Health Insurance Glossary
Wake up, your new favorite cheat sheet just dropped. This glossary covers the health insurance terms you're most likely to run into on plan documents, bills and explanations of benefits. (Added bonus, most examples are diabetes specific.)
Jump to a section:
Plans and coverage | What you pay | Networks and providers | Types of care | Prescriptions | Approvals, claims and appeals
Plans and coverage
Health insurance plan
A contract: you pay a premium, and your insurer pays all or part of your covered healthcare costs. Also called: plan, policy, insurance policy.
Example: Your plan documents spell out what you'll pay for an office visit or a prescription and what your insurer covers.
Premium
What you pay to keep your coverage active, whether or not you use any care. Billed monthly, quarterly or yearly.
Example: You set aside $375 each month for your premium so your coverage never lapses.
Benefits
The services, devices, medications and supplies your plan covers. Also called: covered benefits.
Example: Plan X covers continuous glucose monitors (CGMs) and Plan Y doesn't. If you use a CGM, Plan X will probably cost you less out of pocket.
Coverage
Your right, under your plan's contract, to have eligible healthcare costs paid or reimbursed. Also called: health insurance coverage.
Example: Your plan fully covers two emergency room visits a year once you've met your deductible.
Excluded services
Care your plan won't pay for at all. Also called: non-covered services.
Example: Cosmetic treatments like Botox are excluded under most plans.
Plan tiers
Different plans from the same insurer, usually sorted by cost. Higher tiers have higher premiums and lower deductibles. Lower tiers flip that. Tiers can also differ in which drugs or devices they cover.
Example: Your friend pays more each month than you do. Because her deductible is lower, her insurance starts paying for endocrinology visits much sooner than yours.
Health Maintenance Organization (HMO)
A plan with a tight network. You see your primary care provider (PCP) first and need a referral before seeing a specialist. Care outside the network usually isn't covered.
Example: You're dealing with extra thirst and frequent urination. On an HMO, you'd see your PCP first, and they'd refer you to an endocrinologist.
Exclusive Provider Organization (EPO)
A plan with a smaller network than most. Care outside the network usually isn't covered.
Example: Your employer switches to an EPO, and the endocrinologist you've seen since diagnosis isn't in it. You get a list of in-network endocrinologists to choose from instead.
High Deductible Health Plan (HDHP)
A plan with lower monthly premiums and a higher deductible, so you pay more for care before coverage kicks in. Usually paired with a health savings account (HSA).
Example: If you rarely need care, the low premium saves money. If you fill insulin and CGM prescriptions every month, you'll hit that high deductible fast.
Employer-sponsored health insurance
A plan your employer chooses and offers to employees and their dependents. Your employer usually pays part of the premium, and your share comes out of your paycheck before taxes.
Example: You start a new job and enroll in the company health plan during your first few weeks.
Marketplace
The government-run site where individuals, families and small businesses compare and buy plans. Depending on your income, you may get help paying premiums and out-of-pocket costs. Some states run their own Marketplace and others use the federal one. Also called: the Exchange.
Example: Two people who run a small bakery compare plans on the Marketplace to find coverage for themselves.
Cost-sharing reductions
Discounts that lower deductibles, copays and coinsurance on certain Marketplace plans. You can qualify based on income or as a member of a federally recognized tribe.
Example: As a tribal member, you look for Marketplace plans that come with cost-sharing reductions.
Medicaid
Public health insurance for people with lower incomes. Each state runs its own program, so eligibility and coverage vary by state.
Example: You're a college student with little income, living outside the network of your parents' plan, so you apply for Medicaid.
Medicare
Federal health insurance for adults 65 and older and some people with disabilities.
Example: Your grandmother turns 65 and asks you to help her apply online.
Minimum essential coverage
Coverage that meets the individual responsibility requirement (below). Marketplace plans, employer plans, Medicare, Medicaid and the Children's Health Insurance Program (CHIP) all count.
Individual responsibility requirement
The rule that you carry minimum essential coverage. The federal tax penalty for going without has been $0 since 2019. California, Massachusetts, New Jersey, Rhode Island and Washington, D.C. still charge a penalty on state taxes. Also called: individual mandate.
Minimum value standard
A baseline that a plan covers at least 60% of total allowed costs. If your employer offers an affordable plan that meets it, you usually can't get Marketplace premium tax credits or cost-sharing reductions.
What you pay
Billed amount
What a provider charges for a service. It's roughly what you'd pay with no insurance. Also called: billed charges.
Example: Your explanation of benefits lists the billed amount next to the allowable amount for each service.
