essential health benefits, offering greater protection for insured individuals.
B
Benefits:
In health insurance, Benefits refer to the range of healthcare services, treatments, and support covered under a policy. These can include doctor visits, hospital stays, prescription drugs, preventive care, mental health services, and more. The specific benefits offered vary by plan and are detailed in a document called the Summary of Benefits and Coverage (SBC), helping members understand what is included and what costs may apply.
C
Catastrophic Plan
A Catastrophic Plan is a type of health insurance designed primarily for young, healthy individuals or those facing financial hardship. It offers low monthly premiums but high deductibles, covering essential health benefits only after a high deductible is met, and mainly protects against worst-case, high-cost medical events.
Claim Form
A Claim Form is a document submitted to an insurance company requesting payment or reimbursement for medical services received. It typically includes details like patient information, services provided, costs, and provider information, and must be accurately completed to ensure timely processing.
Claim
A Claim is a formal request made by a healthcare provider or insured individual to an insurance company asking for payment based on the terms of the health insurance policy. Claims are reviewed to determine how much of the service is covered and what amount, if any, the patient must pay.
COBRA
COBRA, short for the Consolidated Omnibus Budget Reconciliation Act, is a federal law that allows employees and their families to continue their group health coverage for a limited time after experiencing events like job loss, reduction in work hours, or other qualifying life events, usually at their own expense.
Coinsurance
Coinsurance is the percentage of healthcare costs that a patient pays after meeting their deductible, with the insurance company covering the remaining percentage. For example, if your plan has 20% coinsurance, you pay 20% of the costs for services, and the insurer pays the remaining 80%.
Consumer Directed Health Plan (CDHP)
A Consumer Directed Health Plan (CDHP) combines a high-deductible health insurance policy with a tax-advantaged account like a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA), empowering individuals to manage their healthcare spending and encouraging smarter healthcare decisions.
Contracting Hospital
A Contracting Hospital is a healthcare facility that has entered into an agreement with an insurance company to provide services to insured members at pre-negotiated rates, often resulting in lower out-of-pocket costs for patients who seek care within the insurer’s preferred network.
Coordination of Benefits
Coordination of Benefits (COB) is the process insurers use when a person is covered by more than one health plan, determining which plan pays first and ensuring that combined payments do not exceed the total cost of care, helping avoid duplication of benefits.
Copay
A Copay, or copayment, is a fixed amount a patient pays for a covered healthcare service at the time of care, such as $30 for a doctor’s visit, with the insurance plan covering the rest. Copays vary by plan and service type and often do not count toward the deductible.
Cost-Sharing Reduction (CSR)
Cost-Sharing Reduction (CSR) is a federal subsidy available to lower-income individuals who purchase health insurance through the Marketplace, helping reduce out-of-pocket costs like deductibles, copays, and coinsurance when enrolled in a Silver-level plan.
Covered Person
A Covered Person is an individual who is enrolled in a health insurance plan and entitled to receive benefits outlined in the policy. This includes the primary insured member and may also extend to eligible dependents such as a spouse or children.
Covered Service
A Covered Service refers to a medical procedure, treatment, or healthcare service that is included under an insurance plan’s benefits. Insurers only pay for services they classify as covered, and coverage details are usually listed in the plan documents provided to members.
D
Deductible
A Deductible is the amount you must pay out of pocket for healthcare services each year before your insurance plan begins to share in the costs. Until you meet your deductible, you usually pay the full price for services, although many preventive services may be covered without requiring you to pay toward the deductible.
Dependent
A Dependent is a person, typically a spouse or child, who is eligible to receive health insurance coverage under a policyholder’s plan. Insurance plans often allow dependents to stay on a parent’s plan until age 26, and some plans also cover other family members under specific conditions.
Drug Formulary
A Drug Formulary is a list of prescription medications that an insurance plan covers, often organized by tiers that determine the cost to the insured. Formularies are created to promote the use of safe, effective, and affordable medications, and choosing drugs from the formulary can help lower out-of-pocket costs.
