Health Insurance Glossary of Terms

ACA (Affordable Care Act)

Also known as Obamacare, the ACA is a health care reform law that expanded access to health insurance, added consumer protections and created the health insurance marketplaces.

Actuarial Value

The estimated average share of covered costs a plan pays. The higher the actuarial value, the more of the average member's costs the plan covers. See also metal tiers.

Advance Premium Tax Credit (APTC)

A tax credit under the ACA that helps individuals and families with low to moderate incomes afford their premiums. It's paid in advance, straight to your insurance company, to lower your monthly bill. For 2027 there's no credit above 400% of the federal poverty level, and since tax year 2026 any extra credit is paid back in full when you file. See the 2027 tax credit income limits.

Adverse Selection

When healthy people skip coverage and mostly people with high medical costs enroll. The risk can't be spread out, so costs rise for everyone in the pool. Plans limit it with set enrollment windows (Open Enrollment and special enrollment periods), waiting periods or, on some plan types, by not covering pre-existing conditions.

Affordable Coverage

A test for job-based coverage. An employer's offer counts as affordable when the employee's share of the cheapest plan stays under a set percent of household income. The percent changes every year, and for 2027 it is 10.22%.

Affordability is figured separately for employee-only coverage and for coverage that includes family members. If an offer isn't affordable, you may qualify for a marketplace tax credit instead.

Allowance

The amount a plan pays toward a service at a set interval. Vision plans often have an allowance for contacts or glasses that you can use every year or every other year, depending on the plan.

Ancillary Benefits

Benefits beyond major medical health insurance, such as dental, vision, disability and life insurance. Employers add them to round out a benefits package, and many can be bought by individuals too. See dental and vision insurance.

Annual Maximum

The most a plan pays in a plan year. Dental plans usually have one, so think of it as the most benefit you can get from the plan in a year.

Beneficiary

A person or organization named to receive benefits, such as life insurance proceeds, when the insured person dies.

Binder Payment

Your first premium payment on a new policy. It "binds" the contract between you and the insurance company, so pay it on time for your coverage to start.

Captive Insurance Company

A company created only to insure its parent company or companies. Some businesses use it as a form of self-funding.

Catastrophic Plan

A marketplace plan with a low premium and a very high deductible that mainly protects you from worst-case costs. Since January 1, 2026, catastrophic plans count as HSA-eligible.

CHIP (Children's Health Insurance Program)

A government program that covers children in families whose income is too high for Medicaid but who still need help paying for coverage.

COBRA Coverage

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It lets people leaving a job at a covered employer keep the same group coverage for a time. You usually pay the whole premium plus an administration fee, so COBRA can be expensive. Compare it with a marketplace plan before you decide.

Coinsurance

Your share of the cost of a covered service, as a percent. You usually meet your deductible before coinsurance starts, and the insurance company pays the rest.

Common Ownership

An ACA standard under which businesses owned or controlled by the same person or group count as one employer. Their full-time equivalent employees are added together, and if the total makes them a large employer, the Employer Shared Responsibility rules may apply, requiring them to offer coverage to employees and their dependents.

Contingent Beneficiary

The person named to receive benefits if both you and your primary beneficiary have died.

Contributory Plan or Benefit

A plan or benefit that both the employer and the employee pay toward.

Copayment (Copay)

A fixed amount you pay for a specific service or prescription, usually when you get it.

Deductible

The amount you pay for covered care each plan year before your plan starts to pay.

Dependent

A person, such as a spouse or child, who is covered under a policyholder's health plan.

Dependent Care

A benefit that helps employees pay for childcare or eldercare so they can work or go to school. See the dependent care FSA under flexible spending account.

Direct Primary Care

A membership with a primary care practice for a flat monthly fee. It no longer blocks you from contributing to an HSA, and you can pay the fee from your HSA, up to $150 a month for one person or $300 for a family in 2027.

Embedded Deductible

On a family plan, each person has their own deductible inside the family deductible. Once one person meets theirs, the plan starts paying for that person's care, even if the family deductible hasn't been reached.

