Health Insurance Glossary
Health insurance terminology can be confusing. This comprehensive glossary explains key terms in plain language to help you understand your coverage and make informed decisions about your healthcare.
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đź“Ś Terms You Should Know
These are the most important terms for understanding health insurance costs:
ACA (Affordable Care Act)
The comprehensive healthcare reform law enacted in 2010, also known as Obamacare. It created the Health Insurance Marketplace, established essential health benefits, and provides subsidies to help people afford coverage.
Example: The ACA requires all marketplace plans to cover pre-existing conditions and prohibits insurers from charging more based on health status.
Actuarial Value (AV)
The average percentage of total healthcare costs that an insurance plan pays. For example, a plan with 70% AV means the plan pays approximately 70% of costs, and you pay 30% through deductibles, copays, and coinsurance.
Example: A Silver plan has 70% actuarial value—if your total healthcare costs are $10,000, the plan pays about $7,000 and you pay about $3,000.
Annual Out-of-Pocket Maximum
The most you have to pay for covered services in a plan year. After you reach this amount, your insurance pays 100% of covered services. This limit does NOT include your premium payments.
Example: If your out-of-pocket maximum is $8,000 and you've already paid that much in deductibles and coinsurance, your insurance covers 100% of covered costs for the rest of the year.
Balance Billing
When an out-of-network provider bills you for the difference between their charge and what your insurance pays. Also called "surprise billing." The No Surprises Act now protects against this in many emergency situations.
Example: If a surgeon charges $10,000 but your insurance only pays $6,000, without protections you could be balance billed for the $4,000 difference.
Bronze Plan
The lowest-cost tier of ACA marketplace plans with 60% actuarial value. Bronze plans have the lowest monthly premiums but the highest out-of-pocket costs when you use healthcare services.
Example: A healthy person who rarely needs medical care might choose a Bronze plan to minimize monthly costs, accepting higher expenses if they do need care.
CHIP (Children's Health Insurance Program)
A program that provides low-cost health coverage to children in families that earn too much to qualify for Medicaid but can't afford private insurance. Income limits vary by state.
Example: A family of four earning $60,000 might not qualify for Medicaid but could get CHIP coverage for their children at very low cost.
Coinsurance
Your share of healthcare costs, calculated as a percentage of the allowed amount for a covered service, AFTER you've paid your deductible. Different from copays, which are flat-dollar amounts.
Example: If your coinsurance is 20% and a procedure costs $1,000, you pay $200 and your insurance pays $800 (after you've met your deductible).
Copay (Copayment)
A fixed amount you pay for a covered healthcare service, usually at the time of service. Copays are typically flat fees like $25 for a doctor visit or $15 for generic drugs.
Example: Your plan has a $30 copay for primary care visits. You pay $30 at checkout regardless of what the visit actually cost.
Cost-Sharing Reduction (CSR)
A discount that lowers the amount you pay for deductibles, copays, and coinsurance. CSRs are available to people with incomes between 100-250% FPL who enroll in Silver plans through the marketplace.
Example: A Silver plan with CSR might have a $500 deductible instead of $2,000, making healthcare much more affordable for lower-income enrollees.
Deductible
The amount you pay for covered healthcare services before your insurance plan starts to pay. After you meet your deductible, you typically pay coinsurance or copays.
Example: With a $1,500 deductible, you pay the first $1,500 of covered medical expenses yourself. After that, your insurance kicks in and you pay only your coinsurance or copay.
EPO (Exclusive Provider Organization)
A type of health plan that only covers care from providers in its network (except emergencies). Like an HMO but typically doesn't require referrals to see specialists.
Example: An EPO might cost less than a PPO but won't cover any out-of-network care except for emergencies.
Essential Health Benefits
A set of 10 categories of services that all ACA-compliant health plans must cover. These include hospitalization, prescription drugs, maternity care, mental health, and more.
Example: All marketplace plans must cover mental health services, even if older plans in your state didn't include this coverage.
Federal Poverty Level (FPL)
A measure of income issued annually by the Department of Health and Human Services. FPL is used to determine eligibility for Medicaid, CHIP, and ACA subsidies.
Example: In 2025, 100% FPL for a single person is about $15,060. If your income is 150% FPL ($22,590), you qualify for both premium subsidies and cost-sharing reductions.