E
Effective Date of Coverage
The Effective Date of Coverage is the day when your health insurance policy officially begins, meaning healthcare services received on or after this date are eligible for coverage according to your plan’s terms.
Emergency Medical Care
Emergency Medical Care refers to immediate treatment needed for sudden and serious illnesses, injuries, or conditions that could threaten life, health, or long-term well-being if not treated promptly, and it is usually covered by insurance without the need for prior approval.
Employer Responsibility
Employer Responsibility under the Affordable Care Act means that certain employers, typically those with 50 or more full-time employees, are required to offer affordable health insurance that provides minimum essential coverage to their employees or face potential penalties.
Essential Health Benefits
Essential Health Benefits are a set of healthcare services that insurance plans must cover under the Affordable Care Act, including services like hospitalization, prescription drugs, maternity and newborn care, mental health services, preventive care, and pediatric care.
Exclusions
Exclusions are specific medical services, treatments, conditions, or procedures that are not covered under a health insurance plan, and policyholders are responsible for the full cost of any healthcare services listed as exclusions in their policy.
Explanation of Benefits (EOB)
An Explanation of Benefits (EOB) is a detailed statement sent by your insurance company after you receive medical services, outlining what was billed, what the insurer paid, any discounts applied, and what amount, if any, you still owe to the provider.
F
Family Coverage
Family Coverage is a type of health insurance plan that extends benefits to the policyholder as well as eligible family members, such as a spouse and children, often providing a cost-effective way to insure multiple people under a single policy.
Federal Poverty Level (FPL)
The Federal Poverty Level (FPL) is a measure of income issued annually by the U.S. government to determine eligibility for various programs and benefits, including Medicaid and Marketplace health insurance subsidies, with different thresholds based on family size and location.
G
Generic Drug
A Generic Drug is a medication that has the same active ingredients, strength, and effectiveness as a brand-name drug but is typically sold at a lower cost. Approved by the FDA, generic drugs offer a more affordable option for patients while maintaining the same therapeutic benefits.
Grandfathered Health Plan
A Grandfathered Health Plan is a health insurance plan that was in place before the Affordable Care Act took effect on March 23, 2010, and hasn’t been significantly changed since. These plans are exempt from some ACA requirements but may not offer the same level of consumer protections.
Group Plan
A Group Plan is health insurance coverage offered by an employer or organization to a group of individuals, usually employees and their dependents. Group plans often provide lower premiums and broader coverage compared to individual plans, thanks to risk pooling and employer contributions.
Guaranteed Issue
Guaranteed Issue is a policy requirement that ensures health insurance companies must offer coverage to any applicant regardless of health status, age, or pre-existing conditions. This provision, strengthened by the Affordable Care Act, helps ensure access to coverage for everyone.
H
Health Insurance Marketplace
The Health Insurance Marketplace is an online platform created by the Affordable Care Act where individuals, families, and small businesses can compare and purchase health insurance plans. It also helps determine eligibility for subsidies or Medicaid based on income and household size.
Health Maintenance Organization (HMO)
A Health Maintenance Organization (HMO) is a type of health insurance plan that requires members to choose a primary care physician (PCP) and get referrals for specialist services. HMOs often have lower premiums and out-of-pocket costs but require care within a specific provider network.
Health Savings Account
A Health Savings Account (HSA) is a tax-advantaged savings account available to individuals enrolled in a high-deductible health plan. It allows users to save money tax-free for qualified medical expenses, offering flexibility and potential long-term savings for healthcare costs.
HIPAA
The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that protects the privacy and security of individuals’ medical records and personal health information. It also ensures the continuity of health coverage during job changes or loss.
I
Individual & Family Out-of-Pocket Maximums
Individual & Family Out-of-Pocket Maximums refer to the most a person or family will have to pay during a policy year for covered healthcare services. Once this limit is reached through deductibles, copays, and coinsurance, the insurance company covers 100% of eligible costs for the rest of the year.