ERISA Health Plan

A health plan governed by the Employee Retirement Income Security Act, the federal law that sets standards for employer-sponsored benefits. Key features include fiduciary duties, reporting and disclosure rules, standard claims and appeals, and portability protections.

Essential Health Benefits

The categories of care every ACA individual and small group plan must cover, including prescription drugs, preventive care, outpatient and emergency services, pregnancy, maternity and newborn care, and mental health services.

Exclusive Provider Organization (EPO)

A more restrictive type of plan that covers care only from in-network doctors and facilities. Emergencies are the exception on ACA plans. An EPO may require prior authorization to see a specialist or for some services.

Explanation of Benefits (EOB)

A statement from your insurance company after you get care. It shows what the provider billed, the allowed amount, what the plan paid, what counted toward your deductible or out-of-pocket maximum, and what you may owe. It isn't a bill.

Federal Poverty Level (FPL)

The yearly income guideline used to decide who qualifies for Medicaid and marketplace savings. Coverage for 2027 uses the 2026 guidelines: 100% is $15,960 for one person and $33,000 for a family of four, and 400% is $63,840 and $132,000.

Fiduciary

A person with a legal duty to act in another party's best interest. In group health insurance, employers and plan administrators have a fiduciary duty to run the plan in the best interest of the people it covers.

Flexible Spending Account (FSA)

An account through your employer that lets you set aside pre-tax money for eligible expenses. Some FSAs cover a broad range of medical costs, others are limited. A dependent care FSA, for example, can only pay for qualified dependent care. Compare HSA vs FSA.

Formulary

The list of drugs a plan covers. Drugs are usually grouped into tiers, which set how the cost is shared between you and the insurer.

Fully Funded or Fully Insured

A policy bought from an insurance company, which then takes on the risk described in the policy. It's the opposite of a self-funded or level-funded plan.

Grace Period

Time after a premium due date when you can still pay without the policy lapsing. Coverage stays in effect during the grace period, but if you don't pay by the end, the policy may be cancelled, often back to the last date your premium covered. The length and terms depend on the insurer and the policy.

Grievance

A formal complaint by a plan member or beneficiary about any part of the plan, including how it's run, what it covers, its benefits or its service.

Guaranteed Issue

A rule that a plan must sell you a policy regardless of pre-existing conditions or other health factors. ACA individual plans and fully insured small group plans are guaranteed issue.

Health Maintenance Organization (HMO)

A plan that covers care from its own network of doctors and hospitals, except in emergencies. Most HMOs ask you to choose a primary care doctor and get a referral before you see a specialist.

Health Reimbursement Arrangement (HRA)

An employer-funded account that reimburses employees for qualified medical expenses. HRAs can pair with high-deductible or traditional plans. Types include the QSEHRA (said "Q-sarah"), the ICHRA (said "ick-rah") and the integrated or group coverage HRA. See ICHRA and QSEHRA for employers.

Health Savings Account (HSA)

A tax-advantaged account you own and use for medical expenses. You need an HSA-eligible health plan to contribute, and for 2027 the limit is $4,500 for self-only coverage or $9,000 for a family. How an HSA compares with an FSA.

High-Deductible Health Plan (HDHP)

A plan with a higher deductible and usually a lower premium, often paired with an HSA. Also called a qualified HDHP. For 2027, an HSA-eligible plan has a deductible of at least $1,750 for one person or $3,500 for a family, and an out-of-pocket maximum no higher than $8,700 or $17,400.

ICHRA (Individual Coverage HRA)

An HRA that gives employees a tax-free allowance to buy their own individual health insurance instead of a group plan. Employers of any size can offer one, and marketplace bronze plans bought with it count as HSA-eligible.

In-Network

Doctors, hospitals and other providers that have a contract with your insurance company. You usually pay less when you use them.

Indemnity Plan

A plan that lets you choose any provider and then reimburses part of the covered cost. It's more flexible, but out-of-pocket costs can be higher.

Integrated Deductible

One deductible that counts both medical and prescription costs, so all your spending moves you toward the point where the plan starts paying.

