Common health insurance terms and what they mean

Health insurance can be complex, with numerous terms and acronyms. So, wouldn’t it be helpful to have a single source where you can find all the definitions? Don’t worry, we have you covered. Whether you want to gain a better understanding of your health plan or are considering making changes during open enrollment, we’ve sorted the most common health insurance terms into six simple categories to give you a better understanding of your benefits.

A full list of definitions can be found on healthcare.gov.

1. People

Subscriber: A person who is responsible for a contract with a health insurance plan. The subscriber is the person subscribing to the health insurance plan and is responsible for paying the plan premiums. The subscriber can enroll eligible dependents under a family contract.

Provider: A healthcare professional or facility licensed as required by state law. Providers include doctors, hospitals, laboratories, pharmacies, skilled nursing facilities, nurse practitioners, registered nurses, physician assistants, psychiatrists, social workers, licensed marriage and family therapists, licensed mental health counselors, clinical specialists in psychiatric and mental health nursing, and others.

2. Plan types

Health Maintenance Organization (HMO): A type of health insurance plan that usually limits coverage to care from providers who contract with the HMO. It generally won’t cover out-of-network care except in urgent or emergency situations. HMOs require a primary care provider (PCP) who provides integrated care and focuses on prevention and wellness.

Preferred Provider Organization (PPO): PPO plans have a larger network than HMO plans. They also provide coverage for out-of-network covered services, at higher cost sharing than with in-network providers. PPOs don’t require you to have a PCP, which means you can go to specialists without a referral. (Note: There’s always value in having a PCP to coordinate your overall health and well-being.)

HSA-Qualified High Deductible Health Plan (HDHP): Also known as Health Savings Account-compliant plans that follow IRS rules, this is a type of health plan with lower monthly premiums and a higher deductible. This plan can be a more affordable type of health insurance in terms of monthly premiums. The deductible applies to most services, except preventive. Once you reach your annual deductible, you may also be required to pay a copayment and/or coinsurance. Employers often offer a Health Savings Account (HSA) alongside these plans to help offset costs.

Exclusive Provider Organization (EPO): A managed care plan where services are covered only if you go to doctors, specialists, or hospitals in the plan’s network (except in an emergency).

Children’s Health Insurance Program (CHIP): An insurance program that provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance. In some states, CHIP covers pregnant women. Each state offers CHIP coverage and works closely with its state Medicaid program. You can apply at any time. If you qualify, your coverage can begin immediately, at any time of year.

Medicaid: An insurance program that provides free or low-cost health coverage to some low-income people, families, 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.

3. Cost-sharing basics

Premium: The amount that you pay for your health insurance. You and/or your employer usually pay it monthly, quarterly, or yearly.

Claim: A request for payment that you or your healthcare provider submits to your health insurer when you get items or services you think are covered.

Deductible: The amount you pay for a covered healthcare service before your insurance plan starts to pay. A deductible is set at the start of your health insurance coverage term. When you meet that dollar amount, the rest of your medical care is covered for the remainder of that term unless your plan includes a copay or coinsurance.

Copayment: A fixed, out-of-pocket dollar amount that you pay for each healthcare service and/or prescription medication. The amount can vary for different services within the same plan, like prescriptions, lab tests, and visits to specialists.

Benefits: The healthcare 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.

Coinsurance: The percentage of costs of a covered healthcare service you pay after you’ve paid your deductible.

Allowed amount: The maximum payment a health plan will pay for a covered healthcare service. Also known as “eligible expense,” “payment allowance,” or “negotiated rate.”

4. Types of care

Preventive care: Includes a very specific list of services. This list is defined by nationally established guidelines. These services typically look for or prevent health issues and are provided before you are diagnosed with a condition, while you’re healthy and show no symptoms. Health plans cover preventive services at no cost with an in-network provider. Preventive care can include screenings, lab tests, immunizations, and patient counseling.

5. Networks

Network: The group of doctors, facilities, vendors, and other healthcare service providers an insurance company has contracted with to provide covered healthcare services. Providers who are in network participate in the plan. Providers who are out of network do not participate in the plan.

In-network provider (preferred provider): A provider who has a contract with your health insurer or plan who has agreed to provide services to members or a plan. You will pay less if you see a provider in the network.

Out-of-network provider (non-preferred provider): A provider who doesn’t have a contract with your plan to provide services. If your plan covers out-of-network services, you’ll usually pay more to see an out-of-network provider than a preferred provider. Your policy will explain what those costs may be. May also be called “non-preferred” or “non-participating” instead of “out-of-network provider.”

In-network copayment: A fixed amount paid for covered healthcare services that go to providers contracted with your health insurance or plan. In-network copayments usually are less than out-of-network copayments.

Out-of-network copayment: A fixed amount you pay for covered healthcare services from providers who do not contract with your health insurance or plan. Out-of-network copayments usually cost more than in-network copayments. 

Out-of-pocket maximum/limit: 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.

6. Other commonly used terms

Prior authorization (Preauthorization): The prior authorization process begins when a provider prescribes a healthcare service that is not covered by a patient's health insurance plan. Once the provider submits the prior authorization, it will be reviewed by the clinical team at the health insurance plan to evaluate the patient's clinical need for the healthcare product, service, or prescription.

Referral: A written order from your primary care provider for you to see a specialist or get certain healthcare services. In many HMOs, you need to get a referral before you can get healthcare services from anyone except your primary care provider. If you don’t get a referral first, the plan may not pay for the services.

Marketplace: Shorthand for the “Health Insurance Marketplace®,” a shopping and enrollment service for medical insurance created by the Affordable Care Act in 2010. In most states, the federal government runs the Marketplace (sometimes known as the "exchange") for individuals and families. On the web, it's found at HealthCare.gov.

Open Enrollment period: An annual period when people can enroll in a Marketplace health insurance plan. Outside Open Enrollment, you may still be able to enroll in Marketplace coverage if you have certain life events, like getting married, having a baby, or losing other health coverage, or based on your estimated household income.

For more helpful healthcare terms and definitions, visit the glossary at healthcare.gov.

If you're a member of Mass General Brigham Health Plan and you have questions about your plan, you can contact customer service Monday through Friday, 8:00 a.m. to 6:00 p.m., and Thursdays 8:00 a.m. to 8:00 p.m., by calling 866-414-5533 or emailing HealthPlanCustomerService-Members@mgb.org.