Individual Coverage HRA (ICHRA)
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-funded account that reimburses employees for premiums and medical expenses when they purchase their own health insurance. It offers flexibility to both employers and employees while maintaining tax advantages.
Infusion Drug Care
Infusion Drug Care involves administering medication directly into the bloodstream through a vein, often used for chronic conditions like cancer or autoimmune diseases. This type of care may be provided in hospitals, infusion centers, or even at home, depending on the treatment and insurance coverage.
In-Network
In-Network refers to healthcare providers, facilities, and suppliers that have contracted with a health insurance plan to provide services at pre-negotiated rates. Using in-network providers typically results in lower out-of-pocket costs for insured individuals.
Inpatient Services
Inpatient Services are medical treatments or procedures that require a patient to be admitted to a hospital or facility for at least one overnight stay. These services often involve surgeries, serious illnesses, or complex treatments that need continuous monitoring.
Insured Person
An Insured Person is the individual who is covered under a health insurance policy, either as the primary policyholder or a dependent. This person is entitled to receive benefits for covered healthcare services as outlined in the insurance plan.
J
Job-Based Health Insurance
Job-Based Health Insurance is coverage offered by an employer to its employees and often their dependents. These group health plans typically feature lower premiums than individual plans and may include a variety of benefits like medical, dental, and vision care.
Joint Commission Accreditation
Joint Commission Accreditation is a seal of approval granted to healthcare organizations that meet specific performance and safety standards. Many insurance providers recognize this accreditation as a mark of quality when evaluating hospitals and facilities in their networks.
Justification of Medical Necessity
Justification of Medical Necessity refers to the documentation required by insurers to prove that a treatment or service is appropriate and essential for a patient’s condition. Without this, certain procedures may be denied or delayed.
Job Loss and Special Enrollment
Losing a job is considered a qualifying life event, triggering a Special Enrollment Period. This allows individuals to enroll in a new health insurance plan through the Marketplace or other means, even outside the standard Open Enrollment window.
K
Kidney Dialysis Coverage
Most health insurance plans, including Medicare, cover kidney dialysis treatments for patients with end-stage renal disease (ESRD). Coverage typically includes inpatient and outpatient dialysis, home dialysis training, and necessary equipment and supplies.
Key Health Indicators
Key Health Indicators are measurable data points—such as blood pressure, cholesterol levels, and BMI—that insurers and healthcare providers use to assess an individual’s health risks. These indicators may influence wellness incentives or care management programs.
Knowledge-Based Authentication (KBA)
Knowledge-Based Authentication is a security method used in health insurance portals and telehealth platforms, requiring users to answer personal or account-related questions to verify identity and protect sensitive health information.
Kid’s Health Insurance Program (CHIP)
The Children’s Health Insurance Program (CHIP) provides low-cost health coverage to children in families that earn too much to qualify for Medicaid but cannot afford private insurance. It covers essential services like check-ups, immunizations, prescriptions, and dental care.
L
Lifetime Limit
A Lifetime Limit is the maximum amount an insurance plan will pay for covered healthcare services over the course of an individual’s life. Once this limit is reached, the insurer is no longer responsible for covering further medical costs. Under the Affordable Care Act, most health plans are now prohibited from imposing lifetime dollar limits on essential health benefits.
Long-Term Care Insurance
Long-Term Care Insurance helps cover the cost of services related to chronic illness, disability, or aging, such as assistance with daily activities like bathing or dressing. These services are not typically covered by standard health insurance or Medicare and are often delivered in nursing homes, assisted living facilities, or at home.
Limited Benefit Plan
A Limited Benefit Plan is a health insurance policy that provides coverage for only specific types of medical services or a limited number of doctor visits or hospital stays. These plans are generally low-cost but are not designed to replace comprehensive health coverage.
Loss Ratio
Loss Ratio refers to the percentage of premium dollars an insurance company spends on medical claims and healthcare quality improvement. Under the ACA, insurers are required to spend at least 80% (individual and small group markets) or 85% (large group market) of premiums on care, not administrative costs or profits.