Allowable amount
The most your plan will pay for a covered service. For in-network care, it's usually a negotiated rate. Also called: allowed amount, eligible expense, payment allowance, negotiated rate.
Example: Your plan raises the allowable amount for PCP visits from $100 to $150 starting next month.
Usual, customary and reasonable (UCR)
What providers in your area typically charge for a service. Some plans use it to set the allowable amount, especially for out-of-network care.
Example: Your plan's allowable amount for an endocrinology visit is based on what endocrinologists in your region usually charge.
Balance billing
A bill from a provider for the gap between their billed amount and your plan's allowable amount. It mostly comes from out-of-network providers. The federal No Surprises Act bans balance billing for most emergency care and for some out-of-network care at in-network facilities.
Example: A provider bills $300 and your plan allows $235. You could get a separate bill for the $65 difference.
Cost-sharing
Your share of the cost of covered care: deductibles, copays and coinsurance. Premiums, penalties and uncovered services don't count. Also called: out-of-pocket costs.
Deductible
What you pay for covered care each plan year before your insurer starts paying. Some plans have separate deductibles for certain things, like prescriptions.
Example: With a $1,000 deductible, you pay the first $1,000 of covered care yourself.
Copay
A flat fee for a covered service, usually paid at check-in. In-network copays cost less than out-of-network ones. Specialist copays are often higher than PCP copays. Also called: copayment.
Example: You pay $55 every time you check in with your in-network endocrinologist. An out-of-network specialist might charge a $95 copay for the same visit.
Coinsurance
The percentage of the allowable amount you pay after meeting your deductible. Your plan pays the rest. Out-of-network coinsurance is usually higher.
Example: The allowable amount for a visit is $200 and your coinsurance is 15%, so you pay $30. If out-of-network coinsurance were 45%, you'd pay $90.
Out-of-pocket limit
The most you'll pay for covered in-network care in a plan year. Once you hit it, your plan pays 100% of the allowable amount. Premiums, balance bills and uncovered services don't count toward it. The federal government sets a cap each year, and your plan's limit can be lower. Also called: out-of-pocket maximum.
Example: You build your yearly healthcare budget around your out-of-pocket limit so you know your worst-case cost.
Explanation of benefits (EOB)
A statement your insurer sends after you get care. It shows what was billed, what the plan paid and what you owe. It isn't a bill.
Example: Your EOB shows a lab test that would have cost $325 without insurance cost you $115.
Flexible spending account (FSA)
A pre-tax account, offered through an employer, for out-of-pocket health costs. Money left at the end of the plan year is usually lost, though some plans allow a grace period or a small rollover.
Example: You set your FSA contribution based on what you expect to spend on supplies and copays so nothing goes to waste.
Health savings account (HSA)
A tax-advantaged savings account paired with an HDHP. The money doesn't expire and stays with you if you change jobs. There's a yearly contribution cap, and funds can only go toward qualified health costs.
Example: You put money into your HSA each paycheck and use it for pump supplies until you meet your deductible.
Networks and providers
Network
The providers, hospitals, labs and suppliers that contract with your plan.
Example: Your employer's plan network is built around Hospital X, so visits with doctors at Hospital Z aren't covered.
In-network provider
A provider who contracts with your plan at negotiated rates. Seeing them costs less. Also called: network provider, preferred provider, participating provider.
Example: Your clinic leaves your plan's network, so you start looking for a new PCP.
Out-of-network provider
A provider who doesn't contract with your plan. You'll pay more, and some plans (like HMOs and EPOs) won't pay anything. Also called: non-preferred provider.
Specialist
A provider trained in one area of medicine or one type of patient.
Example: An endocrinologist who focuses on type 1 diabetes care for adults ages 18 to 30.
Referral
A written order from your PCP to see a specialist or get a specific service. Many HMOs require one.
Example: Your PCP refers you to an endocrinologist after you raise concerns about diabetes.
Types of care
Diagnostic tests
Tests that help figure out what's causing a health problem. Providers often won't say "diagnostic test." You're more likely to hear "let's run some labs." Also called: diagnostics.
Example: To check for type 2 diabetes, a provider might order an A1C, a fasting blood sugar test or a glucose tolerance test.
Durable medical equipment (DME)
Equipment and supplies your provider orders for daily or long-term use to manage a condition.
Example: Many plans classify insulin pumps as DME.
Emergency medical condition
An illness, injury or symptom serious enough that going without care would put your health in serious danger, seriously affect how your body works or damage your organs.
Example: Symptoms of diabetic ketoacidosis (DKA) count as an emergency medical condition.
