Glossary of terms
Insurance can be like speaking a foreign language! Find some common terms you should understand defined below.
Common terminology
The key things you should look for in your Schedule of Benefits are your deductible, coinsurance, and out-of-pocket maximum. Keep in mind, these may vary depending on your location; for example, they may be different internationally vs. in the US.
Deductible
- A flat amount that an insure must pay before the insurance company will make any benefit payments under a health insurance policy.
Coinsurance
- The amount of eligible expenses the insured is responsible for paying after any applicable deductibles are met.
Out-of-pocket maximum
- The most you must pay out-of-pocket until the plan pays for everything at 100%.
More words to know
It's helpful to become familiar with common insurance terms like these to better understand your benefits.
Below, you’ll find basic insurance terms and definitions that can help you when it’s time for open enrollment and selecting your benefits.
Allowable charge
An allowable charge is the amount your insurance company considers to be reasonable for a specific medical service. Allowable charges are typically set based on market value. They’re also known as allowed amounts, maximum allowable charges, or usual, customary, or reasonable (UCR) charges. Example: Let’s say you twist your ankle and go to the hospital for an X-ray. The hospital (which is a provider within your insurance network) will only be reimbursed by your insurance company for the amount of their allowable charge.
Benefits
Benefits are the services or items covered under an insurance policy. Your plan’s covered benefits and exclusions will be defined in the terms of your policy.
Benefit level
A benefit level is the maximum amount an insurance provider has agreed to pay for a covered benefit during your benefit period.
Claim
An insurance claim is a request for an insurance company to cover payments. Claims are often made by the policyholder or provider.
Claimant
This is any policyholder who submits a claim to an insurance company for coverage.
Covered charges
Covered charges include any costs paid for by your insurance plan. Some plans limit covered charges if they’re incurred from providers outside of your plan’s network.
Covered person
A covered person is anyone covered by an insurance plan, including the policy owner and their dependents.
Covered service
A covered service is any service or supplies covered by an insurance plan. These will be outlined in your insurance policy terms.
Dependent
A dependent is an individual covered by the primary insurance holder’s plan, such as a spouse or child.
Effective date
The effective date is the date on which insurance coverage begins.
Exclusion
Exclusions are conditions or treatments that aren’t covered by an insurance plan.
Explanation of benefits
An explanation of benefits (EOB) is an insurance company’s breakdown of how a claim was paid. It includes information about what the provider paid and what portion of the cost, if any, the policyholder is responsible for.
In-network provider
An in-network provider is a professional, company, or organization that’s part of an insurance plan’s network. Services from in-network providers are usually less expensive than out-of-network care. Insurance companies often negotiate discounted prices from providers in exchange for referrals.
Insurance policy
An insurance policy is a contract between an insurer (the insurance company) and the insured (the individual, business, or entity being covered). An insurance policy defines the insurance terms and conditions, along with costs associated with coverage.
Insurer
An insurer is a company or organization that provides insurance coverage.
Non-covered charges
Non-covered charges are healthcare costs that aren’t covered by your existing health insurance program. These may include services like plastic surgery, chiropractic care, or psychological services.
Out-of-network provider
Also known as a non-network provider, an out-of-network provider is one outside your insurance program’s network. Medical services from out-of-network providers are usually more costly than those covered by your insurance policy.
Out-of-pocket costs
Out-of-pocket costs are healthcare expenses you're required to pay for yourself following treatment or services.
Outpatient services
Outpatient services are those that don't require overnight hospitalization. Often, these services or treatments are conducted in a doctor’s office, clinic, or hospital.
Policyholder
An insurance policyholder — or policy owner — is the individual who purchased, pays for, and is covered by the insurance policy.
Provider
A provider is a physician, licensed healthcare professional, clinic, doctor’s office, hospital, or medical facility. Providers may be in-network or non-network.
Underwriting
Underwriting is a process through which health insurance providers decide to offer coverage to a potential enrollee. Providers may set a policy premium during the underwriting process as well.