M
Medicaid
Medicaid is a joint federal and state program that provides free or low-cost health coverage to eligible low-income individuals and families, including children, pregnant women, seniors, and people with disabilities. Eligibility and benefits can vary by state.
Medical Cost-Sharing Group
A Medical Cost-Sharing Group is a non-insurance arrangement where members contribute monthly to share each other’s medical expenses. These groups often operate on shared ethical or religious principles and may not offer the same protections or guarantees as traditional insurance.
Medical Group
A Medical Group is a network of physicians and healthcare providers who work together, often under a shared management structure, to offer coordinated care to patients. Medical groups may be part of an HMO or other insurance networks, helping streamline patient services.
Medicare
Medicare is a federal health insurance program primarily for people aged 65 and older, as well as certain younger individuals with disabilities or end-stage renal disease. It includes several parts that cover hospital care, medical services, and prescription drugs.
Member
A Member is an individual who is enrolled in a health insurance plan and entitled to receive covered healthcare services as outlined in the policy. This term applies to both the primary policyholder and any covered dependents.
Minimum Essential Coverage (MEC)
Minimum Essential Coverage (MEC) refers to the type of health insurance that meets the requirements under the Affordable Care Act. Having MEC means you’re covered by a plan that offers basic health benefits and helps you avoid penalties that may apply for being uninsured.
N
Network
A Network is a group of doctors, hospitals, pharmacies, and other healthcare providers that have agreed to offer services at negotiated rates for members of a specific health insurance plan. Staying within the network typically results in lower out-of-pocket costs for covered services.
Non-Contracting Hospital
A Non-Contracting Hospital is a medical facility that does not have an agreement with your health insurance provider. Receiving care at such a hospital may lead to higher costs, as services are considered out-of-network and may not be fully covered by your plan.
O
Open Enrollment Period
The Open Enrollment Period is the designated time each year when individuals can enroll in or make changes to their health insurance plans. Outside this window, changes can usually only be made if you qualify for a Special Enrollment Period due to life events like marriage, job loss, or having a baby.
Out of Network
Out of Network refers to healthcare providers or facilities that do not have a contract with your health insurance plan. Services received from out-of-network providers often result in higher out-of-pocket costs or may not be covered at all, depending on your plan.
Out-of-Pocket Maximum
The Out-of-Pocket Maximum is the most you will have to pay in a plan year for covered healthcare services, including deductibles, copays, and coinsurance. Once you reach this limit, your insurance pays 100% of eligible expenses for the remainder of the year.
Outpatient Services
Outpatient Services are medical procedures, tests, or treatments that do not require an overnight stay in a hospital. These include services like diagnostic imaging, physical therapy, minor surgeries, and routine doctor visits, often performed in clinics or outpatient facilities.
P
Participating Provider Option (PPO)
A Participating Provider Option (PPO) is a type of health insurance plan that offers more flexibility in choosing healthcare providers. Members can see any doctor or specialist without a referral, including out-of-network providers, although staying in-network usually results in lower costs.
Pharmacy Benefit Manager (PBM)
A Pharmacy Benefit Manager (PBM) is a third-party administrator that manages prescription drug benefits on behalf of health insurers, employers, or government programs. PBMs help negotiate drug prices, manage formularies, and process claims to control costs and improve access to medications.
Premium
A Premium is the amount you pay, usually monthly, to maintain your health insurance coverage. It’s required regardless of whether you use healthcare services and is separate from out-of-pocket costs like deductibles, copays, and coinsurance.
Premium Tax Credit
A Premium Tax Credit is a government subsidy that helps lower-income individuals and families afford health insurance purchased through the Health Insurance Marketplace. The credit is based on household income and can be applied in advance to reduce monthly premium costs.
Prescription Drugs
Prescription Drugs are medications that require a doctor’s approval to be dispensed. Health insurance plans typically cover a range of prescription drugs, and the amount you pay depends on your plan’s formulary and tier level of the medication.
