Plain-English definitions for the 29+ health insurance terms that come up most often — written by a licensed advisor, with links to related guides whenever a term deserves a deeper dive.
Also known as: Affordable Care Act
The Affordable Care Act — the 2010 federal law that created the Marketplace and modern coverage rules.
The Affordable Care Act (ACA) is the federal law that created the Health Insurance Marketplace, required plans to cover pre-existing conditions, set Essential Health Benefits, and introduced premium tax credits for income-eligible households.
Your share of a covered medical bill after meeting the deductible, expressed as a percentage.
Coinsurance is the percentage of a covered medical bill you pay after your deductible is met. A common split is 80/20 — the insurer pays 80% and you pay 20% — until you hit your out-of-pocket maximum.
A federal law that lets you continue your employer's group plan after leaving a job, at full cost.
COBRA (Consolidated Omnibus Budget Reconciliation Act) lets you continue an employer's group health plan for up to 18 months after losing coverage, but you typically pay 100% of the premium plus a 2% administrative fee.
Also known as: Copayment
A fixed dollar amount you pay for a covered service, like $30 for a primary care visit.
A copay (or copayment) is a flat fee you pay for a covered service — for example, $30 for a primary care visit or $15 for a generic prescription. Copays always count toward your out-of-pocket maximum.
The amount you pay out of pocket for covered services before insurance begins paying its share.
A deductible is the amount you pay each plan year for covered medical care before your insurance starts paying. Preventive care is generally covered before the deductible is met.
A spouse, child, or other person eligible for coverage under your health plan.
A dependent is someone — typically a spouse or child under 26 — who can be added to your health insurance plan. Adding dependents increases premium but also their covered care.
A family deductible where the plan starts paying for a single member once that member meets the individual deductible.
On an embedded deductible plan, any single family member only has to meet their individual deductible before the plan begins paying for that person's care — even if the full family deductible has not been hit.
Exclusive Provider Organization — no referrals, but no out-of-network coverage outside emergencies.
An EPO (Exclusive Provider Organization) is a hybrid network. Like a PPO, you don't need a referral to see specialists. Like an HMO, there's no out-of-network coverage except in true emergencies.
Also known as: EOB
A statement from your insurer showing what was billed, what they paid, and what you owe.
An Explanation of Benefits (EOB) is a summary from your insurance carrier after a claim is processed. It shows the billed amount, the network-negotiated rate, what the plan paid, and what you owe. An EOB is not a bill.
The combined ceiling all family members must reach before the plan pays for everyone.
The family deductible is the maximum combined amount your family pays out of pocket toward the deductible each year. Once met, the plan begins paying for every covered member — even if individual deductibles weren't met.
The list of prescription drugs a plan covers, usually grouped into pricing tiers.
A formulary is the list of prescription drugs covered by a health plan. Drugs are usually placed in tiers (generic, preferred brand, non-preferred brand, specialty) that determine your cost.
Also known as: Flexible Spending Account
Flexible Spending Account — a pre-tax employer-sponsored account for medical expenses.
An FSA (Flexible Spending Account) is a pre-tax account offered through an employer to pay for qualified medical expenses. Funds generally must be used in the plan year (the 'use-it-or-lose-it' rule).
Also known as: Health Maintenance Organization
Health Maintenance Organization — lower-cost plan with a PCP and referrals required.
An HMO (Health Maintenance Organization) requires you to choose a primary care physician and get referrals before seeing specialists. Premiums are typically lower, but out-of-network care isn't covered except for emergencies.
Also known as: Health Savings Account
Health Savings Account — a triple-tax-advantaged account paired with an HSA-eligible plan.
An HSA (Health Savings Account) is a tax-advantaged account you fund yourself when paired with an HSA-eligible high-deductible plan. Contributions, growth, and withdrawals for qualified medical expenses are all tax-free.
Providers and facilities that have a contracted rate with your insurance plan.
In-network providers have agreed to discounted, contracted rates with your insurance carrier. Using in-network care almost always means lower out-of-pocket cost and full benefit coverage.
