Health Insurance Terms 101: A Brief Guide


When dealing with healthcare costs and health insurance plans, it can be challenging to be aware of what you need to know. While the money you’re spending on health care is a serious matter to consider, the jargon used in the healthcare industry can make it feel like a foreign language. Familiarizing yourself with this language is essential when dealing with insurance agencies or an insurance lawyer. It will help you get an appropriate insurance quote if you are looking for suitable medical insurance. There are a lot of different health insurance terms out there, and it can be tough to keep track of them. Here is a brief guide to some of the most common health insurance terms 101 you may come across.

  • Premium: This is the amount paid for a health insurance cover. It’s usually settled every month.
  • Deductible: This is the amount paid for out-of-pocket medical services before your health insurance coverage gets activated.
  • Co-pay: This is the amount you need to pay for each doctor’s prescription or consultation.
  • Co-insurance: This is the percentage of medical expenses you need to pay after settling your deductible.
  • Out-of-pocket maximum: This is the total amount you need to pay out of pocket for your medical services in a year. Once you reach this figure, your health insurance will cover your medical expenses fully.

Children’s Health Insurance Program

The Children’s Health Insurance Program, also known as CHIP, is a health insurance program for low and moderate-income children. CHIP provides health coverage to children not eligible for Medicaid. However, a few states have separate CHIP programs. CHIP provides comprehensive health coverage, including hospitalizations, prescriptions, immunizations, routine checkups, preventive care, and many more. Many Children’s Health Insurance Program plans also provide coverage for vision care and dentist or pediatric dentist visits.


COBRA, which is short for Consolidated Omnibus Budget Reconciliation Act of 1985, is a federal law allowing employees and their families to continue their health insurance coverage after employees leave their jobs. The employee pays the entire premium plus a small administrative fee to continue using their health insurance. COBRA can be an ideal option for those between jobs or with preexisting conditions that make it hard to find new health coverages.


Coinsurance is one of the most vital terms to understand when it comes to health insurance terms 101. Coinsurance covers a percentage of medical costs you are supposed to pay after meeting your deductible. For instance, if your coinsurance is 20% and you have a one-hundred medical bill, you would be responsible for paying twenty dollars out of your pocket. Coinsurance usually gets paid alongside your deductible, and your health insurance company will usually cover the remaining costs of your medical bill.


A copayment, also known as a copay, is a fixed amount you pay for a medical service, typically after receiving the service. For example, you may have a $20 copayment for a doctor’s visit or a $10 copayment for a medical prescription. The copayment is usually less than the entire cost of the service. Health insurance terms 101 can be confusing, but knowing the basics can help you make the most of your coverage.


A deductible is an amount you have to pay out-of-pocket for your health care costs before your insurance company starts to pay for your covered services. In other words, it’s the amount you have to spend on your health care before your insurance coverage kicks in. Deductibles can vary depending on the type of insurance plan you have. For instance, some insurance plans have a per-person deductible, while others have a family deductible. And some have a deductible for each type of services, such as doctor visits, prescription drugs, or hospital stays. The crucial thing to remember is that the higher your deductible is, the lower your monthly premiums will be. So if you’re looking to save money on your health insurance, you should consider choosing a plan with a higher deductible.

Flexible Spending Account

Health insurance can be a complex and confusing topic, but it’s vital to understand the basics. One of the terms you may come across is flexible spending account or FSA in short. An FSA is an account type that allows you to set aside pre-tax money to pay for eligible medical expenses. It can be a helpful way to save money on your healthcare costs. FSAs Have limitations, however. For example, you need to use the funds in your account within a specific timeframe, and there may be restrictions on what types of expenses are eligible. If you’re considering signing up for an FSA, be sure to do your research and understand the rules and limitations. It will help you make the most of this benefit and avoid surprises in the future.


A formulary is a list of drugs covered by a health insurance plan. The insurance cover creates this list and may change from time to time. The formulary may be split into tiers, with different levels of coverage for each tier. For example, tier 1 may cover generic drugs, while tier 2 may cover brand-name drugs.

Generic Medications

Generic medications are drugs the FDA approves to interchange with brand-name medications. It means they have the same active ingredients, safety, strength, and efficacy as the brand-name drug. Generic drugs are typically much less expensive than brand-name drugs and are often available in various forms and doses.

When you have health insurance, your plan may require you to get a prescription filled with a generic medication to save money. In some cases your plan may also require you to try a generic medication before it covers a brand-name drug. If you have any questions about your health insurance plan’s requirements for generic prescriptions, ensure you contact your plan’s customer service department.

Health Savings Account

A health savings account (HSA) is a type of savings account used to pay for medical expenses. Contributions to an HSA are tax-deductible, and withdrawals from the account are tax-free. HSAs are available to individuals enrolled in a high-deductible health insurance plan.

