Health Insurance Glossary

On occasion, there are questions about what a specific word or term means in the context of health insurance. This glossary is intended to serve as a tool to assist you in understanding some of the most common terms.

Affordable Care Act (ACA): The comprehensive health care reform law enacted in    March 2010.

Affordable Coverage: An employer-sponsored health plan covering only the employee, and whose cost cannot exceed a set annual percentage of the employee’s household income.

Claim: A request for a benefit (including reimbursement of a health care expense) by a   plan participant to the insurer for items or services the participant believes are covered by the plan.

COBRA (Consolidated Omnibus Budget Reconciliation Act): A federal law that in some cases allows a plan participant to temporarily keep health coverage after his or her employment ends, he or she loses coverage as a dependent of the covered employee, or another qualifying event.

Coinsurance: The percentage of costs of a covered health care service the participant pays after having paid his or her deductible.

Copay (also known as copayment): A fixed amount the participant pays for a covered health care service after having paid his or her deductible.

Deductible: The amount the plan participant pays for covered health care services before his or her insurance plan starts to pay.

Dependent: A child or other individual for whom a   parent, relative, or other person may claim a personal exemption that reduces their tax obligation.

Employer Mandate: Provision of the Affordable Care Act that requires certain employers with at least 50 full-time employees (or full-time equivalents) to offer health insurance coverage to its full-time employees (and their dependents) that meets certain affordability and minimum value standards or pay a penalty tax.

Essential Health Benefits: A set of 10 categories of services health insurance plans must cover under the Affordable Care Act.

Health Reimbursement Arrangement (HRA): Employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years.

Health Savings Account (HSA): A type of savings account that allows an individual to set aside money on a pre-tax basis to pay for qualified medical expenses, if he or she has a high deductible health plan.

High Deductible Health Plan (HDHP): A plan with a higher deductible than a traditional insurance plan.

In-Network: Health care providers (e.g., specialists, hospitals, laboratories) that have accepted contracted rates with the insurer in order to participate in the insurer’s


Open Enrollment Period: The yearly period when people can enroll in    a   health insurance plan.

Out-of-Network: Services received outside an insurer’s network. These services typically carry a higher cost to the insured person.

Out-of-Pocket Costs: Expenses for medical care that are not reimbursed by insurance.

Out-of-pocket costs include deductibles, coinsurance, and copays for covered services, plus all costs for services that are not covered.

Plan Year: A 12-month period of benefits coverage under a   group health plan. This 12-month period need not align with the calendar year.

Qualified Health Plan: An insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost sharing (like deductibles, copays, and out-of-pocket limits), and meets other requirements under the Affordable Care Act. All qualified health plans meet the minimum essential coverage requirement.

Special Enrollment Period: A time outside the yearly Open Enrollment Period when an individual can sign up for health insurance. An individual typically qualifies for a   Special Enrollment Period as a result of a certain life event, such as losing other health coverage, moving, getting married, having a baby, or adopting a child. By law, special enrollment periods must last at least 30 days.

Waiting Period: The time that must pass before coverage can become effective for an employee or dependent who is otherwise eligible for coverage under an employer-sponsored health plan.

For a more in-depth glossary of terms:

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