Health Insurance Glossary

What you pay

The four numbers that determine your actual cost — and the one that caps your worst year.

Premium

The fixed amount you pay every month to keep your coverage active, whether or not you use any care. Paying your premium is what keeps the policy in force; it does not count toward your deductible or out-of-pocket maximum.

Deductible

The amount you pay for covered services before your plan starts sharing costs. If your deductible is $3,000, you generally pay the first $3,000 yourself. Many plans cover preventive care, and sometimes certain visits or drugs, before you meet it.

Copay (copayment)

A flat fee you pay for a specific service — $30 for an office visit, for example. Copays are predictable and set by the plan, and depending on the plan may apply before or after you've met your deductible.

Coinsurance

Your percentage share of a cost after you've met the deductible. With 20% coinsurance, the plan pays 80% of an approved charge and you pay the remaining 20%, continuing until you reach your out-of-pocket maximum.

Out-of-pocket maximum

The most you can be required to pay for covered, in-network care in a plan year. Once you hit it, the plan pays 100% of covered services for the rest of the year. Premiums do not count toward it. This is the single most important number for understanding your worst-case exposure.

Allowed amount

The maximum a plan will recognize for a covered service. In-network providers agree to accept it as full payment. Out-of-network providers may bill you for the difference between their charge and the allowed amount.

Help paying for coverage

The subsidy system, and the 2026 change that reshaped who qualifies.

Premium tax credit (subsidy)

Financial help that lowers your monthly marketplace premium, based on your projected household income and family size. It's typically paid in advance directly to your insurer, then reconciled on your tax return against what you actually earned.

Federal poverty level (FPL)

An income benchmark used to determine eligibility for subsidies and Medicaid. Marketplace subsidies run from 100% to 400% of FPL — for 2026 coverage, roughly $15,650 to $62,600 for one person and $32,150 to $128,600 for a family of four in the continental U.S.

Subsidy cliff

The hard cutoff at 400% of the federal poverty level, above which the premium tax credit drops to zero rather than tapering. Enhanced subsidies smoothed this out from 2021 through 2025; those expired January 1, 2026, so the cliff is back in effect.

MAGI (modified adjusted gross income)

The income figure used to calculate subsidy eligibility. Because certain deductions — retirement contributions, HSA contributions, the self-employed health insurance deduction — reduce it, MAGI can differ meaningfully from gross income, which matters a great deal near the subsidy cliff.

Cost-sharing reduction (CSR)

Extra help that lowers your deductible, copays, coinsurance, and out-of-pocket maximum — not your premium. Available only to households below 250% of FPL, and only on Silver plans, which is why Silver is often cheaper overall than Bronze for those who qualify.

Advance payment reconciliation

Settling up at tax time between the subsidy paid on your behalf during the year and what your actual income entitled you to. Starting with the 2026 plan year, the caps that limited how much excess you had to repay were eliminated, so an underestimate can mean repaying the full difference.

Plan types and structure

How plans are organized, and what the labels actually promise.

PPO (Preferred Provider Organization)

A plan that lets you see any provider without a referral, including out-of-network care at a higher cost. More flexibility, generally higher premiums.

HMO (Health Maintenance Organization)

A plan that requires you to use its network and typically to get referrals from a primary care physician before seeing specialists. Less flexibility, generally lower premiums.

EPO (Exclusive Provider Organization)

A hybrid: like an HMO you must stay in-network except in emergencies, but like a PPO you generally don't need referrals to see specialists.

Metal tier

Bronze, Silver, Gold, and Platinum describe how costs are split between you and the insurer — roughly 60%, 70%, 80%, and 90% of total costs paid by the plan across a standard population. All tiers cover the same essential health benefits.

Actuarial value

The share of total covered medical costs a plan pays on average across a large group of people. It describes the plan's design, not your personal outcome — a 60% Bronze plan doesn't mean you'll pay 40% of each bill.

Essential health benefits (EHB)

Ten categories of care that ACA-compliant plans must cover, including hospitalization, prescription drugs, maternity, mental health, and pediatric dental and vision. Adult dental and vision are not included.

Formulary

The list of prescription drugs a plan covers, organized into tiers that determine your cost. Two plans with identical premiums can differ enormously in what your specific medication costs, which is why the formulary matters more than the premium for anyone on regular prescriptions.