Joint Life Insurance

A life insurance policy that covers two people and pays a benefit after the first person dies. After that, coverage usually ends. Couples or business partners may choose it because it can cost less than two separate policies.

Keogh Plan (HR 10)

A retirement plan for self-employed people and small business owners that lets them save for retirement on a tax-deferred basis.

Level-Funded Plan

A mix of fully insured and self-funded. It's technically self-funded, with a stop-loss policy on top to protect against large losses. The employer carries the risk up to the specific and aggregate attachment points, and stop-loss covers claims above them. See level-funded plans for small businesses.

Lifetime Limit

The most a plan pays for covered services over your lifetime. The ACA largely removed lifetime limits from major medical plans, but they still exist on temporary and limited-scope plans.

Long-Term Care Insurance

Insurance that pays for long-term care, such as help with daily activities, in-home care and nursing home care. It helps you plan for extended care needs later in life.

Marketplace (Exchange)

The ACA platform where individuals and families shop for health plans and apply for tax credits. HealthCare.gov is the federal marketplace for states without their own, including Utah, Montana, Wyoming and South Carolina. Idaho and Colorado run their own, Your Health Idaho and Connect for Health Colorado.

Maximum Out-of-Pocket

The most you pay in a plan year for covered, in-network care on an ACA plan. Deductibles, copays and coinsurance all count toward it. Once you reach it, the plan pays for covered care in full for the rest of the year. For 2027 the limit is $12,000 for one person and $24,000 for a family.

Medicaid

A joint federal and state program that covers eligible people with low incomes and people in special situations, such as pregnancy or new refugee status. Rules vary by state, and of the states we serve, Wyoming and South Carolina have not expanded Medicaid. Compare health insurance by state.

Medical Loss Ratio

The share of premium dollars an insurer spends on care and quality improvement. The ACA sets minimums, with a higher one for large group plans. Insurers that fall short must pay rebates to policyholders.

Metal Tiers

Marketplace plans are grouped by actuarial value into bronze, silver, gold and platinum. Platinum plans pay the largest share of average costs, then gold, silver and bronze, while premiums usually run the other way.

Minimum Essential Coverage

Coverage that meets the ACA's standard, also called qualifying coverage. It includes most job-based plans, marketplace and other individual plans, and government programs such as Medicare, Medicaid, CHIP, TRICARE and veterans' health care. Losing it is a qualifying life event.

Named Insured

The person or entity covered by an insurance policy. It's often the policy owner, but it can include others.

Network

The doctors, hospitals, clinics and other providers that contract with an insurance company to care for its members. Using in-network providers usually saves you money.

Open Enrollment

The yearly window when you can enroll in or change health plans, at work or on the marketplace. On HealthCare.gov, Open Enrollment for 2027 coverage runs November 1, 2026 to January 15, 2027, and Idaho and Colorado set their own dates. Open Enrollment 2027 dates and deadlines.

Out-of-Pocket Costs

What you pay yourself for care, including deductibles, copays and coinsurance. Premiums are separate.

Preferred Provider Organization (PPO)

A plan with a network of contracted providers that also covers out-of-network care, at a lower level of coverage.

Premium

What you pay for your health insurance, usually each month. With job-based coverage, it's often taken from your paycheck. Premiums don't count toward your deductible or out-of-pocket maximum.

Premium Subsidies

Financial help that lowers what eligible people pay for premiums. See advance premium tax credit.

Preventive Care

Checkups, screenings based on age, sex and health history, vaccines and other preventive services defined by ACA guidelines. ACA plans cover them with no cost sharing when you see an in-network provider.

QSEHRA (Qualified Small Employer HRA)

A benefit small employers can offer to help employees pay for health care, including marketplace premiums. The employer sets the allowance, up to $6,700 for self-only or $13,550 for family coverage in 2027. How QSEHRA and ICHRA work.

Qualified Medical Expenses

Costs that qualify for tax-advantaged treatment under IRS rules, such as doctor visits, hospital care, prescriptions and medical equipment. You can pay them from an HSA, FSA or HRA, or deduct them on your taxes above a threshold. IRS Publication 502 has the full list.

