Understanding Health Insurance Jargon: A Glossary for Beginners

Understanding Health Insurance Jargon: A Glossary for Beginners


Hi there! My name is Claire and I work as a healthcare advocate, helping people navigate the complex world of health insurance. I know firsthand how confusing and overwhelming the health insurance process can be, especially if you’re new to it. The plans, terms, and acronyms seem designed to complicate and obscure rather than inform and educate.

Fear not – you’ve come to the right place. In this post, I want to break down some of the most common health insurance terms and explain what they really mean in plain English. My goal is to demystify health insurance jargon and give you a strong baseline of knowledge so you can feel more empowered when choosing and using your coverage.

We’ll cover topics like deductibles, co-pays, premiums, providers, networks, and more. I’ll explain what each one means and how it impacts your costs and care. By the end, you’ll be fluent in health insurance speak! Just grab a cup of tea or coffee, get comfortable, and let’s dive in.


Let’s start with one of the most basic but important terms – your premium. In simple terms, your premium is your monthly health insurance payment. It’s the amount you or your employer pays to your insurance company each month to maintain active coverage.

Premiums vary depending on the type of plan you choose (individual, family, etc.), the level of coverage provided, and other factors like your age, location, and health status. Generally, more comprehensive plans with lower out-of-pocket costs for care will have higher premiums. Lower premiums often mean you’ll pay more in other costs like deductibles or co-pays when receiving care.

It’s important to budget for your premium payments like any other monthly bill. Failing to pay your premium on time could result in a lapse or termination of your health insurance. Some employers deduct premiums directly from your paycheck to make payments automatic each month. For individual plans, you’ll usually receive a bill from your insurance company for premiums.


A deductible is the amount you must pay out of pocket each year before your insurance begins covering costs. For example, if your deductible is $1,500, that means you must spend $1,500 of your own money on medical care before the insurance kicks in to help pay medical bills.

Deductibles are usually applied on a yearly basis and must be met for most covered services, including doctor visits, lab tests, surgeries, and more. However, some preventive care services may be covered before you reach your deductible. It’s important not to confuse your deductible with your total out-of-pocket maximum, which caps how much you spend in a year.


A co-pay is a fixed amount you pay when receiving medical treatment, like a $25 fee you’d pay at the doctor’s office. Unlike deductibles which reset annually, co-pays don’t count toward your deductible or out-of-pocket maximum. You’ll typically pay co-pays for things like primary care visits, specialist appointments, generic drugs, imaging tests, and more.

Co-pays let you share in the cost of care while letting insurance pick up the rest. They encourage you to seek preventive services regularly without hitting your deductible first. Co-pays are usually cheaper than paying full costs out-of-pocket before meeting your deductible. Co-pay amounts vary based on the medical service and your specific insurance plan.


Coinsurance refers to the percentage of a medical bill you pay after meeting your annual deductible. For example, if your insurance plan has 20% coinsurance, the insurance pays 80% of covered medical bills while you pay the remaining 20%. Coinsurance only kicks in once your deductible is satisfied for the year, and it helps split the remaining costs between you and your insurance company.

The coinsurance percentage varies between plans but is usually between 10-30%. Higher coinsurance often means lower premiums. Be aware that coinsurance still applies to your bills until you reach your out-of-pocket maximum for the year. Beyond that, full coverage takes over for the rest of the year.

Out-Of-Pocket Maximum

Your out-of-pocket maximum acts as a cap on how much medical spending you’re responsible for in a year. This protects you financially from catastrophic medical costs. Once you reach your out-of-pocket maximum, the insurance company is responsible for 100% of additional covered medical bills for the rest of the year.

The Affordable Care Act (ACA) set limits on yearly out-of-pocket costs at $7,900 for an individual or $15,800 for a family on ACA-compliant plans for 2023. Plans may have lower out-of-pocket maximums, but they can’t exceed these limits. Costs like premiums don’t count toward your out-of-pocket maximum – only deductibles, co-pays, and coinsurance you pay for in-network care.


An insurance network is the group of doctors, hospitals, and other medical providers that have contracted with your insurance company to provide services. You’ll save money by seeing in-network providers, as these providers have agreed to charge negotiated discounted rates.

Going out-of-network means paying potentially significantly higher medical bills and is usually not covered at all under some plans. Make sure any provider is in-network before receiving care to avoid unexpected costs. Check with your insurance company or search their provider directory online if you have questions about a provider’s network status.

Primary Care Physician (PCP)

Your primary care physician, or PCP, acts as your main point of contact for all preventive and non-emergency medical care needs. PCPs are usually general practitioners, internists, family doctors, or pediatricians who know you and your family’s health history.

Many plans require you to designate a PCP who will coordinate referrals to specialists and oversee your healthcare needs. Seeing your PCP for routine appointments and illnesses helps manage costs through lower co-pays as opposed to visiting an urgent care or emergency room. Your insurance may also cover more preventive services like physicals at no charge when done through your PCP.


Specialists are doctors who focus on specific areas of medicine beyond primary care. Examples include cardiologists for heart issues, dermatologists for skin concerns, orthopedists for bone and muscle problems, and many more specialties.

You’ll typically need a referral from your PCP in order to visit specialists that are covered under your insurance plan. Exceptions may apply for OB/GYNs and emergency/trauma care. Specialist visits usually carry a higher co-pay than primary care visits. Be sure any specialist you see participates in your health insurance provider’s network to avoid greater costs.