Gold Plan
An ACA marketplace plan tier with 80% actuarial value. Gold plans have higher monthly premiums than Silver or Bronze but lower out-of-pocket costs when you use healthcare.
Example: Someone with chronic conditions requiring regular doctor visits and prescriptions might save money overall with a Gold plan despite higher premiums.
Health Insurance Marketplace
A shopping and enrollment service for health insurance, created by the Affordable Care Act. You can find and compare plans, apply for subsidies, and enroll during Open Enrollment.
Example: To get ACA subsidies, you must enroll through the marketplace (HealthCare.gov or your state's exchange), not directly through an insurance company.
HMO (Health Maintenance Organization)
A type of health plan that usually requires you to choose a primary care physician (PCP) and get referrals to see specialists. HMOs typically only cover in-network care except for emergencies.
Example: With an HMO, you might need to see your primary care doctor first before getting a referral to a dermatologist.
In-Network
Providers and facilities that have contracted with your health insurance plan to provide services at negotiated (lower) rates. Using in-network providers costs you less.
Example: An in-network doctor visit might cost $30 (your copay), while the same visit out-of-network could cost $200+ because the provider hasn't agreed to discounted rates.
Medicaid
A joint federal and state program that provides health coverage to eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities.
Example: In expansion states, adults with incomes up to 138% FPL qualify for Medicaid, providing free or very low-cost coverage.
Metal Tier
The four categories of ACA marketplace plans—Bronze, Silver, Gold, and Platinum—named for their actuarial value, not quality. All tiers cover the same essential benefits.
Example: A Bronze and Platinum plan from the same insurer cover the same services—the difference is how costs are split between you and the plan.
Open Enrollment
The annual period when you can enroll in or change your health insurance plan through the marketplace. For most states, this runs November 1 through January 15.
Example: If you want coverage starting January 1, you typically need to enroll by December 15 of the previous year.
Out-of-Network
Providers and facilities that don't have a contract with your health plan. Out-of-network care usually costs more, and some plans don't cover it at all (except emergencies).
Example: Using an out-of-network surgeon might mean paying 40% coinsurance instead of 20%, plus any amount the surgeon charges above your plan's allowed amount.
PPO (Preferred Provider Organization)
A type of health plan with a network of preferred providers. You can see any doctor without a referral, and out-of-network care is covered but costs more.
Example: With a PPO, you can see a specialist directly without a referral, and even see out-of-network doctors (though you'll pay more).
Provider Network
The list of doctors, hospitals, and other healthcare providers that have contracted with your insurance plan. Different plans have different networks.
Example: Before choosing a plan, check that your preferred doctors and local hospitals are in the plan's network.
Qualified Health Plan (QHP)
An insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, and meets other requirements under the Affordable Care Act.
Example: Only Qualified Health Plans sold through the marketplace are eligible for premium tax credits and cost-sharing reductions.
Qualifying Life Event (QLE)
A change in your life circumstances that allows you to enroll in health insurance outside of Open Enrollment. Examples include losing coverage, getting married, having a baby, or moving to a new state.
Example: Getting married is a qualifying life event that gives you 60 days to enroll in or change your health insurance.
Silver Plan
An ACA marketplace plan tier with 70% actuarial value. Silver plans are the most popular because they're the only tier eligible for cost-sharing reductions (CSRs) for lower-income enrollees.
Example: If you earn between 100-250% FPL, choosing a Silver plan qualifies you for CSRs that significantly reduce your deductible and copays.
Special Enrollment Period (SEP)
A time outside the annual Open Enrollment when you can enroll in health insurance due to a qualifying life event like losing other coverage, getting married, having a baby, or moving.
Example: If you lose your job and employer coverage, you have 60 days to enroll in a marketplace plan through a Special Enrollment Period.
Additional Resources
For more detailed information about health insurance terms and coverage:
- HealthCare.gov Official Glossary – Complete glossary from the federal marketplace
- CMS.gov Glossary – Medicare and Medicaid terminology
- Our Methodology – How we calculate cost ranges
Disclaimer: This glossary is for educational purposes only and does not constitute insurance or legal advice. Terms may have different meanings in specific policy documents. Always read your plan documents carefully or consult a licensed insurance professional for specific questions.