Emergency room care
Care at an emergency room or similar licensed facility to check for or treat an emergency medical condition. Also called: emergency room services.
Example: You pass out from low blood sugar, hit your head and get checked out in the ER.
Emergency medical transportation
Ambulance transport by ground, air or water for an emergency medical condition.
Example: Your plan fully covers ambulance transport for two emergencies a year.
Urgent care
Care for something that needs attention soon but isn't an emergency. It usually costs much less than the ER.
Example: You twist your ankle on a hike and head to urgent care.
Inpatient care
Care that requires formal admission to a hospital, usually with at least one overnight stay. An overnight stay for "observation" may be billed as outpatient care, which can change what you owe. If you're kept overnight, ask whether you've been admitted. Also called: hospitalization.
Example: Someone newly diagnosed with type 1 diabetes is admitted to the hospital after severe high blood sugar.
Habilitation services
Services that help people learn, keep or improve skills for daily life, like occupational therapy, physical therapy or speech therapy.
Complications of pregnancy
Conditions caused by pregnancy, labor or delivery that need medical care to prevent serious harm to the parent or baby. Morning sickness and planned C-sections don't count. Also called: pregnancy complications.
Example: Preterm labor is a complication of pregnancy.
Investigational treatment
A treatment still being studied in a clinical trial. Most plans don't cover it.
Example: You ask your endocrinologist whether you could join a trial for a new diabetes treatment.
Prescriptions
Formulary
Your plan's list of covered drugs, sorted into tiers that cost different amounts. It can change during the plan year. Also called: drug list.
Example: You check your formulary and see a generic drug sits in a cheaper tier than its brand-name version. Another brand isn't listed at all, which means it isn't covered.
Generic medication
A drug with the same active ingredient as a brand-name drug, approved by the U.S. Food and Drug Administration (FDA) as equally safe and effective. Generics come out after the brand's patent expires and usually cost less. Also called: generics.
Example: The store is out of your usual allergy medicine, so you buy the generic version instead.
Specialty drug
A drug that needs special handling, monitoring or dispensing. Specialty drugs are often the most expensive ones on a formulary.
Example: Your plan lists one insulin as a specialty drug, and it costs more than the other insulins it covers.
Non-medical switching
Switching medications because your plan changed its formulary, with no medical reason behind the switch.
Example: Your pharmacy tells you Insulin B isn't covered anymore. You work with your endocrinologist to switch to Insulin C so you aren't paying full price.
Pharmacy benefits
The part of your coverage that pays for prescriptions filled at a pharmacy. It's often managed by a separate company called a pharmacy benefit manager (PBM). Also called: pharmacy benefits plan.
Example: You pick up insulin, test strips and pen needles, and your pharmacy benefits cover most of the cost.
Drug discount card
A card that lowers prescription prices. Programs vary in cost, eligibility and which drugs they cover. You usually can't use one together with insurance on the same prescription, so compare both prices. Also called: prescription discount card.
Approvals, claims and appeals
Prior authorization
Your plan's approval, before you get a service, device or drug, that it's medically necessary. It isn't required in emergencies. Getting approved doesn't guarantee the plan will pay. Also called: preauthorization, prior approval, precertification.
Example: You decide to start on an insulin pump. Your endocrinologist's office sends your medical information to your insurer for approval before writing the prescription.
Medically necessary
Care needed to prevent, diagnose or treat a condition that meets accepted medical standards. Insurers decide this using their own written criteria (called medical policy guidelines) and a medical review of your records.
Example: Your insurer reviews your records and decides your CGM is medically necessary.
Claim
A request for payment that you or your provider send to your insurer.
Example: You paid for a CGM yourself and submit a claim to get reimbursed, since you believe it's covered.
Denial
Your insurer's decision not to pay a claim or cover a request.
Appeal
Asking your insurer to reconsider a denial, in whole or in part. Your denial letter should explain how to appeal and the deadline.
Example: Your insulin pump request is denied, so you work with your endocrinologist to start an appeal.
Exception request
A written request, usually from your provider, asking your plan to cover a drug or item it normally doesn't (or to cover it at a lower cost) because you need it.
Example: Your plan prefers Insulin B, but it doesn't work well for you. Your endocrinologist asks your plan to cover Insulin A at the same price.
Grievance
A formal complaint to your insurer. Also called: complaint.
Example: Your plan won't cover a CGM until you start taking insulin. You file a grievance saying the device is necessary for your care now.
This glossary is a guide and doesn't cover every term you'll see. Insurers don't all use the same words, so check with your plan if something on your documents doesn't match.