Prescription Drug List
A Prescription Drug List, or formulary, is a list of medications covered by a health insurance plan. Drugs are usually grouped into tiers that determine the cost to the insured, with generic drugs typically being the most affordable.
Prescription Drug Payment Level Tier
Prescription Drug Payment Level Tiers categorize medications into levels—such as Tier 1 (generic) to Tier 4 (specialty)—which affect how much you pay. The lower the tier, the lower the cost, encouraging the use of more cost-effective options when available.
Preventive Care Services
Preventive Care Services include routine health screenings, immunizations, and check-ups intended to prevent illness or detect health issues early. Under most insurance plans, these services are covered at no additional cost to the patient when provided by in-network providers.
Primary Care Physician (PCP)
A Primary Care Physician (PCP) is the main healthcare provider responsible for managing your overall health. PCPs offer general medical care, coordinate specialist referrals, and often serve as the first point of contact for medical concerns.
Prior Authorization
Prior Authorization is a requirement from your health insurer to approve certain medications, treatments, or procedures before they are provided. It helps control costs and ensures the service is medically necessary but can delay access to care if not submitted in advance.
Provider
A Provider is a licensed individual or facility that delivers healthcare services, such as doctors, hospitals, specialists, or clinics. In insurance terms, providers can be classified as in-network or out-of-network depending on their agreement with the insurer.
Q
Qualified Health Plan
A Qualified Health Plan (QHP) is an insurance plan that meets the standards set by the Affordable Care Act and is certified by the Health Insurance Marketplace. These plans cover essential health benefits, follow established limits on cost-sharing, and meet requirements for provider networks and quality reporting.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a tax-advantaged benefit that allows small businesses with fewer than 50 full-time employees to reimburse employees for individual health insurance premiums and qualified medical expenses, helping them offer coverage without providing a traditional group plan.
R
Referral
A Referral is a written order from your primary care physician (PCP) for you to see a specialist or receive certain medical services. In many health plans—especially HMOs—a referral is required for the insurance to cover the visit or treatment, ensuring coordinated and cost-effective care
S
Specialist
A Specialist is a doctor who focuses on a specific area of medicine—such as cardiology, dermatology, or orthopedics—and provides expert care for complex or chronic conditions. Depending on your insurance plan, you may need a referral from your primary care physician to see a specialist.
Special Enrollment Period
A Special Enrollment Period is a limited time outside the annual Open Enrollment when you can sign up for or make changes to your health insurance due to qualifying life events like losing other coverage, getting married, having a baby, or moving to a new area.
Specialty Drug
A Specialty Drug is a high-cost prescription medication used to treat complex or rare conditions such as cancer, multiple sclerosis, or rheumatoid arthritis. These drugs often require special handling, close monitoring, and are typically placed in the highest cost-sharing tier of a health plan.
State Continuation Coverage
State Continuation Coverage allows employees of small businesses who lose their health coverage due to job loss or other qualifying events to temporarily continue their existing insurance. It’s similar to COBRA but applies to employers not subject to federal COBRA regulations.
Subsidy (Also Known As Premium Tax Credit)
A Subsidy, often referred to as a Premium Tax Credit, is financial assistance provided by the federal government to help lower-income individuals and families afford health insurance purchased through the Marketplace. It reduces monthly premiums and, in some cases, out-of-pocket costs.
T
Telemedicine
Telemedicine refers to the delivery of healthcare services remotely using telecommunications technology. Patients can consult with doctors, receive diagnoses, and even get prescriptions via phone or video, making care more accessible—especially in rural or underserved areas.
Tiered Network
A Tiered Network is a health insurance model that categorizes healthcare providers into groups or “tiers” based on cost and quality. Patients pay less when choosing providers in preferred tiers and more when choosing lower-ranked or out-of-network providers.
Total Annual Cost
Total Annual Cost refers to the combined amount an insured person can expect to pay in a year, including premiums, deductibles, copays, coinsurance, and other out-of-pocket expenses. It offers a more complete view of a plan’s overall affordability beyond just the premium.