Network

The providers and facilities contracted with your plan. In-network care costs less and counts fully toward your out-of-pocket maximum; out-of-network care costs more and on some plan types isn't covered at all outside emergencies.

HDHP (high-deductible health plan)

A plan meeting IRS minimum-deductible and maximum-out-of-pocket rules, which makes you eligible to contribute to a Health Savings Account. For 2026 the minimum deductible is $1,700 self-only or $3,400 family.

Enrolling and staying covered

The windows that decide when you can act — and what happens if you miss them.

Open Enrollment Period

The annual window when anyone can enroll in or change a marketplace plan without needing a special reason. For 2026 coverage it ran November 1, 2025 through January 15, 2026 in most states.

Special Enrollment Period (SEP)

A window — usually 60 days — opened by a qualifying life event, allowing you to enroll or change plans outside Open Enrollment.

Qualifying life event

A change that opens a Special Enrollment Period: losing other coverage, moving, marriage or divorce, having or adopting a child, or certain income changes. Voluntarily dropping coverage generally does not qualify.

Guaranteed issue

The rule that an insurer must sell you a plan regardless of health status, and cannot charge more or exclude pre-existing conditions. All ACA marketplace plans are guaranteed issue; medically underwritten private plans are not.

Underwriting

The process of evaluating your health history to decide whether to offer coverage and at what price. It applies to private off-marketplace plans and most life insurance, but not to ACA marketplace plans.

COBRA

Federal continuation coverage letting you keep an employer plan after leaving a job, at 102% of the full premium — the entire cost plus up to a 2% administrative fee. Typically lasts 18 months, and up to 36 for certain qualifying events.

Medicare terms

The vocabulary of Medicare, where the acronyms multiply fastest.

Part A

Hospital insurance, covering inpatient stays, skilled nursing facility care, hospice, and some home health care. Most people pay no premium for Part A.

Part B

Medical insurance, covering doctor visits, outpatient care, preventive services, and durable medical equipment. It carries a monthly premium — $202.90 standard in 2026.

Part C (Medicare Advantage)

An all-in-one alternative to Original Medicare offered by private insurers, often bundling drug coverage and extra benefits at a low or $0 premium, in exchange for using the plan's network.

Part D

Prescription drug coverage through private plans. In 2026 the deductible is capped at $615 and out-of-pocket drug spending is capped at $2,100, after which the plan pays 100% for the rest of the year.

Medigap (Medicare Supplement)

A policy that works alongside Original Medicare to cover costs it leaves behind — deductibles, copays, coinsurance. Benefits are standardized by plan letter, so Plan G is identical across carriers and only price and service differ.

IRMAA

The Income-Related Monthly Adjustment Amount — a surcharge on Part B and Part D premiums for higher earners. It's based on income from two years earlier and applies as a cliff, so exceeding a threshold by any amount triggers the full tier.

Claims and other terms

What arrives in the mail, and the categories worth recognizing.

EOB (Explanation of Benefits)

A statement from your insurer after a claim showing what was billed, what the plan allowed, what it paid, and what you may owe. It is not a bill — but it's worth comparing against the bill that follows.

Prior authorization

Approval a plan requires before it will cover certain services, procedures, or drugs. Skipping it can mean a denied claim even for care that would otherwise have been covered.

Excepted benefits

Coverage excepted from most major-medical rules because it's designed to supplement comprehensive insurance rather than replace it — accident, critical illness, hospital indemnity, fixed indemnity, and standalone dental and vision plans.

Fixed indemnity plan

A plan paying a set cash amount per event or per day rather than a share of actual costs. It is not major medical insurance, is not required to cover essential health benefits, and should never serve as someone's only coverage.

Coverage gap

In non-expansion states, the situation where a household earns too much for Medicaid but under 100% of FPL, leaving them ineligible for marketplace subsidies. Among the states Philip serves, this applies in Alabama, Florida, and Georgia; Arizona and Ohio expanded Medicaid.

Creditable coverage

Coverage considered at least as good as a benchmark — most often used for Medicare Part D, where having creditable drug coverage lets you delay enrolling without incurring a late enrollment penalty.

Common Questions