What is the most important term to understand before buying a plan?

The out-of-pocket maximum, because it caps your worst-case cost for the year. Compare it alongside the deductible, since a low deductible with a high out-of-pocket maximum can still leave you exposed.

What does it mean if a plan is ACA-compliant?

It means the plan follows Affordable Care Act rules: it covers the ten essential health benefits, accepts pre-existing conditions and cannot charge more based on health history. Short-term plans are not ACA-compliant.

What is the difference between a copay and coinsurance?

A copay is a fixed dollar amount, such as $25 per office visit. Coinsurance is a percentage, such as 20 percent of the allowed amount for a service. Some plans use both.

What does network mean in practice?

It is the list of providers your plan has contracted with. Seeing an in-network provider means the plan's negotiated rate applies; seeing an out-of-network provider often means paying the full bill yourself.

A plan's list of covered prescription drugs, organized into tiers that set your copay. A drug that is not on the formulary is generally not covered, which is why checking your medications matters before enrolling.

Health Insurance Glossary: Terms Explained Simply

Last updated: 2026-10-23 · Reviewed by [Licensed Agent Name], Licensed Health Insurance Agent

This glossary explains the health insurance terms you meet when comparing plans, in plain language and in alphabetical order. Each definition is short enough to read in seconds. If a term is still unclear after reading it, a licensed agent can walk you through it in plain English on a short, free call.

Insurance language is written for insurers, not shoppers. These are the terms that actually change what you pay, alphabetized so you can look one up mid-conversation.

C

Copay: A fixed dollar amount you pay for a specific service, such as $30 for an office visit, instead of a percentage of the bill.
Coinsurance: Your share of a covered service after the deductible, expressed as a percentage. If the plan pays 80 percent, your coinsurance is 20 percent.
Cost-sharing reduction (CSR): Extra savings available only on silver-tier Marketplace plans for households with lower incomes. CSRs lower deductibles, copays and out-of-pocket maximums.
Claim: The request a provider or you submit to the insurance company for payment of covered services.

D

Deductible: The amount you pay for covered in-network care before your plan starts sharing the cost. Preventive care is usually covered before the deductible is met.

E

EPO (Exclusive Provider Organization): A middle ground: no referrals are usually required, but care outside the network is generally not covered, except in emergencies.
Essential health benefits: The ten categories of care every ACA-compliant plan must cover, including doctor visits, hospitalization, prescriptions, maternity care, mental health and preventive care.
Explanation of Benefits (EOB): The statement your plan sends after a claim showing what was billed, what the plan paid and what you may owe. An EOB is not a bill.

F

Formulary: The list of prescription drugs a plan covers, organized into tiers that determine your copay — from low-cost generics to higher-cost specialty drugs.

H

HMO (Health Maintenance Organization): A plan type that usually requires you to stay in network and get a referral from a primary care provider before seeing a specialist.

I

In-network vs. out-of-network: In-network providers have agreed to the plan's negotiated rates. Out-of-network providers have not, and many plans cover nothing for them outside of emergencies.

M

Metal tiers: Bronze, silver, gold and platinum labels that describe how a plan splits costs with you. Bronze plans pay about 60 percent of covered costs; platinum plans about 90 percent.

N

Network: The doctors, hospitals, labs and pharmacies a plan has contracted with. Using in-network providers costs much less than going outside the network.

O

Out-of-pocket maximum: The most you will pay for covered in-network care in a plan year, including deductibles, copays and coinsurance. After you reach it, the plan pays 100 percent of covered in-network care.
Open enrollment: The annual window when anyone can sign up for ACA Marketplace coverage, generally running from November 1 into mid-January for coverage starting the following year.

P

Premium: The amount you pay every month to keep a health plan active, whether or not you use medical care that month. Premiums are separate from deductibles, copays and coinsurance.
PPO (Preferred Provider Organization): A plan type that lets you see providers outside the network for a higher cost and generally does not require referrals. Premiums are often higher than an HMO.
POS (Point of Service): A plan that combines HMO and PPO features: in-network care after a referral, with limited out-of-network coverage.
Prior authorization: A requirement that the plan approve certain treatments, prescriptions or procedures before they are performed, so they are covered.
Premium tax credit (subsidy): Financial help from the government that lowers your monthly Marketplace premium, based on household income, household size and the cost of coverage where you live.
Pre-existing condition: Any health condition you had before coverage started. ACA plans must cover them; short-term and underwritten private plans typically do not.

Q

Qualifying life event: A change in your life the ACA recognizes as a reason to enroll outside open enrollment, including marriage, divorce, a birth, a move or loss of other coverage.

R

Referral: A written approval from your primary care provider allowing you to see a specialist, required by many HMO plans.

S

Special enrollment period (SEP): A window outside open enrollment when you can enroll or change plans after a qualifying life event, such as losing coverage, moving or getting married.
Short-term health insurance: Temporary, underwritten coverage that bridges a gap in coverage. It is not ACA-compliant and generally excludes pre-existing conditions.
Supplemental insurance: Policies that pay a set benefit alongside major medical coverage — such as accident, hospital indemnity, dental, vision or critical illness plans. They do not replace a major medical plan.

U

Underwriting: The carrier's review of your health history before issuing a policy. Underwritten plans can decline an applicant or exclude conditions; ACA plans cannot.

W

Waiting period: A set amount of time after you enroll before certain benefits become available, common on supplemental and employer-sponsored plans.

Frequently asked questions

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Licensed in all 50 states. Last updated: 2026-10-23

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