Insurance & Coverage Terms
Plain-language explanations of insurance terms that affect coverage, costs, and access to care
1. Premium - A premium is your monthly health insurance payment you pay for health coverage. A health insurance premium has to be paid monthly regardless of whether or not you received medical care that month.
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2. Deductible- A deductible is the amount of money you have to spend out-of-pocket before your insurance begins to cover your care.
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3. Copay- A copay is the fixed amount of money you pay out-of-pocket at the time of care. These amounts are usually required for doctor visits, specialist appointments, or prescriptions. Your specific copay depends on the plan you have, but they often apply before your deductible is met as well.
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4. Coinsurance- Coinsurance is your share of costs for a covered health service, calculated as a percentage (like 20%) that you pay after you've met your plan's deductible. For example, with 20% coinsurance, if the allowed cost of a doctor visit is $100 and you've met your deductible, you pay $20, and the plan pays the remaining $80​
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5. In-network- In-network refers to Doctors or healthcare offices that are part of a health plan's network of providers. In-network Doctors, specialists, hospitals, or pharmacies have a contract with your health insurance plan to provide services at a lower price to you.
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6. Out-of-network- Doctors, hospitals, or providers that do not have a contractual agreement with your health insurance plan. This means that these health providers don't have a pre-negotiated with your health insurance plan. Seeing these providers would be more expensive due to higher out-of-pocket costs, higher deductibles, or no coverage at all.
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7. Prior authorization- Prior authorization is when an insurance company requires doctors to get approval before a patient can receive certain treatments, tests, or medications.
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8. Step-therapy- step therapy is a tactic used by health insurance companies that requires patients to try lower-cost medications before coverage is approved for more expensive medications/treatments.
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9. Medical necessity- Medical necessity means a treatment, test, or service is considered necessary to diagnose or treat a medical condition according to accepted clinical standards.
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10. HMO (health maintenance organization)- A HMO is a type of insurance plan that has the smallest provider network. This plan requires patients to use doctors and hospitals within a specific network and typically get referrals from a primary care doctor to see specialists.
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11. PPO (preferred provider network)- A PPO is a type of insurance plan that has a large provider network. This plan lets patients see providers both inside and outside the network without needing referrals, though care is cheaper within the network
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12. High-Deductible Health Plan (HDHP)- A HDHP is a health insurance policy with lower monthly premiums but higher annual deductibles ($1,650 individual/$3,300 family in 2025) and higher out-of-pocket maximums ($8,500/$17,000 in 2026). Members pay full costs for services (except preventive care) until the deductible is met, usually paired with a tax-advantaged Health Savings Account (HSA)