Treatment Plan
A Treatment Plan is a detailed proposal created by a healthcare provider that outlines the course of action for diagnosing or managing a medical condition. It may include medications, procedures, follow-up care, and lifestyle recommendations, often reviewed for insurance approval.
U
Utilization Management
Utilization Management is a process used by health insurance companies to evaluate the medical necessity, efficiency, and appropriateness of healthcare services before they are provided. This may involve prior authorization, concurrent review, or case management to help control costs and ensure quality care.
V
Vaccination
Vaccination is a preventive healthcare service that provides immunity against diseases like flu, measles, and COVID-19. Most health insurance plans cover recommended vaccines at no cost when administered by an in-network provider.
Variable Copay
A Variable Copay refers to a copayment amount that changes based on factors such as drug tier or provider network. For example, generic drugs may have a lower copay than brand-name or specialty medications.
Value-Based Care
Value-Based Care is a healthcare delivery model in which providers are compensated based on patient health outcomes rather than the volume of services provided. It aims to improve care quality while controlling healthcare costs.
Vision Coverage
Vision Coverage is an optional health insurance benefit that helps pay for eye exams, glasses, and contact lenses. It may be included in a broader health plan or offered as a standalone policy.
W
Waiting Period
A Waiting Period is the time an individual must wait after enrolling in a health plan before certain coverage benefits begin. This can apply to specific services or pre-existing conditions, though many plans now limit or prohibit such delays.
Wellness Program
A Wellness Program is a health promotion initiative often offered by employers or insurers to encourage healthier lifestyles. It may include health screenings, fitness incentives, smoking cessation programs, or mental health support.
Workers’ Compensation
Workers’ Compensation is a state-mandated insurance program that provides benefits to employees who suffer job-related injuries or illnesses. It typically covers medical expenses, lost wages, and rehabilitation costs without requiring the worker to sue the employer.
X
X-ray Services
X-ray Services involve diagnostic imaging used to detect fractures, infections, or other internal conditions. Most health insurance plans cover X-rays as part of outpatient or inpatient services, subject to deductible or copay requirements.
Excluded X-ray Procedures
Some insurance plans list specific X-ray procedures that are not covered, particularly those deemed experimental or not medically necessary. It’s important to check plan documents to understand which imaging services are excluded.
X-Chromosome Linked Conditions
Certain genetic conditions linked to the X chromosome may require ongoing medical care. Health insurance may cover diagnostic testing and treatment if deemed medically necessary, particularly when tied to preventive care or family planning.
Y
Yearly Benefit Limit
A Yearly Benefit Limit is the maximum dollar amount or number of services that a health insurance plan will cover in a year for a specific benefit. Though ACA-compliant plans don’t allow dollar caps on essential benefits, some supplemental plans may have these limits.
Young Adult Coverage
Under the Affordable Care Act, Young Adult Coverage allows individuals to remain on a parent’s health insurance plan until age 26, regardless of student status, residence, or marital status, ensuring extended protection during early adulthood.
Your Rights Under the Plan
Every health insurance plan includes a section outlining Your Rights, such as the ability to appeal a claim denial, access medical records, and receive timely care. Understanding these rights helps consumers make informed healthcare decisions.
Z
Zero-Cost Preventive Care
Zero-Cost Preventive Care refers to health services, like immunizations, screenings, and annual check-ups, that are fully covered by insurance without requiring copayments or deductibles, as mandated by the ACA for in-network providers.
Z Codes (ICD-10)
Z Codes are part of the ICD-10 medical coding system used to identify social, economic, and lifestyle factors that affect health, such as homelessness or occupational risks. These codes are used in medical records and sometimes in health coverage decisions.
Zika Virus Coverage
Zika Virus Coverage may include diagnostic testing, consultations, and pregnancy-related monitoring, depending on the insurance plan. While not a standard benefit, relevant services may be covered under infectious disease or maternal care categories.