Glossary of Insurance Terms
Understanding Insurance Starts Here
Whether you’re exploring individual coverage, Medicare, or employee benefits, this glossary helps break down the industry terms you may hear along the way.
Individual & Health Insurance Terms
Premium: The amount you pay for your insurance policy, usually monthly.
Deductible: The amount you pay out-of-pocket for covered healthcare before your insurance starts to pay.
Co-pay (Copayment): A fixed fee you pay for certain healthcare services, like doctor visits or prescriptions.
Out-of-Pocket Maximum: The most you’ll have to pay for covered services in a policy period. After this, your plan pays 100%.
HMO (Health Maintenance Organization): A type of health plan that requires you to use a network of providers and get referrals for specialists.
PPO (Preferred Provider Organization): A flexible plan that lets you see out-of-network providers at higher costs and doesn’t require referrals.
Medicare Terms
Part A: Covers inpatient hospital care, skilled nursing facility care, and some home health services.
Part B: Covers outpatient care, doctor visits, preventive services, and medical equipment.
Part C (Medicare Advantage): An all-in-one alternative to Original Medicare offered by private insurers, often includes Part D.
Part D: Prescription drug coverage offered through private plans.
Medigap (Supplement): Extra insurance that helps pay some of the healthcare costs not covered by Original Medicare.
Enrollment Periods: Designated times when you can sign up for or make changes to your Medicare coverag
Group Health & Employee Benefits Terms
Group Plan: Health insurance offered by an employer to its employees and sometimes their families.
Dependent Coverage: Insurance coverage extended to an employee’s spouse or children.
Carrier: The insurance company that underwrites and manages the plan.
Contribution Strategy: How employers split the cost of premiums with employees.
Formulary: A list of prescription drugs covered by a health insurance plan.
Waiting Period: The time an employee must wait after starting a job before becoming eligible for health benefits.
Compliance & Regulatory Terms
ACA (Affordable Care Act): Federal legislation aimed at expanding healthcare access, requiring certain employers to offer coverage.
ERISA: A federal law that sets minimum standards for group health and retirement plans in private industry.
1095-C: A form employers use to report health insurance coverage offered to employees under the ACA.
FTE (Full-Time Equivalent): A calculation used to determine employer obligations under ACA rules.
COBRA: A law allowing employees to keep their group coverage temporarily after leaving a job.
SPD (Summary Plan Description): A document that outlines the benefits and legal rights under an employer-sponsored health plan.