Open Enrollment is a critical time to choose or renew health insurance coverage, but it can be confusing with all the industry-specific terms. Understanding these key terms can help you make informed decisions about your healthcare and select the best plan for your needs. Here’s a glossary of essential health insurance terms to guide you through Open Enrollment.
Premium
The amount you pay monthly for your health insurance plan. Think of it as your subscription fee to keep your coverage active.
Example: If your monthly premium is $300, you’ll pay that amount each month regardless of whether you use any healthcare services.
Deductible
The amount you need to pay out of pocket for covered healthcare services before your insurance plan begins to share costs.
Example: If your deductible is $1,500, you’ll pay all medical expenses up to $1,500 before your insurer covers a portion of additional costs.
Copayment (Copay)
A fixed amount you pay for specific services, like doctor visits or prescriptions, as part of your cost-sharing with the insurer.
Example: Your plan may have a $25 copay for primary care visits, meaning you’ll pay that amount for each visit.
Coinsurance
The percentage of costs you share with your insurer after meeting your deductible. Coinsurance applies until you reach your out-of-pocket maximum.
Example: With 20% coinsurance, you’ll pay 20% of covered services, and your insurer will cover the remaining 80% after your deductible is met.
Out-of-Pocket Maximum
The maximum amount you’ll pay in a year for covered services, including deductibles, copays, and coinsurance. After reaching this limit, your insurer covers 100% of costs for covered services.
Example: If your out-of-pocket maximum is $6,000, you won’t pay more than that amount in a year for covered care.
Network
A group of doctors, hospitals, and other providers that your insurer contracts with to offer services at a discounted rate. Staying in-network usually costs less than seeing out-of-network providers.
Always confirm that your preferred providers are in-network to avoid higher out-of-pocket expenses.
In-Network and Out-of-Network
In-network providers are part of your insurer’s network, and their services typically cost less. Out-of-network providers are not contracted with your insurer, often resulting in higher costs or no coverage.
Example: An in-network primary care visit may have a $25 copay, while an out-of-network visit could cost significantly more.
Health Maintenance Organization (HMO)
A type of health insurance plan that requires you to use in-network providers for care, except in emergencies. HMOs usually require a primary care physician (PCP) referral to see specialists.
HMOs can be more affordable but have limited provider options. Make sure your preferred doctors are within the HMO network.
Preferred Provider Organization (PPO)
A plan that offers more flexibility in choosing providers, allowing you to see both in-network and out-of-network providers without a referral. PPOs typically have higher premiums but offer broader provider access.
If you prefer more provider options, a PPO plan may be a better fit, even with higher premiums.
Exclusive Provider Organization (EPO)
An EPO plan combines features of HMOs and PPOs, requiring you to use in-network providers without referrals but offering no coverage for out-of-network care (except in emergencies).
EPOs are ideal for those who want more freedom than an HMO but don’t need out-of-network access.
High Deductible Health Plan (HDHP)
A plan with a higher deductible and lower premium, often paired with a Health Savings Account (HSA). HDHPs are designed for those who want lower monthly premiums and are prepared for higher out-of-pocket costs.
HDHPs are best for those who expect low medical expenses and want to save on premiums.
Health Savings Account (HSA)
A tax-advantaged savings account available with HDHPs, allowing you to set aside money for medical expenses. Funds in an HSA are tax-free and roll over year to year. Read about how to maximize your HSA.
HSAs are a great option for saving pre-tax dollars for future healthcare costs, and contributions can even be invested.
Special Enrollment Period (SEP)
A time outside of Open Enrollment when you can enroll in or change your health insurance plan, triggered by certain life events such as marriage, childbirth, or job loss.
If you experience a qualifying event, you may be eligible for an SEP to adjust your coverage.
Preventive Care
Services intended to prevent illness or detect health issues early, such as vaccinations, screenings, and annual check-ups. Most preventive care is covered at no cost to you.
Take advantage of preventive care benefits as they’re often fully covered under most health plans.
Formulary
A list of prescription drugs covered by your insurance plan. Drugs are often divided into tiers, with higher costs for brand-name or specialty medications.
Check your plan’s formulary if you rely on specific medications to ensure they’re covered affordably.
Premium Tax Credit
A subsidy that lowers your monthly premium cost for ACA marketplace plans, based on your income and household size.
Update your income and household information to see if you qualify for financial assistance through the ACA.
For a more comprehensive guide to health insurance terminology, visit our Insurance Terminology section. This resource provides clear definitions and explanations to help you navigate your healthcare options with confidence to select the right plan during Open Enrollment. With this knowledge, you’ll be better equipped to evaluate your options, compare costs, and make choices that align with your healthcare needs and budget. Let HealthBird help guide you through the process with personalized recommendations to make Open Enrollment a stress-free experience.
