If knowledge is power, then being knowledgeable about common health insurance terms can empower you to make informed decisions about your coverage. Consider this blog as your glossary of health insurance terminology in your search for affordable health insurance plans.

Table of Contents

Terminology About Your Policy

Health Insurance Terms Related to Cost

People Who Play a Role in Obtaining Health Insurance Benefits

Healthcare Providers and Services

Health Plan Types

Health Insurance Tiers of Coverage

Health Insurance Terms Related to Processes

Prescription Drug Terminology

Regulatory and Legal Health Insurance Terms

Get Help Interpreting Confusing Health Insurance Terms

Terminology About Your Policy

Insurance policies can often feel like they’re written in a different language. Here are some health insurance terms to help you make sense of your policy information:

Health Insurance Policy or Contract: A legal agreement between you and your insurance company.

Policy Holder: The person who holds and controls the insurance policy. They’re responsible for paying the premiums and making decisions about the policy.

Policy Effective Date: The date when your insurance coverage starts. You’re not covered for any services received before this date.

Policy Term: The period of time that an insurance policy provides coverage. Typically the term is for one year, but can be different depending on the policy.

Renewal: Continuance of your insurance policy for another term. Most insurance policies automatically renew at the end of the policy term.

Covered Service: The medical services that are covered under your health insurance plan. Any services not listed as covered services may not be paid for by your insurance company.

Exclusions: Specific conditions or circumstances that are not covered by the insurance policy.

Endorsements and Riders: Changes to the insurance policy made by the insurance company. Endorsements can add, remove, or change the coverage in the policy.

In-Network: Doctors, hospitals, and other health care providers that have a contract with your health insurance company. You’ll typically pay less to see in-network providers.

Out-of-Network: Doctors, hospitals, and other healthcare providers that do not have a contract with your health insurance company. You’ll typically pay more to see out-of-network providers.

Health Insurance Terms Related to Cost

Understanding the costs associated with your insurance plan can help you plan for your financial future and avoid unexpected expenses. Here are some common health insurance terms related to costs you need to know:

Premium: The amount you pay to the insurance company to keep your policy active. Typically this is billed each month, but can also be paid quarterly or annually.

Deductible: The amount you must pay out-of-pocket before your insurance coverage kicks in. For example, if your deductible is $1,000, your insurance won’t pay for any services until you’ve paid $1,000 for covered health care services.

Copayment (Copay): A fixed amount, for example, $25, that you pay each time you receive a specific type of health care service, like a doctor’s visit or prescription medication.

Coinsurance: Unlike a copay, coinsurance is not a fixed amount. Instead, it’s a percentage of the cost of a health care service that you pay after you’ve met your deductible. For example, if your coinsurance is 20%, you would pay 20% of the cost of a covered service, and your insurance would pay the remaining 80%.

Out-of-Pocket Maximum: The most you’ll have to pay for covered services in a plan year. After you’ve reached this amount, your health insurance will pay 100% of the cost of covered benefits.

AZ Health health insurance terms relating to cost

People Who Play a Role in Obtaining Health Insurance Benefits

Different people and entities play various roles in the insurance process. Here are some terms to help you understand who’s who:

Insured: The individuals covered by a health insurance policy, i.e. you, your family, and any other dependents.

Dependent: This is a person who relies on someone else for financial support. In health insurance terms, it’s usually a child or spouse who is covered by the policyholder’s plan.

Insurer: The insurance company that provides the insurance coverage.

Insurance Agent: A person who sells insurance policies. They can represent one insurance company or multiple companies.

Insurance Broker: A person who represents the insurance buyer (you) rather than the insurance companies. They can provide you with multiple quotes from different companies to help you find the best coverage at the best price.

You Might Like: Why Should You Use a Broker For Obamacare Plans?

Insurance Adjuster: The individual responsible for investigating insurance claims to determine how much the insurance company should pay.

Healthcare Providers and Services

Healthcare services can be complex and confusing. Here are some health insurance terms to help you navigate this maze:

Provider: A general term used for health professionals who provide healthcare services, including doctors, nurses, and therapists, among others.

Primary Care Physician (PCP): The main doctor who coordinates your healthcare. They’re typically the doctor you see for routine checkups and when you’re sick.

Specialist: A doctor who focuses on a specific area of medicine, like cardiology or dermatology. Depending on your policy, you may need a referral from your PCP to see a specialist.

Inpatient Services: Services you receive when you’re admitted to a hospital. This could include surgery, overnight stays, and some types of diagnostic tests.

Outpatient Services: Services you receive at a hospital or clinic without being admitted. This could include tests, treatments, and some minor surgeries.

Preauthorization: Approval from your health insurance company that a health care service, treatment, or procedure is medically necessary. You’ll often need to get preauthorization before you receive certain non-emergency services.

