Health Insurance Terms: A Plain-English Glossary

On this page

• What you pay
• Plan types
• Getting care
• The Marketplace and tax credits
• Job-based coverage
• Health accounts
• Medicare and Medicaid
• Claims, bills and your rights
• Frequently asked questions

What you pay

• Premium: The monthly price of your coverage, which you pay whether or not you use any care.
• Deductible: What you pay for covered care each year before your plan starts sharing costs. Some services, like preventive care, are covered before you meet it.
• Family deductible: The amount a family on one plan pays before after-deductible benefits start for everyone. With an embedded deductible, each person also has a smaller deductible of their own.
• Copay: A flat fee for a covered service, such as a doctor visit or a prescription.
• Coinsurance: Your percentage share of the allowed amount for a covered service, usually after you meet your deductible.
• Out-of-pocket maximum: The most you’ll pay for covered in-network care in a plan year. For 2027, Marketplace plans can’t set it above $12,000 for one person or $24,000 for a family.
• Allowed amount: The most your plan will pay for a covered service, also called the negotiated rate. Coinsurance is usually figured from it.

Plan types

• HMO: A health maintenance organization usually covers care only from doctors in its network, except in emergencies, and you typically need referrals.
• PPO: A preferred provider organization charges less in network but lets you go out of network without a referral, for a higher cost.
• EPO: An exclusive provider organization covers only in-network care, except emergencies, and usually doesn’t require referrals.
• POS: A point-of-service plan uses a primary care doctor and referrals like an HMO, but it pays for some out-of-network care at a higher cost.
• Metal levels: The Bronze, Silver, Gold and Platinum tiers of Marketplace plans. Bronze usually has the lowest premiums and the highest costs when you get care, and Platinum is the reverse.
• Catastrophic plan: A low-premium plan with a very high deductible for people under 30 or with a hardship exemption. It covers preventive care and at least three primary care visits a year before the deductible.
• Short-term health insurance: Temporary coverage that doesn’t follow ACA rules, so it can exclude pre-existing conditions and leave out benefits like maternity care.
• Health care sharing ministry: A group whose members share each other’s medical bills. It isn’t insurance and doesn’t have to cover essential health benefits.
• Grandfathered plan: An individual policy bought, or a job-based plan already in place, on or before March 23, 2010. It doesn’t have to follow some ACA rules, such as free preventive care.

Getting care

• In-network and out-of-network: In-network providers have contracts with your plan; out-of-network providers don’t, so their care costs more or isn’t covered. You can check whether a doctor is in network.
• Referral: A written order from your primary care doctor to see a specialist or get certain services. HMOs and POS plans usually require one.
• Prior authorization: Your plan’s advance approval that a service, drug or device is medically necessary. It isn’t a promise to pay.
• Formulary: Your plan’s list of covered prescription drugs, also called a drug list.
• Preventive care: Screenings, vaccines and checkups meant to prevent illness or catch problems early. Most plans cover the recommended list at no cost in network.
• Essential health benefits: The 10 categories of care, from hospital stays to children’s dental and vision, that individual and small-group plans must cover.
• Pre-existing condition: A health problem you had before your coverage started. ACA plans can’t refuse to cover it or charge you more for it.

The Marketplace and tax credits

• Marketplace: The government-run exchange, HealthCare.gov or your state’s own site, where you compare and buy individual plans and apply for savings.
• Open enrollment: The yearly sign-up window for Marketplace plans. Dates vary by state.
• Special enrollment period: A chance to sign up outside open enrollment after a qualifying life event, such as losing coverage, marrying, having a baby or moving. You usually have 60 days to pick a Marketplace plan, and job-based plans must give you at least 30.
• Premium tax credit: A tax credit that lowers your Marketplace premium, based on your expected income and household size. You can take it monthly and settle up at tax time using Form 1095-A, which can mean paying some back.
• Benchmark plan: The second-lowest-cost Silver plan available to you. Your tax credit is based on its price, even if you choose another plan.
• Cost-sharing reductions: Extra savings that lower your deductible, copays and out-of-pocket maximum if your income is under 250% of the federal poverty level. You get them only with a Silver plan.
• Federal poverty level (FPL): An income measure, updated yearly, used to decide who qualifies for Marketplace savings, Medicaid and CHIP. Since 2026, premium tax credits generally go to households between 100% and 400% of it.
• Modified adjusted gross income (MAGI): The income figure the Marketplace and Medicaid use: your adjusted gross income plus untaxed foreign income, non-taxable Social Security and tax-exempt interest. More in what counts as income.
• Navigator: A trained, impartial helper who assists with Marketplace applications for free. Agents and brokers also help people enroll, but they’re licensed to sell plans.

