| Average individual deductible (employer plan) | ~$1,700 per year (KFF Employer Health Benefits Survey, 2023) |
| Most common plan type offered by employers | PPO (KFF Employer Health Benefits Survey, 2023) |
| Out-of-pocket maximum limit (ACA plans) | $9,450 individual / $18,900 family (HHS, plan year 2024) |
| Terms defined in this glossary | 15+ |
Why Health Insurance Jargon Feels So Confusing
Health insurance comes with its own dense vocabulary — and most plans offer little explanation of what any of it means. When you're staring at an enrollment form or trying to decipher a medical bill, terms like coinsurance or out-of-pocket maximum can stop you cold. This reference glossary cuts through the fog.
If you're brand new to how US coverage works, start with our plain-language overview of US health insurance before diving into individual terms. For readers who also want to decode other policy types, a similar approach applies to reading a car insurance policy.
| Average individual deductible (employer plan) | ~$1,700 per year (KFF Employer Health Benefits Survey, 2023) |
| Most common plan type offered by employers | PPO (KFF Employer Health Benefits Survey, 2023) |
| Out-of-pocket maximum limit (ACA plans) | $9,450 individual / $18,900 family (HHS, plan year 2024) |
| Terms defined in this glossary | 15+ |
Core Cost Terms You'll See on Every Plan
These terms define what you actually pay — before and after your insurance kicks in.
Premium
The monthly amount you pay to maintain health insurance coverage, regardless of whether you use any medical services. It's separate from any costs you pay when you actually receive care.
Deductible
The amount you pay for covered health services before your insurance begins sharing costs. For example, with a $1,500 deductible, you pay the first $1,500 of covered care each plan year.
Copay
A fixed dollar amount you pay for a specific covered service, such as $30 for a primary care visit. Copays are usually due at the time of the appointment.
Coinsurance
After meeting your deductible, coinsurance is your share of costs expressed as a percentage. With 20% coinsurance, if a covered service costs $200, you pay $40 and your insurer pays $160.
Out-of-Pocket Maximum
The most you'll pay for covered services in a plan year. Once you hit this limit, your insurer covers 100% of additional covered costs. Premiums typically don't count toward this cap.
In-Network vs. Out-of-Network
In-network providers have a contract with your insurer and charge negotiated rates. Out-of-network providers don't, which typically results in higher costs or no coverage at all, depending on your plan.
Prior Authorization
Approval your insurer requires before certain services, procedures, or medications are covered. Without it, a claim may be denied even if you have coverage.
Health Savings Account (HSA)
A tax-advantaged account available to people enrolled in a qualifying high-deductible health plan. Funds can be used to pay for eligible medical expenses and roll over year to year.
Understanding how these costs interact is critical. For example, your deductible, copay, and coinsurance don't work independently — they stack. Our article on how deductibles, copays, and coinsurance work together explains the full picture.
Plan Types, Networks, and Documents
Beyond what you pay, you need to understand how your plan is structured and what paperwork to expect.
- HMO (Health Maintenance Organization): Requires you to choose a primary care physician (PCP) and get referrals to see specialists. Coverage is generally limited to in-network providers.
- PPO (Preferred Provider Organization): Offers more flexibility — you can see specialists without a referral and go out-of-network, though usually at higher cost.
- EPO (Exclusive Provider Organization): Like a PPO but with no out-of-network coverage except in emergencies.
- HDHP (High-Deductible Health Plan): Features a higher deductible and lower premiums. Often paired with a Health Savings Account (HSA).
- Network: The group of doctors, hospitals, and other providers your insurer has contracted with. Staying in-network almost always costs less.
- EOB (Explanation of Benefits): A statement from your insurer detailing what was billed, what they paid, and what you owe. It is not a bill. See our field guide to reading an EOB for a full walkthrough.
- Formulary: Your plan's approved list of covered prescription drugs, usually organized into tiers that determine your cost.
Your Plan Documents Are the Final Word
Definitions of insurance terms can vary between insurers and even between plans from the same insurer. The Summary of Benefits and Coverage (SBC) — a standardized document your plan is required to provide — is the best place to confirm what specific terms mean for your coverage. When in doubt, call the member services number on your insurance card.
This article provides general information about health insurance terminology and is not a substitute for personalized advice. Coverage terms vary by insurer, plan, and state. Always review your actual policy documents and consult a licensed insurance professional for guidance specific to your situation.