Navigating insurance options is easier if you know the lingo.
Health insurance terms can feel like another language — but once you learn the concepts, it gets easier to choose the plan that’s best for you. Here, we define common health insurance terms to help streamline the sign-up process.
Health Insurance Marketplace
This is a free service that connects people with brand-name health insurance, as well as financial and enrollment help for those who need it. The federal government runs most services like this, but some states operate their own. Covered California is state-run.
This program offers free or low-cost medical coverage to limited-income adults and children. While Covered California and Medi-Cal are separate programs, you can apply for Medi-Cal year-round through Covered California. Keep in mind that Medi-Cal is California’s version of the federal Medicaid program and both are different from Medicare, which is the federal program that provides health insurance primarily for people over age 65.
Each year, there is a designated time frame in which you or any qualified Californian can sign up for — or change — a health plan through Covered California or elsewhere. Our open enrollment starts on November 1 and ends on January 31.
Special enrollment is an exception to open enrollment that allows you to sign up for health insurance outside the open enrollment window when you experience a qualifying life event. These events can include losing employer-sponsored coverage, having a child, moving to or within California or getting married, just to mention a few.
This is the amount of money you pay your insurance company each month to have a health insurance plan.
A network is a group of health care providers, such as doctors, specialists and hospitals, that are covered through your health plan. Typically, different health insurance companies have different networks. You may incur additional expenses when seeking care outside of your provider’s network.
This is the amount of money you need to pay for health care services per year before your insurance company starts contributing. However, most plans pay for a limited number of provider visits, as well as basics like checkups and disease management prior to you reaching your deductible. When choosing a plan, keep in mind that plans with lower monthly premiums tend to have higher deductibles, while plans with higher monthly premiums might not have any deductible at all.
If every time you go to the doctor, your appointment costs $20 (or some other specific amount of money), that’s referred to as a copay. This is the fixed amount that you owe for certain services as outlined by your insurance plan. These services include emergency room visits, specialist visits, laboratory tests and more. For plans that include a deductible, you may need to pay your deductible down before you owe copays for services.
Some health plans have coinsurance, which is used to pay for services not covered by a copay. Coinsurance is similar to copays, but instead of paying a set amount of money when you receive medical care, it’s a percentage of the total cost.
These are health care expenses that your insurance company won’t reimburse you for, and they can include copays, coinsurance and deductibles.
This maximum is the very most you could possibly pay out of your own pocket for covered medical services over the course of one year; your health plan will cover 100 percent of all medical expenses after the maximum is met.
If you have a PPO plan, you might encounter the term “allowed amount.” PPO plans offer the flexibility of seeing providers outside of the plan’s network, but they may not cover the full cost of treatment. Insurance companies decide how much a provider visit is worth in each area of the country — and they may only cover you up to that amount. For example, you might want to see an out-of-network therapist who charges $250 an hour, but the allowed amount in your area is only $100. If you choose to go to the out-of-network therapist, you will have to pay the difference in cost yourself. Keep in mind, this does not apply to HMO health plans, which do not provide coverage for out-of-network providers.
Covered California is a free service that connects you with quality brand-name health insurance and the financial help to pay for it. This financial help, from premium tax credits to cost-sharing reductions, is based on income, location and household size. See if you qualify here.
- Premium Tax Credit and Advanced Premium Tax Credit (APTC): Federal financial help for health insurance comes in the form of federal tax credits and goes toward your monthly premium. That’s why it’s called a premium tax credit. If you qualify for this type of help, you can choose to receive this money in one lump sum at tax time. You can also choose to have tax credits paid directly to your insurance company each month to help reduce the amount of your premiums. These are called advanced premium tax credits.
- Cost-Sharing Reductions: This type of financial help lowers the amount members owe for out-of-pocket health insurance expenses like copays and deductibles. Those who qualify for cost-sharing reductions can only receive this benefit by choosing a Silver plan. Silver is a health plan tier with cost-sharing financial help built in that allows qualified members to get the benefits of a Gold or Platinum plan for the monthly price of Silver if they fall into the required income bracket.
This may seem straightforward, but it’s one of the most commonly misunderstood aspects of the sign-up process. When asked to provide this number, household size only refers to the people who are on your tax return.
Bronze, Silver, Gold and Platinum Plans
Health plans are typically divided into four coverage tiers: Bronze, Silver, Gold and Platinum. The benefits are the same for each tier, but they differ in how the cost is split between you and your health plan. Typically, Bronze plans offer the lowest monthly premiums, but the highest out-of-pocket costs when health care is needed, and Platinum plans offer the highest monthly premiums, but the lowest out-of-pocket costs.