Quick Glance Health Insurance Dictionary

  • Allowed Amount

What it is:
The price your insurance agrees is “reasonable.”
If a provider charges more, you usually don’t owe the extra when in-network.

  • Balance Billing

What it is:
When an out-of-network provider bills you for what insurance didn’t pay.

  • Coinsurance

What it is:
The percentage you pay after your deductible is met.
Example:
Insurance pays 80%
You pay 20%

  • Copay

What it is:
A flat dollar amount you pay at the time of the visit.
Example:
• $25 primary care visit
• $50 specialist visit
• $10 prescriptions
Copays often apply even before your deductible is met.

  • Covered Service

What it is:
A service your plan agrees to help pay for.

  • Deductible

What it is:
The amount you must pay before your insurance starts helping with most things.
Example:
Deductible = $2,000
You pay the first $2,000 of covered care yourself.

  • Denial

What it is:
When insurance says “no” and gives a reason.

  • Explanation of Benefits (EOB)

What it is:
A statement showing:
• What was billed
• What insurance paid
• What you owe
(Not a bill — but it leads to one.)

  • Formulary

What it is:
The list of medications your plan covers.

  • HSA / FSA

What they are:
Health Savings Account or Flexible Spending Account. Special accounts you can use to pay medical expenses tax-free.

  • In-Network vs Out-of-Network Provider

In-network: Your insurance has a contract with that provider → much cheaper.
Out-of-network: No contract between the insurance company and the provider → much more expensive or not covered.

  • Out-of-Pocket Maximum (OOP Max)

What it is:
The most you will pay in a year for covered care.
Once you hit this number insurance pays 100% of covered services for the rest of the year.
This is your financial “ceiling.”

  • Premium

What it is:
What you pay every month just to have insurance.
You pay this whether you use your insurance or not.

  • Prior Authorization

What it is:
Insurance approval needed before certain services, imaging, surgeries, medications, or equipment.
No approval = often no payment.

  • Referral

What it is:
A formal permission slip to see a specialist (not needed in every plan).