The 5 Health Insurance Terms Everyone Should Know

Individual and Family

The 5 Health Insurance Terms Everyone Should Know

Published on June 20, 2018


According to a Policygenius study, we have good and bad news about health insurance.
The good news: 70% of respondents to their survey said that they were satisfied with their current health insurance plans, for the most part.
The bad news: Although people are satisfied with their plan, 73% of respondents who provide themselves with health insurance are still going to look for new plans. Unfortunately, only 39% of these people are confident in their ability to find a plan.
Why does it matter whether or not you can pick a health insurance plan?
Picking a health insurance plan is a big deal! Especially when it comes to plans that can only be bought during the annual open enrollment period, since this is the health insurance you’re going to have all year long. If you’re going to be stuck with something for a yearit’s probably best for you to have all the resources you need to make the right decision.
Luckily, eHealth has compiled a list of major health insurance key terms that will help you understand the costs associated with insurance plans, which should help you making the right decision when it comes to choosing your plan.
5 common health insurance terms

  1. Deductible. A deductible is the amount of money you pay, out-of-pocket, towards covered medical costs before the insurance company starts to contribute to your bills. How Does a Deductible Work
  2. Coinsurance. This is the amount that enrollees are required to pay for a medical claim. If your health insurance has a 20% coinsurance requirement, then a bill of $200 would cost you $40 and the health insurance company $160. Coinsurance will apply after you’ve met your deductible—so before you meet your deductible, you might be paying 100% of certain medical costs (check plan details to see if this is true, or if there are exclusions, for your particular plan).

What is Coinsurance3. Copayment. This cost is also referred to as a “copay” for short. A copay is a specific charge that your health insurance plan has set for specific medical services or supplies. Unlike coinsurance, a copayment is not a percentage of the cost, but rather a set price that does not change. For example, all doctor’s office visits might have a $15 copay—which means you’ll pay $15 for doctor’s visits, and the healthy insurance company will pay the rest. Oftentimes prescriptions will have set copayments as well.  You may or may not continue to have copayments after you’ve met your deductible, depending on the health insurance plan.
What is Copay
4. Out-of-pocket maximum. The most you’ll have to pay for covered medical services in a year is called your out-of-pocket maximum. Costs that go toward this limit include:

  1. Your share of coinsurance
  2. Copayments (as of 2014 copayment must count towards deductibles and out-of-pocket maximum on qualified health insurance plans)
  3. Generally anything that goes towards your deductible as well

5. Premium. This keyword is perhaps a little easier to understand for most. It is the cost that you’ll usually see when looking at “how much a plan costs”. It’s the set, monthly payment you make in order to have your health insurance plan. Premium payments do not count towards deductibles or out-of-pocket-maximums.
Health insurance plans are like snowflakes—no one plan is the exact same as the other
Each plan has its own terms and limitations, so be sure to check the official plan documents to understand how that specific plan works. While we aim to help you understand how each cost works, you should use this list as a general outline, not law. Every insurance company has different rules, and insurance plans are not all exactly alike.  This article is only for general education.

More ways to get help searching for plans
Now that you’ve been introduced to some of the costs of most health insurance plans, you can hopefully avoid being part of the 4% of Americans who failed to correctly define these terms (not including the monthly premium).
If you want to dive even deeper into the depths of everything there is to know about health insurance plans, you can visit our Insurance Resource Center, and find a wide variety of information on how health insurance works. If you’re confident that you have the knowledge you need to start shopping, you can visit and begin getting quotes on health insurance plans in your area.

We’ll let you know when we publish anything new.