Glossary of Terms
From premium to out-of-pocket max, get clear definitions of all insurance jargon.
Clean, easy-to-understand definitions organized alphabetically. Each term includes a simple explanation and helpful examples.
Terms A – D
Allowed Amount
The maximum amount your insurance will pay for a covered service.
Balance Billing
When a provider bills you for the difference between their charge and your insurer's allowed amount (usually out-of-network).
Benefit Year
The 12-month cycle your plan uses to reset deductibles and coverage.
Claim
The request your doctor or hospital sends to your insurer for payment.
Coinsurance
Your percentage of the bill after meeting your deductible.
Copay
A fixed dollar amount you pay for certain services, like a doctor visit.
Cost Sharing
The way you and your insurer split costs (includes copays, coinsurance, and deductibles).
Deductible
The amount you pay out of pocket each year before your plan starts paying.
Dependent
A family member (like a spouse or child) covered under your plan.
Terms E – H
Emergency Room (ER)
For life-threatening situations; covered as in-network even if the hospital isn't.
EOB (Explanation of Benefits
The summary your insurer sends after a claim, showing what was covered and what you owe.
EPO (Exclusive Provider Organization)
A plan similar to a PPO but without out-of-network coverage.
Exclusion
Services or treatments your plan does not cover.
Formulary
The list of prescription drugs your plan covers (and their cost tiers).
Grace Period
Extra time you have to pay your premium before your plan cancels.
HMO (Health Maintenance Organization)
A plan that requires a primary doctor and referrals to see specialists, usually lower cost.
HSA (Health Savings Account)
A tax-free savings account used for qualified medical expenses.
HSA-Compatible Plan
A high-deductible health plan (HDHP) that allows HSA contributions.
Terms I – O
In-Network
Doctors or facilities that have an agreement with your insurer (usually lower cost).
Maximum Allowable Charge (MAC)
The highest amount your plan will pay for a covered service.
Network
The group of providers and hospitals that work with your insurer.
Out-of-Network
Providers without an agreement with your plan (you'll pay more).
Out-of-Pocket Maximum
The most you'll pay in a year for covered services. After that, your plan pays 100%.
Open Enrollment
The annual period (usually Nov 1–Jan 15) when anyone can apply, renew, or change their plan.
Terms P - R
PPO (Preferred Provider Organization)
A plan with more freedom to choose doctors, even out-of-network.
POS (Point of Service)
A hybrid plan that blends HMO structure with PPO flexibility.
PCP (Primary Care Provider)
Your main doctor who handles checkups, preventive care, and referrals.
Premium
The amount you pay each month to keep your coverage active.
Preventive Care
Routine checkups, screenings, and vaccines that are typically covered at no cost.
HSA (Health Savings Account)
A tax-free savings account used for qualified medical expenses.
Prior Authorization
Approval from your insurer before you get certain tests or treatments.
Referral
A note from your PCP giving you permission to see a specialist.
Terms S – Z
Special Enrollment
A 60-day window triggered by major life events (like marriage, moving, or a new baby).
Specialist
A doctor who focuses on a specific type of care (like dermatology or orthopedics).
Subsidy
Financial help from the government to lower your insurance costs (includes premium tax credits).
Telehealth / Telemedicine
Virtual visits with a doctor over video or phone.
Urgent Care
A walk-in clinic for non-emergencies that need same-day attention.
Pro Tip
If you ever feel lost, start with your deductible and premium — those two numbers explain almost everything.
The Bottom Line
Insurance doesn't have to sound like a foreign language. Once you know these terms, you can read any plan with confidence.