Health Insurance Terminology: A Guide to Common Terms

Common Health Insurance Terms Explained

Understanding health insurance terminology can help you make more informed decisions about your coverage options.

Key Terms

Premium

The amount you pay for your health insurance coverage, typically on a monthly basis. This is separate from other out-of-pocket costs like deductibles and copays.

Deductible

The amount you must pay for covered healthcare services before your insurance plan starts to pay. For example, with a $1,000 deductible, you pay the first $1,000 of covered services yourself.

Copayment (Copay)

A fixed amount you pay for a covered healthcare service after you've paid your deductible. For example, you might pay $25 for a doctor's office visit.

Coinsurance

Your share of the costs of a covered healthcare service, calculated as a percentage of the allowed amount for the service.

Out-of-Pocket Maximum

The most you have to pay for covered services in a plan year. After you spend this amount, your health plan pays 100% of covered services.

Plan Types

HMO (Health Maintenance Organization)

A type of health plan that usually limits coverage to care from doctors who work for or contract with the HMO.

PPO (Preferred Provider Organization)

A type of health plan that contracts with medical providers to create a network of participating providers.

EPO (Exclusive Provider Organization)

A managed care plan where services are covered only if you use doctors, specialists, or hospitals in the plan's network.

HDHP (High Deductible Health Plan)

A plan with a higher deductible than traditional insurance plans, often paired with a Health Savings Account (HSA).

Understanding Your Options

When evaluating health insurance options, consider how these terms apply to your specific situation and healthcare needs.