You can use the money in an HSA to pay for a wide range of medical expenses, including doctor visits, prescription drugs, and dental care. You can also use the account to pay for insurance premiums and other out-of-pocket costs. HSAs are a great way to save for medical expenses, and they can help you reduce your overall healthcare costs. If you enroll in a high-deductible health plan, ensure to check out a health savings account.

High Deductible Health Plan

A high deductible health plan is a type of health insurance that requires the policyholder to pay a higher deductible before the insurer pays for any covered services. It can be a good option for healthy people who do not anticipate needing much medical care. It is also an ideal way to save costs on premiums if you are a policyholder.


Health Maintenance Organizations, or HMOs, are a type of health insurance requiring you to receive medical care from a specific group of providers. HMOs usually have a network of hospitals, specialists, and doctors that you can choose from. You will likely need to choose a primary care physician or PCP from this network who will coordinate your care and refer you to specialists as needed. HMOs typically have lower monthly premiums than other types of health insurance, but they also have more restrictions on coverage.


In-network is one of the terms used in health insurance terms 101. It refers to providers contracted with the health insurance company to provide care for its policyholders. In-network providers usually agree to accept the health insurance company’s negotiated rates for services, which means that policyholders will pay less for care when they use in-network providers.

Inpatient Care

Inpatient care is one of the most essential health insurance terms 101 to understand. It refers to the care a patient receives while staying in a medical facility or hospital. Inpatient care can include a wide range of services, from emergency care to surgeries to long-term care. Inpatient care is usually more expensive than outpatient care, as it requires the use of more resources and staff.

However, it is often necessary for more serious medical conditions. Inpatient care can also be more convenient for patients, as they do not have to travel to and from a medical facility for each appointment. If you have health insurance, it is vital to understand what your coverage entails, like coverage for Invisalign or a tooth cleaning service. Many health insurance plans cover inpatient care, but some have restrictions or exclusions. Ensure you check your policy or contact your insurance company to learn more about your coverage.


Medicaid is one of the health insurance terms that you need to know. Medicaid is a state and federal program that provides medical assistance for disabled and low-income individuals. Medicaid pays for prescription drugs, hospital stays, doctor visits, and other medical services.

Health Care Sharing Ministries

When it comes to health insurance options outside the typical scope of commonly known solutions, healthcare shares are an amazing opportunity not many know about. Essentially, these ministries like Jericho Share, are comprised of a community of people with like-minded beliefs, willing to support each other with their healthcare bills when necessary. If this option appeals to you, reach out to learn more!


One of the most vital health insurance terms 101 to know is network. A health insurance network is a group of hospitals, doctors, and other healthcare providers who agree to provide care to patients with a particular insurance plan. To see a provider within your network, you will typically need to pay a lower out-of-pocket cost than if you were to see a provider outside of your network. It’s crucial to check with your insurance company to ensure that the providers you want to see are in-network, as this can save you a significant amount of money on your healthcare costs.


In the U.S, out-of-network or OON refers to health care providers who do not have a contract with a patient’s health insurance plan. It means the health insurance plan may not cover any or all of the costs associated with care from that provider. Out-of-network providers can include hospitals, physicians, and other health care providers. Patients should be aware of the potential for higher costs when using an OON provider, as they may be required to pay the price of services out-of-pocket. It is vital to check with one’s health insurance plan to see if OON coverage is available and to understand associated costs.

There are a few situations where patients may need to seek care from an OON provider. For instance, if a patient has an emergency medical situation and needs to be seen by a provider who does not participate in their health insurance plan, they may have no choice but to use an out-of-network provider. Additionally, some patients may choose to see an OON provider for a specific treatment or procedure not covered by their health insurance plan. In these cases, patients should prepare to pay the entire cost of services out-of-pocket. If you have any questions about OON coverage, be sure to ask your health insurance plan or provider.

Out-of-Pocket Costs

One of the most vital health insurance terms 101 to know is your out-of-pocket costs. It is the amount you need to pay for your medical care before your insurance kicks in. It can include things like your coinsurance, copayments, and deductible. Knowing your out-of-pocket costs can help you budget for your medical care and make informed decisions about your health care.

Out-of-Pocket Limit

One crucial health insurance terms 101 to know is your out-of-pocket limit. It is the maximum amount you will have to pay for covered medical expenses in a year. Once you reach your out-of-pocket limit, your health insurance company will start paying 100% of the cost of your covered medical expenses. It’s vital to know your out-of-pocket limit, to plan how much you will have to pay for health care in a year.

Insurance terminology can be confusing for anyone, but if you are purchasing your health insurance it’s important to know what all the different terms mean. It will help you determine whether medical practitioners, such as a pediatric dentist or foot doctor, are part of the insurance cover you purchase. Knowing these terms will aid in making the best choice before getting a medical insurance plan.

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