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Glossary: Key Terms to Know about Health Insurance

Updated November 7, 2013

Co-insurance

A percentage of the bill for a healthcare service that you must pay. For example, you may have to pay 20 percent of the cost of a surgery above a co-payment, while your insurance plan pays the remaining 80 percent. The 20 percent is the amount of your co-insurance. 

Co-payments (or co-pays)

A flat amount you must pay for each medical service received, such as a test, prescription or visit to your doctor, which is made alongside your insurance provider’s payment for the service. For example, you may pay a copayment of $10 per visit with a primary care provider and $20 per visit with a specialist. 

Deductibles

The dollar amount you must pay out of pocket for healthcare costs each year before your insurance plan begins covering expenses. Deductibles are usually paid yearly. 

Group insurance policy

Insurance coverage provided to two or more people, usually through a job, union or trade association. 

Individual insurance policy

An insurance plan purchased directly from the insurance company or through a company that sells insurance. 

In network

Healthcare providers are “in network” if they are on your insurance plan’s list of approved providers. This means healthcare services provided by them are covered by your plan. 

Maximum out-of-pocket limit

The amount of money you have to pay for healthcare costs before your policy pays 100 percent of the allowed amount for the rest of the policy period (typically 1 year). Also called stop-loss. 

Open enrollment

A period of time, usually once per year, when employers allow employees to start, change or drop health insurance coverage and other benefits. 

Out of network

Healthcare providers who are not on your insurance plan’s list of approved providers. Your plan may not cover their services, or may only cover them in part. 

Out-of-pocket expenses

Expenses you must pay when a treatment or service is not covered by insurance or covered only in part. 

Pre-existing condition

A medical condition you had before joining a health insurance plan. 

Preferred providers

“In network” doctors, hospitals, clinics, etc. under your health insurance plan. 

Premium

A monthly fee paid to your insurance company to keep your health insurance coverage active. 

Primary Care Provider (PCP)

A doctor you contact first for health concerns or services. Your PCP is responsible for supervising your overall healthcare needs and serves as a “gatekeeper,” coordinating and authorizing medical services. Your PCP can refer you to other doctors for specialist care. 

Referral

A recommendation from a doctor to consult with another type of doctor, usually a specialist. 

Usual and customary

The fee charged by most providers in a given geographical area. Many insurance companies will use “usual and customary” guidelines to decide how much they will pay for a particular service. If a provider’s charges are higher than this average, you may be responsible for paying the difference.

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