Health Insurance Terms

The world of health insurance is full of terms and acronyms that might have your brain buzzing. Knowing exactly what these terms mean can help you better control costs and make the most informed decisions for your health and wallet.

Let’s break down 10 common health insurance terms that you, as a healthcare consumer, should know!

1. Claim

A claim is a request for payment that you or your doctor submits to your health insurance company after you receive care. Read this article >> to follow the journey of a claim, from creation to resolution.

2. Copay

A copay is a fixed amount you pay for a covered healthcare service.

3. Coinsurance

Coinsurance is the percentage of healthcare costs shared between you and your health plan after you've met your deductible. 

4. Deductible

A deductible is the amount you must pay out of pocket for healthcare services before your health plan starts sharing the cost. 

5. Explanation of Benefits

An explanation of benefits, or EOB, is a statement from your health insurance plan describing what costs it will cover for medical care or products you’ve received. To learn more about how to read an EOB and understand healthcare transactions, check out this summary >>

6. In-Network Provider

An in-network provider is a healthcare professional or facility that has a contract with your insurance company to provide services to plan members at a pre-negotiated rate. Click >> for some light reading on how to choose a primary care provider.

7. Out-of-pocket max

The out-of-pocket maximum is the most you will pay each year for all covered services. This total includes your deductible, coinsurance and copayments. Once the out-of-pocket maximum has been met, all covered services are paid in full by your insurance with no additional cost to you. 

8. Premium

A premium is the amount an individual or employer pays each month for health insurance coverage. You will learn how much you are responsible for at open enrollment each year depending on the plan you choose, and you'll typically see that amount withdrawn from one monthly paycheck or split between two bi-weekly paychecks.

9. Prior authorization or Pre authorization

Prior authorization means getting approval before you can access certain medications or services. This is not always necessary, but you should call your health insurance company using the number on the back of your ID card before any surgery, diagnostic test, lab work, or other service to ensure your provider has agreed to cover it. Learn more about prior authorization >>

10. Referral

A referral is a written order from your primary care provider for you to see a specialist or get certain healthcare services. Not all health plans require a referral, but if yours does, ask your PCP or clinic for an electronic referral before visiting a specialist. Without it, you’ll likely pay more for your care—or it may not be covered at all. If you're unsure whether a referral is required, sign in to your health plan account or call the number on your ID card. Your ID card may even say "Referrals Required."

Now that you have a better understanding of these 10 common terms, you're one step closer to being the best healthcare consumer you can be!