Health Plan Types

There are many different types of health plans available, each with their own set of rules and benefits. Here are some of the common health insurance terms to help you understand the differences:

Health Maintenance Organization (HMO): A type of health insurance plan that provides coverage through a network of doctors and hospitals. You typically need a referral from your PCP to see a specialist.

Preferred Provider Organization (PPO): Health insurance plan that provides more flexibility than an HMO. You can see any doctor or specialist without a referral, but you’ll pay less if you use providers in the plan’s network.

Exclusive Provider Organization (EPO): A comprehensive coverage plan with a focus on in-network care. Members are required to seek medical services from a designated network of healthcare providers, ensuring cost-effective care within a structured network.

Point of Service (POS): A plan which allows individuals to pay less for using in-network healthcare providers and typically requires a referral from a primary care doctor to see a specialist. These plans are not available through the Health Insurance Marketplace.

Healthcare Sharing Ministry: A plan where members of a particular organization (often religious) share the cost of each other’s medical expenses, reflecting a communal approach to healthcare coverage based on shared beliefs and values. These plans provide an alternative to traditional health insurance and emphasize community support in managing healthcare costs. Again, these plans are not available through the federally regulated Health Insurance Marketplace, so the minimum standards of care are not applicable.

Health Insurance Tiers of Coverage

The Affordable Care Act (ACA) offers different tiers of health insurance plans, which vary in terms of cost-sharing and coverage levels.

Bronze Plans: Lower monthly premiums but higher out-of-pocket costs. Good for individuals and families who need essential coverage on a budget.

Silver Plans: Moderate monthly premiums and cost-sharing. These plans are an attractive option for individuals seeking a middle ground between upfront costs and out-of-pocket expenses for healthcare services.

Gold Plans: Higher monthly premiums but lower out-of-pocket costs. Gold Plans provide comprehensive coverage, making them suitable for individuals who anticipate higher medical expenses and prefer more predictable costs throughout the year.

Platinum Plans: The highest level of care and cost. Platinum tier plans offer higher premiums but lower out-of-pocket costs, providing a range of options to suit different healthcare needs and budgets.

AZ Health health insurance terms related to claims and processes

Health Insurance Terms Related to Processes

The world of insurance can be a maze of processes and procedures. Here are some health insurance terms to help you navigate:

Claims Process: How to request payment from your insurance company for healthcare services you’ve received.

Appeals Process: Your right to ask for (appeal) a full and fair review of an insurer’s decision to deny a claim.

Utilization Management: How insurance companies review the type and amount of care you’re getting. Examples may use prior authorization, case management, accompanying reviews or proper discharge planning.

Prescription Drug Terminology

Whether you are on a regular regimen of medications or only need occasional coverage, here are health insurance terms you may come across when filling prescriptions:

Pharmacy Benefit Manager (PBM): A company that manages prescription drug benefits on behalf of health insurers.

Generic Drug: A medication that has the same active ingredients as a brand-name drug. Generic drugs are usually less expensive than brand-name drugs.

Formulary: The list of prescription drugs that are covered under a health insurance policy.

There are many regulatory and legal health insurance terms that are vital to understanding your your rights and responsibilities:

Affordable Care Act (ACA): Also known as Obamacare, this federal law was enacted in 2010 to improve access to affordable health coverage and protect people from abusive insurance company practices.

Pre-Existing Condition: A health diagnosis you had before the date that new health coverage starts. Under the ACA, health insurance companies can’t refuse to cover you or charge you more because of a pre-existing condition.

Related: Can I Get Health Insurance With Pre-Existing Conditions?

Health Insurance Marketplace: A service that helps people shop for and enroll in affordable health insurance. The federal government operates the Marketplace, available at HealthCare.gov, for Arizona.

Patient’s Bill of Rights: A list of guarantees for those receiving medical care. These rights provide patients with information, fair treatment, and autonomy over medical decisions, among other rights.

Health Insurance Portability and Accountability Act (HIPAA): A federal law that protects the privacy of your health information and gives you certain rights with respect to your health information.

Consolidated Omnibus Budget Reconciliation Act (COBRA): A federal law that may allow you to temporarily keep health coverage after your employment ends, you lose coverage as a dependent of the covered employee, or another life event.

AZ Health get help understanding confusing health insurance terms

Get Help Interpreting Confusing Health Insurance Terms

Even with a reliable glossary of health insurance terms, learning how these terms affect the choices for individual health insurance or family plans in Arizona can be overwhelming.

Working with an independent health insurance broker to simplify the process and the terminology can simplify the process and give you the confidence you need to pick the best plan for your current and future circumstances.

At Arizona Health Insurance Experts, we connect Arizonans with an exclusive list of independent health insurance brokers, at no charge. Click here to get started.