Skip to Main Content

Health Insurance Terms Made Easy

Date: 07/01/15

According to a recent NPR article, many young adults do not understand the basics of health insurance. As a Washington health insurance plan provider, we want to help clear the air on the meanings of common terms in the health insurance world. Our goal is to alleviate some of the stress and educate our members on key terms, so you all can feel empowered to take control of your health!

Key Terms:

  1. ACA: The Affordable Care Act was implemented on March 23, 2010 also known as Obamacare, makes it possible for all U.S. citizens and legal residents to have health insurance.
  2. Claim: When you visit your doctor, the doctor’s medical office will bill your health plan for that visit. This also includes any exams or surgeries you received.
  3. Co-insurance: Once you meet your deductible, your insurance will only pay a portion of your medical bill (usually 60, 80 or 90% depending on your plan). The amount left over is your co-insurance or the portion you will still need to pay. Your co-insurance will remain the same until you reach your maximum out-of-pocket limit. Once you hit this mark, your health plan will pay 100% of the cost.
  4. Co-pay: The set dollar amount you pay for your doctor’s visits, prescriptions, hospital visits, etc.
  5. Deductible: The amount you have to pay for medical bills before your health insurance begins to pay. After you meet your deductible, your health insurance will begin to pay a portion of these services. Plans with high deductibles usually have lower monthly premiums, and vice versa.
  6. Health Insurance Marketplace: Under the ACA, the federal government offered states the ability to create a “marketplace” or “health exchange.” A website where people can buy affordable health insurance.  Most states decided to use the “Federal Marketplace” (Healthcare.gov). Washington state (WAHealthPlanFinder.org) and some others created their own.  You can only get government subsidies to help pay for your health insurance premiums under the “marketplace.” You have the choice to buy insurance outside the “marketplace” but you will not be eligible for subsidies.
  7. HMO (Health Maintenance Organization): A type of health insurance plan that limits coverage to doctors in a certain network. Members must choose a “primary care physician” who will refer you to in-network specialists and pharmacies. Out-of-network care is not covered except for emergency situations.
  8. PPO (Preferred Provider Organization): A type of health insurance plan where you have a broad network of providers.  You are not required to select a “primary care physician.” You can see any in-network provider. You will need to pay more if you visit a doctor outside the network.
  9. Premium: The amount of money you pay each month in order to have health insurance. Premiums depend on:
    1. Your age
    2. Whether or not you smoke
    3. Where you live
  10. Subsidy: The amount of money the government pays to your health plan to help pay your premium. This is also known as a Premium Tax Credit. Individuals with up to 400% of the FPL (a little more than $45,000 for 1 person) are allowed to receive subsidy. (This only refers to health plans purchased on the “marketplace” and is dependent on your annual income.)

Sources: https://www.healthcare.gov/glossary/#Canchor