Health Insurance Glossary

Actuarial value (AV) is the percentage of total average costs for covered benefits that a plan will cover. For example, a Silver plan with 70% AV means the plan pays 70% of covered medical costs on average, while you pay 30%. Bronze = 60%, Silver = 70%, Gold = 80%, Platinum = 90%. Your actual costs will vary from the average.

The benchmark plan, also called the Second Lowest Cost Silver Plan (SLCSP), is used to calculate premium tax credit amounts. Your subsidy is calculated as the difference between the cost of the SLCSP in your area and your expected contribution based on your income. If you choose a plan cheaper than the SLCSP, you keep the extra subsidy as savings.

Catastrophic plans are low-premium, high-deductible health plans available to people under 30 or those who qualify for a hardship or affordability exemption. They cover three primary care visits per year before the deductible and provide essential health benefits. Catastrophic plans are NOT eligible for premium tax credits.

The Children's Health Insurance Program (CHIP) provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid, but not enough to afford private coverage. CHIP is jointly funded by states and the federal government. Each state program has different eligibility rules but must cover routine check-ups, immunizations, doctor visits, prescriptions, dental, vision, and emergency care.

COBRA is a federal law that lets you continue your employer-sponsored health insurance for a limited time after certain events that would cause you to lose coverage, like leaving a job. Under COBRA, you pay the entire premium — both what you were paying and what your employer was paying — plus a 2% administrative fee. COBRA is often much more expensive than Marketplace coverage.

Coinsurance is the percentage of costs of a covered health care service you pay after you've paid your deductible. For example, if your plan has 20% coinsurance, you pay 20% of the cost and your insurance pays 80%. You pay coinsurance until you reach your out-of-pocket maximum.

A copay (or copayment) is a fixed amount you pay for a covered health care service, usually when you receive the service. For example, you might pay a $30 copay to see your primary care doctor and a $50 copay to visit a specialist.

Cost-sharing reductions (CSRs) are discounts that lower your out-of-pocket costs when you receive care. To qualify, your income must be between 100-250% of the Federal Poverty Level, and you must enroll in a Silver plan. CSRs can dramatically lower your deductible, copays, and out-of-pocket maximum.

Your deductible is the amount you pay out-of-pocket for covered health care services before your insurance begins to pay. For example, with a $1,500 deductible, you pay the first $1,500 of covered services yourself. After that, you usually pay a copayment or coinsurance, and your insurance pays the rest.

An EPO (Exclusive Provider Organization) is a managed care plan where services are covered only if you use doctors, specialists, or hospitals in the plan's network (except in emergencies). Unlike HMOs, you don't need a referral to see a specialist. Unlike PPOs, there is no out-of-network coverage.

Essential Health Benefits (EHBs) are a set of 10 health care service categories that must be covered by all non-grandfathered individual and small group insurance plans. The 10 categories are: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services, laboratory services, preventive care, and pediatric services including oral and vision care.

The Federal Poverty Level (FPL) is a measure of income issued annually by the Department of Health and Human Services. It's used to determine eligibility for certain federal programs and benefits, including ACA subsidies. In 2025, 100% FPL for a single person is $15,060/year.

A formulary is a list of prescription drugs covered by your health plan. Drugs are typically organized into tiers with different cost-sharing amounts. Tier 1 (generic drugs) typically have the lowest copays, while higher tiers have higher costs. You should check your plan's formulary to make sure your medications are covered before enrolling.

A grandfathered plan is a health insurance plan that was in existence on March 23, 2010 (when the ACA was signed). These plans are exempt from some ACA requirements. Grandfathered plans cannot be purchased by new enrollees and must not have made significant changes to their benefits or costs. Fewer grandfathered plans exist each year.

A High Deductible Health Plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional plan. In 2025, an HDHP must have a minimum deductible of $1,650 (individual) or $3,300 (family). HDHPs are often paired with Health Savings Accounts (HSAs).

