Health Insurance Terms You Should Know

Health insurance is as complex as it is necessary. That’s why we want to help you make a well-informed decision about your next healthcare plan by going over a list of important health insurance terms in simple, easy-to-understand language.

These terms describe essential aspects of your plan’s coverage and cost, and with all of the available plans out there, some plans may benefit you more than others. Let’s get into it.


Allowable charge

AKA “allowed amount”, “maximum allowable”, or “usual, customary, and reasonable (UCR)”

This is the amount that your doctor and your health insurance agreed on as a reasonable rate for the doctor’s service. The allowable charge is the most your insurance plan will pay for a given service.

NOTE: If a healthcare provider charges more than your plan’s allowable charge, you may have to pay that difference yourself.


Benefit Period

AKA “benefit year”

This is the 12-month period for which your coverage is calculated. Any services you receive or money you pay during this period builds up until the next 12-month benefit period. For example, if your plan covers 1 physical a year, you would have to pay for a second physical within that time.

NOTE: The benefit year doesn’t necessarily align with the calendar year. It usually begins the month you started the plan. Health insurance companies may update your plan’s benefits and rates at the start of each benefit period.



This is a percentage of the cost of a medical service that you pay after you’ve paid your deductible. This is separate from a copay, which you may still pay on top of the coinsurance. For example, your plan may cover 90% of your medical bill. The remaining 10% of the bill would be your coinsurance cost.



AKA “Copayment”

This is a fixed amount that you pay to your healthcare provider when you receive a service. Not all plans have a copay.

NOTE: Generally, healthcare plans with a higher premium have lower or zero copays.



This is the amount of money you pay out-of-pocket before your insurance policy starts paying for your services. Your copay, coinsurance, and premium don’t count toward this total. This total is counted starting at the beginning of your benefit period and resets at the start of the next one. For example, if you have a deductible of $2,000, you will pay the first $2,000 of your healthcare costs. After that, your health insurer covers the rest.


Enrollment period

This is a period of the calendar year in which you can sign up for a new insurance plan. This may vary from insurer to insurer.


Explanation of benefits


This is a breakdown of the medical services you received after visiting a healthcare provider. Your EOB explains how much your healthcare plan covers and how much you have to pay out-of-pocket.

NOTE: To make sure the bill is squared away, be sure to check your EOB against the bill you received from the doctor. This will tell you if you paid enough for the service so you don’t receive any unexpected bills in the future.



This is a federal program that provides health benefits to low-income individuals.



This is a federal program that provides medical benefits for people ages 65+.



This refers to a group of medical providers that made an agreement with your healthcare insurer to accept the terms of your healthcare plan. Generally, you’ll pay less for services that are in-network.



This refers to an amount of money you have to pay yourself, or “out of your own pocket.”



This is the amount that you pay at regular intervals to keep your coverage. These payments are typically due monthly.


Short-term insurance

This refers to plans you can enroll in at any point of the year, not just during enrollment periods. You may also be able to start receiving benefits from these plans right away, and you can cancel the plan at any time with no penalty. Some insurance providers offer short-term plans for up to 36 months before you have to reapply.


Still looking for help?

Call First Family Insurance and speak with a licensed insurance agent today! We’ll walk you through every step of the insurance process, from A to Z. With FFI, your family always comes first.

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