Also known as: Health Insurance Marketplace, Exchange
The federal (or state) exchange where ACA plans are sold and subsidies are applied.
The Marketplace (HealthCare.gov in Texas) is the federally-run exchange where you can compare ACA-compliant plans and apply for premium tax credits or cost-sharing reductions.
Also known as: MOOP, Out-of-Pocket Maximum
The most you'll pay in a plan year before the insurer covers 100% of in-network care.
The Maximum Out-of-Pocket (MOOP) is the annual cap on what you'll spend for covered, in-network care. Deductible, copays, and coinsurance count toward it; premiums don't. Once hit, the plan pays 100%.
The annual window when anyone can enroll in or change a Marketplace plan without a qualifying event.
Open Enrollment is the yearly period (Nov 1 – Jan 15 in most states) when anyone can enroll in or change an ACA Marketplace plan. Outside this window you need a Special Enrollment Period.
Providers without a contracted rate; using them typically means much higher out-of-pocket cost.
Out-of-network providers haven't agreed to your carrier's contracted rates. PPO plans usually cover a portion of out-of-network care at higher cost; HMO and EPO plans typically don't cover it at all outside emergencies.
Point of Service plan — HMO-style with a PCP, but limited out-of-network coverage.
A POS (Point of Service) plan is a hybrid: like an HMO it requires a primary care doctor and referrals, but like a PPO it covers some out-of-network care at higher cost-sharing.
Also known as: Preferred Provider Organization
Preferred Provider Organization — broader network, no referrals, partial out-of-network coverage.
A PPO (Preferred Provider Organization) lets you see any provider in a broad network without a referral and covers some out-of-network care at higher cost. Premiums are usually higher in exchange for the flexibility.
The monthly amount you pay to keep your health insurance active.
Your premium is the fixed monthly amount you pay (or have paid on your behalf via subsidies) to keep your coverage active. Premiums don't count toward your deductible or out-of-pocket maximum.
Routine screenings and visits ACA-compliant plans cover at 100% in-network with no deductible.
Preventive care includes annual physicals, screenings, immunizations, and certain women's and children's services. ACA-compliant plans must cover these at 100% in-network without applying the deductible.
Also known as: PCP
Your main doctor; required by HMO/POS plans and the source of specialist referrals.
A Primary Care Physician (PCP) is the doctor who coordinates your day-to-day care. HMO and POS plans require you to choose one and route specialist visits through them via referrals.
Also known as: Pre-Authorization
Insurer approval required before certain procedures, imaging, or medications will be covered.
Prior authorization is approval the insurance company must give before they'll cover certain procedures, imaging, or specialty drugs. Skipping it can result in the entire claim being denied.
The set of doctors, hospitals, and facilities a plan has contracted rates with.
A provider network is the group of doctors, hospitals, labs, and pharmacies your plan has contracts with. Network breadth is one of the biggest differences between PPO, HMO, and EPO plans.
Written approval from your PCP needed before an HMO/POS plan will cover a specialist visit.
A referral is the formal approval from your primary care physician needed before an HMO or POS plan will cover a specialist visit. Skipping it usually means paying the full bill yourself.
Also known as: SEP
A 60-day window opened by a qualifying life event to enroll in or change coverage.
A Special Enrollment Period (SEP) is a 60-day window — triggered by events like marriage, a baby, a move, or losing job coverage — when you can enroll in or change a Marketplace plan outside of Open Enrollment.
A doctor focused on a specific area (cardiology, orthopedics, dermatology, etc.).
A specialist is a physician with focused training in a specific area of medicine. HMO and POS plans require a referral from your PCP before they'll cover a specialist visit.
Licensed Health Insurance Advisor · Marine Corps Veteran
Phil is the founder of Valor Health Solutions — an independent, veteran-owned health insurance brokerage based in Keller, TX. He works directly with individuals, families, self-employed professionals, and small businesses across Texas and 32 other states, translating insurance jargon into plain English and helping clients avoid the costly mistakes most people only learn about after a claim.
Insurance is full of edge cases. Call or text Phil — a licensed advisor and Marine Corps veteran — for a real human answer, no scripts.