Job-based coverage

• Employer affordability test: If a job-based plan meets a minimum value standard and your share for employee-only coverage is no more than 9.96% of household income in 2026 (10.22% in 2027), it counts as affordable and you can’t get a Marketplace tax credit instead. Family members are judged on the cost of family coverage. More in Marketplace coverage when your job offers insurance.
• COBRA: A law that lets you keep your job-based plan after leaving a job or losing hours, usually for 18 months, at up to 102% of the full premium.
• Self-funded plan: An employer plan where the company pays workers’ claims itself, often with an insurer handling the paperwork. State insurance mandates generally don’t apply to it.
• Coordination of benefits: The rules for which plan pays first when you have two. For a child on both parents’ plans, the birthday rule usually makes the plan of the parent whose birthday comes first in the year pay first.
• Dependent coverage to 26: Young adults can stay on a parent’s plan until 26, whether or not they’re in school, married or living at home.

Health accounts

• HSA: A health savings account is a tax-free account you can open with an HSA-eligible high-deductible plan. The money is yours to keep, and for 2027 you can put in up to $4,500 for self-only coverage or $9,000 for family coverage.
• FSA: A flexible spending account is an employer account you fund with pre-tax pay for medical costs. Unused money is generally lost at the end of the plan year, apart from a small carryover or grace period if your plan offers one.
• HRA: A health reimbursement arrangement is an account your employer funds to reimburse your medical costs tax-free, up to a set amount each year.
• ICHRA: An individual coverage HRA reimburses workers tax-free for individual insurance they buy themselves, including Marketplace plans. If you accept it, you can’t also get a premium tax credit.

Medicare and Medicaid

• Medicare: Federal health insurance for people 65 and older and some younger people with disabilities or certain conditions. If you qualify at 65, you can sign up during a 7-month window around your 65th birthday.
• Original Medicare: Part A covers inpatient hospital care, skilled nursing facility care, hospice and home health care. Part B covers doctor visits, outpatient care, medical equipment and many preventive services, for a monthly premium.
• Medicare Advantage (Part C): A private plan approved by Medicare that you can choose instead of Original Medicare. Most include drug coverage.
• Part D: Medicare’s prescription drug coverage, sold through private plans.
• Medigap: Private insurance that helps pay your share of costs in Original Medicare. Plans are standardized and labeled by letter, such as Plan G and Plan N.
• Late enrollment penalty: A higher Part B or Part D premium you may pay for as long as you have that coverage if you sign up late without other qualifying coverage.
• Medicaid: Free or low-cost coverage for some people with low incomes, run by each state under federal rules. You can apply any time, and income limits vary by state.
• Medicaid coverage gap: In most of the 10 states that haven’t expanded Medicaid to adults with incomes up to 138% of the poverty level, many adults below the poverty level can’t get Medicaid or a tax credit.
• CHIP: Low-cost coverage for children in families that earn too much for Medicaid but not enough for private coverage.
• Medicare Savings Programs and Extra Help: State-run programs that help people with limited income and savings pay Medicare premiums and other costs, plus a federal program, Extra Help, that lowers Part D drug costs. More in who qualifies.

Claims, bills and your rights

• Claim: A request for payment that you or your provider sends to your insurer after you get care.
• Explanation of benefits (EOB): A statement from your insurer showing what a provider charged, what the plan paid and what you may owe. It isn’t a bill.
• Balance billing: When an out-of-network provider bills you for the difference between its charge and your plan’s allowed amount. In-network providers can’t do this for covered services.
• No Surprises Act: A federal law that bans most surprise bills for emergency care and for out-of-network clinicians at in-network hospitals and facilities. It doesn’t cover ground ambulances.
• Appeal: A request for your plan to reconsider a denied claim or service. You generally have at least 180 days to file.
• External review: An independent review of a denial after the plan’s internal appeal. You usually have 4 months to ask, and the insurer has to accept the decision.
• Summary of Benefits and Coverage (SBC): A standard summary of a plan’s costs and coverage, laid out the same way for every plan so you can compare them.
• Minimum essential coverage: Coverage that meets the ACA’s requirement to have insurance, such as Marketplace, job-based, Medicare, Medicaid and CHIP coverage. There’s no federal penalty for going without it, but California, Massachusetts, New Jersey, Rhode Island and DC have their own.

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Frequently asked questions

What’s the difference between a deductible and an out-of-pocket maximum?

The deductible is what you pay before your plan starts sharing costs. The out-of-pocket maximum is the most you’ll pay for covered in-network care in a year, and your deductible counts toward it.

Is a premium tax credit the same as a subsidy?

Yes. When people talk about Marketplace subsidies, they usually mean the premium tax credit, which lowers your monthly premium. Cost-sharing reductions are a second kind of help that lowers what you pay when you get care.

Where can I find what these terms mean for my own plan?

Start with your plan’s Summary of Benefits and Coverage, which shows your deductible, copays, coinsurance and out-of-pocket limit. HealthCare.gov also has a full glossary.

This article is general information, not insurance, tax or legal advice. Exact rules and dollar limits depend on your plan, your state and the year. Last reviewed October 2026.