An HMO (Health Maintenance Organization) is a type of health plan that usually limits coverage to care from doctors who work for or contract with the HMO. Generally it will not cover out-of-network care except in emergencies. An HMO may require you to live or work in its service area to be eligible. You'll need a referral from your primary care doctor to see a specialist.

A Health Savings Account (HSA) is a tax-advantaged savings account you can use to pay for qualified medical expenses. To open an HSA, you must be enrolled in an HSA-eligible High Deductible Health Plan (HDHP). Contributions are tax-deductible, grow tax-free, and withdrawals for qualified medical expenses are tax-free. Unused funds roll over year to year.

Medicaid is a joint federal and state program that provides free or low-cost health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities. Eligibility rules vary by state. In states that expanded Medicaid under the ACA, adults with income up to 138% FPL qualify.

Medicare is a federal health insurance program primarily for people age 65 and older, and for certain younger people with disabilities or specific conditions. Medicare has four parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage).

ACA marketplace plans are categorized into four metal levels: Bronze, Silver, Gold, and Platinum. The metal level reflects how you and your insurance company split costs. Bronze plans have the lowest premiums but highest cost-sharing. Platinum plans have the highest premiums but lowest cost-sharing. Silver plans are special because only Silver plans offer cost-sharing reductions.

A health plan's network is the group of doctors, hospitals, pharmacies, and other healthcare providers that have agreed to provide services to the plan's members at negotiated rates. Using in-network providers generally costs you less. Using out-of-network providers (if covered at all) typically costs more.

Open Enrollment is the yearly period when you can sign up for health insurance, change your current plan, or drop coverage. For ACA Marketplace plans, Open Enrollment typically runs from November 1 through January 15. Outside of this period, you can only enroll or change plans if you qualify for a Special Enrollment Period.

The out-of-pocket maximum is the most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance, your health plan pays 100% of the costs of covered benefits. In 2025, the federal OOP maximum limit is $9,450 for individual coverage.

A PPO (Preferred Provider Organization) is a type of health plan where you pay less if you use doctors, hospitals, and other health care providers that belong to the plan's network. You can use providers outside of the network for an additional cost. You don't need a referral to see a specialist.

A preferred provider is a doctor, hospital, or other healthcare professional who has a contract with your insurer to provide services at a negotiated (discounted) rate. Using preferred providers (in-network) results in lower costs for you than using out-of-network providers. Your plan's provider directory shows which providers are preferred/in-network.

A premium is the monthly amount you pay for your health insurance plan, regardless of whether you use any medical services. If you qualify for a premium tax credit (subsidy), the government pays part of your premium directly to your insurer, reducing your monthly bill.

A premium tax credit (also called a subsidy) is a refundable tax credit designed to help eligible individuals and families pay for health insurance purchased through the Marketplace. Your credit amount is based on your estimated income and household size for the year. You can apply it monthly to lower your premium or claim it on your tax return.

Prior authorization (also called pre-authorization or pre-approval) is a requirement from your health insurer that your doctor get approval before prescribing certain medications, ordering specific tests, or performing certain procedures. If you receive services requiring prior authorization without getting approval first, your insurance may not cover the cost.

A Qualifying Health Plan (QHP) is a health insurance plan that meets the requirements of the Affordable Care Act and is certified to be sold on the Health Insurance Marketplace. QHPs must cover essential health benefits, follow established limits on cost-sharing, and meet other requirements. Only QHPs sold through the Marketplace are eligible for premium tax credits and cost-sharing reductions.

A rating area is a geographic region used by health insurers to set premium prices. Each state is divided into rating areas, and premiums for the same plan may vary between rating areas. Most states use county-based rating areas, meaning premiums can differ from county to county within the same state.

A Special Enrollment Period (SEP) is a time outside the yearly Open Enrollment Period when you can sign up for health insurance. You qualify for an SEP if you've experienced certain life events, such as losing health coverage, getting married, having a baby, or moving to a new area. Most SEPs last 60 days from the qualifying event.