Qualifying Life Event

A change that lets you enroll in or change ACA coverage outside Open Enrollment, such as losing other coverage, moving, marriage or having or adopting a baby. On the marketplace you usually have 60 days to act, and employer plans may give you less time. How a Special Enrollment Period works.

Rebating

Offering something of value as an incentive to buy insurance. Insurance rules generally prohibit it.

Refund

Money returned to the policyholder from premiums paid, when certain conditions are met.

Reinstatement

Restoring a lapsed policy after missed payments. It may require paying past-due premiums and meeting other conditions.

Reinsurance

An arrangement where an insurer passes part of its risk to another insurer, the reinsurer, to manage large claims. Some states run reinsurance programs that lower marketplace premiums, including Idaho and Colorado.

Reinsurer

The insurance company that provides reinsurance to another insurer, helping it manage risk and stay financially stable.

Renewal

Extending a policy beyond its original term. Premiums or terms may change at renewal.

Rider

An add-on to a policy that changes or expands its coverage to fit the policyholder's needs.

Risk Retention Group

A group formed by businesses in the same industry to self-insure their liability risks together, regulated under the federal Liability Risk Retention Act.

Rx Deductible

A separate deductible for prescription drugs. You pay this amount for covered drugs before the plan helps pay.

Self-Funded Plan

A plan where the employer pays employees' claims itself instead of buying a fully insured policy, usually with stop-loss insurance to limit large losses.

Small Employer

An employer below the ACA's large-employer size, counted by average full-time equivalent employees in the previous calendar year. The exact cutoff can vary by state. See small business health insurance.

Special Enrollment Period

Time outside Open Enrollment when you can enroll in or change a plan after a qualifying life event, such as marriage, a birth or losing other coverage. Check if you qualify for special enrollment.

Specific and Aggregate Attachment Points

The two thresholds in a stop-loss policy. The specific attachment point is the claim amount for one person above which stop-loss pays. The aggregate attachment point is the total claims amount for the whole group above which stop-loss pays.

Stop-Loss Insurance

Coverage that protects self-funded employers from large or unexpected claims by limiting their losses. The two main types are specific and aggregate.

Term Life Insurance

Life insurance for a set number of years. If the insured person dies during the term, the policy pays a death benefit. It usually costs less than permanent life insurance but builds no cash value.

Trust

A legal arrangement where one party holds property or assets for another's benefit. Trusts are often used in estate planning to provide for beneficiaries.

Underwriting

How an insurer assesses the risk of insuring a person, property or business. The goal is a premium, coverage and terms that balance the insurer's stability with the insured's needs.

Universal Life Insurance

Permanent life insurance with flexible premiums and death benefits, plus a cash value that earns interest. You can adjust premiums and the death benefit within limits.

Vision Plan

Coverage for eye care, including routine eye exams, glasses and contact lenses. See dental and vision plans.

Voluntary Plan or Benefit

A plan offered by an employer where the employee pays the full cost.

Waiting Period

Time after a policy starts before certain benefits are covered.

Wellness Program

Programs from employers or health plans that encourage healthy habits, often with incentives or rewards. See employee wellness programs.

Whole Life Insurance

Permanent life insurance with a fixed premium and a cash value that grows over time, plus a death benefit for your beneficiaries.

X-Ray Coverage

What a plan pays for X-ray images. Benefits may start only after you meet your deductible.

Yearly Renewable

A plan that renews every year. Most health plans, group and individual, renew yearly, and so do many group life plans.

Zero-Deductible Plan

A plan with no deductible for medical care. It may still have a separate deductible for prescriptions.

Form 1095-A

Sent by the marketplace to people who bought a marketplace plan. You need it to file your taxes and settle any premium tax credit. The marketplace also sends a copy to the IRS, so your return must match it.

Form 1095-B

Sent by an insurance company to people it covered directly. It reports your coverage for the tax year, so keep it with your tax records.

Form 1095-C

Sent by applicable large employers to their full-time employees, reporting the coverage the employer offered.