Provider Directory

As mentioned earlier, an important resource provided by your health insurer is its provider directory. This directory lists doctors, hospitals, urgent care centers, and other facilities that participate in and accept your insurance plan.

Search the online provider directory by location, medical specialty, languages spoken, and other criteria to find in-network options near you. You may also call your insurance company’s customer service line for help finding providers. Making sure any healthcare provider you see is in-network using this directory will save you significantly from costs due to out-of-network charges.

Understanding Health Insurance Jargon: A Glossary for Beginners
Understanding Health Insurance Jargon: A Glossary for Beginners

Emergency Room Care

Emergency rooms, or ERs, are for serious, life-threatening injuries or illnesses that require immediate medical treatment. Examples include severe bleeding, chest pain, broken bones, severe burns, or major trauma from accidents. Foregoing or delaying ER care could seriously jeopardize your health.

ER visits are generally subject to higher co-pays than primary doctor visits and can still apply if you’re admitted to the hospital. Your plan may require you to notify them of ER visits within a certain window. Know that most non-emergency care in ERs will not be covered on preventive terms and could lead to higher costs. Appropriate use of urgent care centers and your PCP are usually cheaper options where feasible.

Urgent Care

Urgent care centers provide walk-in appointments for injuries or illnesses requiring prompt medical attention that are not true medical emergencies. Sprains, minor cuts or burns, respiratory illnesses, and animal/insect bites are examples of common urgent care visits.

Co-pays for urgent care are usually lower than ER charges and are a more affordable route for nonemergency medical issues that arise outside of normal primary care office hours. Quality urgent cares are also often faster to get to than ER waits, especially for minor problems. Always check your policy’s coverage terms for urgent care to understand costs.

Preventive Care

Preventive care refers to health services like annual physicals, cancer screenings, immunizations, and well-baby/well-child visits geared toward identifying potential health issues before they become major problems. Many health plans must fully cover preventive care under the ACA without patient cost-sharing like deductibles or coinsurance.

Covered preventive care services are designated by groups like the U.S. Preventive Services Task Force and are free-of-charge regardless of deductible status. Knowing what is covered promotes cost-effective maintenance of good health over expensive treatment later.


FAQ 1: What is the difference between a deductible and an out-of-pocket maximum?

The main difference is that a deductible is the amount you must pay each year before your insurance begins contributing to costs of care, while an out-of-pocket maximum caps your total expenditures for the year, including deductibles, copays, and coinsurance paid.

A deductible applies to most services and starts over each year, but an out-of-pocket maximum provides year-long protection once reached. For example, if your deductible is $1,500 and out-of-pocket max is $3,000, you’d pay the full $1,500 deductible before coinsurance kicks in. Then you’d pay coinsurance on bills until the $3,000 max is reached, at which point full coverage starts for the rest of the year.

FAQ 2: What should I do if I need to see a specialist?

First, check if your primary care physician needs to provide a referral for specialist visits to be covered by your plan. If so, contact your PCP and request a referral for the specialist you need to see. Without the referral, you may have to pay full costs or higher coinsurance. When scheduling with the specialist, verify they participate in your insurance network for in-network coverage as well. Bring your insurance card and referral to all specialist appointments.

FAQ 3: How do I choose a health insurance plan?

There are a few key factors to consider when choosing a plan: your medical needs, providers you want to use, deductible/premium amounts you’re comfortable with, and coverage details like preventive care or prescription benefits. Look at several options on your state marketplace and compare costs and coverage side by side. Consider talking to a licensed insurance broker if you need help understanding tradeoffs. Ultimately pick a plan that fits your budget and priorities.

FAQ 4: Can I go to an out-of-network provider?

You can go out-of-network, but it usually results in much higher costs. If the provider is out-of-network, your insurance likely won’t pay any costs until you meet your full out-of-pocket maximum, leaving you with the entire bill. It’s best to verify providers are in-network before receiving care when feasible to make the most of your coverage. Emergency situations allow for exemption from network restrictions, but it’s still advisable to transition follow-up care to in-network providers.

FAQ 5: What should I do if I lose my health insurance coverage?

Losing coverage through a job change or life event can be stressful. First find out if you qualify for a special enrollment period on the public marketplace in your state. You may have 60 days to enroll in new coverage outside the regular open enrollment period due to qualifying life events. Look into options through Medicaid or other state programs as well. Otherwise, consider a short-term health plan as an interim option until open enrollment for individual plans comes around again. Don’t delay and leave yourself at risk of gaps in healthcare access.

FAQ 6: How do I dispute a bill from my doctor or insurance company?

First, carefully review the bill for accuracy and check that the services charged match what was provided. If there are errors, contact your provider or insurance company right away. For coverage disputes, ask your insurer specifics on which service or procedure they denied and why. Compile notes from your treatment and requests for prior authorization if applicable. Appealing a decision verbally and through written letters explaining why you believe care should be covered is your right. State insurance regulators can assist if issues can’t be resolved. Documentation is key throughout the dispute process.


Health insurance can feel confusing with all its technical terminology and processes. I hope this overview has helped demystify some of the most common terms and given you a better understanding of how coverage works. Please feel free to reach out if you have any other questions as you continue managing your healthcare needs and insurance choices. Learning the language is the first step toward feeling informed and in control of your medical care options and costs.


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