Health insurance glossary
Plain-English definitions of the terms you'll see when comparing private and ACA health plans.
- ACA (Affordable Care Act)
- The federal law that created the HealthCare.gov marketplace, premium tax credits and rules such as covering pre-existing conditions on ACA-compliant plans.
- Allowed amount
- The maximum a plan will pay for a covered service. In-network providers agree to accept it; out-of-network providers may bill you the difference.
- Balance billing
- When an out-of-network provider bills you for the difference between their charge and the plan's allowed amount.
- Coinsurance
- Your share of a covered cost after the deductible, shown as a percentage. For example, the plan pays 80% and you pay 20%.
- Copay
- A fixed amount you pay for a covered service, such as a doctor visit or prescription, usually at the time of service.
- Deductible
- The amount you pay for covered services each plan year before the plan starts sharing costs.
- Explanation of benefits (EOB)
- A statement from the insurer showing what was billed, what the plan paid and what you may owe. It is not a bill.
- Fixed indemnity / hospital indemnity
- Coverage that pays a set cash amount for events like a hospital stay, regardless of the actual bill. It is not major medical insurance.
- Formulary
- The list of prescription drugs a plan covers, often grouped into tiers with different costs.
- Guaranteed issue
- Coverage that must be offered regardless of health history. ACA plans are guaranteed issue during enrollment periods.
- HMO
- A plan type that usually requires you to use in-network providers and get referrals to see specialists.
- HSA (health savings account)
- A tax-advantaged savings account paired with an HSA-eligible high-deductible plan. Ask your tax professional about eligibility.
- In-network
- Doctors, hospitals and pharmacies that have a contract with your plan, usually at a lower cost to you.
- Medical underwriting
- When a carrier reviews your health history to decide whether to offer coverage and on what terms. Private underwritten plans use it; ACA plans don't.
- Open enrollment
- The yearly window when anyone can enroll in or change an ACA plan. Private plans can often be bought year-round.
- Out-of-pocket maximum
- The most you'll pay for covered in-network services in a plan year. After you reach it, the plan pays 100% of covered costs.
- Pre-existing condition
- A health condition you had before coverage starts. ACA plans must cover them; private underwritten plans may exclude them or decline coverage.
- Premium
- The amount you pay, usually monthly, to keep your coverage active.
- Premium tax credit (subsidy)
- A tax credit that lowers the cost of an ACA marketplace plan, based on household income and size.
- PPO
- A plan type with a network of providers that lets you see specialists without referrals and often covers out-of-network care at a higher cost.
- Prior authorization
- Approval from the plan required before certain services or drugs are covered.
- Special enrollment period
- A time outside open enrollment when you can get ACA coverage after a qualifying life event, like losing other coverage or moving.
- Short-term health insurance
- Temporary coverage with limited benefits and medical underwriting. It is not ACA coverage, and rules vary by state.
- Waiting period
- Time after coverage starts before certain benefits apply, common for some conditions or services on private plans.