Your Health Insurance Glossary

Health insurance experts Traci Richards and Stephen Schuster define the terms you'll encounter as you choose a health insurance plan.

With words like “co-pay,” “premium,” and “deductible,” wading through the sea of health insurance terms can be overwhelming. Before you tackle choosing a health insurance plan or deciding if a health savings account is right for you, it’s helpful to understand the words that you’ll encounter in the paperwork.

Below you’ll find a list of basic health insurance terms along with their definitions and the most important points to know about each.

  • Provider - Anyone in the healthcare industry who provides a healthcare service to you, including doctors, hospitals, laboratories, x-ray centers, surgery centers, and pharmacies
  • Premium - The amount of money you will pay each month to purchase a health insurance plan. In many cases your employer will pay a portion of the premium and you will pay the remainder. Most plans with family coverage in 2006 have a premium cost of more than $10,000 a year. Premiums vary by the amount of your deductible (see below for definition of “deductible”).
  • In-Network and Out-of-Network Providers - Health insurance companies negotiate with doctors and hospitals to provide services to the people they insure. The doctors and hospitals they contract with are referred to as “in-network providers” because they have agreed to provide services to you at a discounted rate, while “out-of-network” doctors and hospitals do not provide services to insured patients at a discounted price. If your doctor is out-of-network, you’ll pay more for services than if you visit an in-network doctor. Your health insurance company can provide a list of doctors and hospitals that are in-network, and a doctor or hospital can tell you whether they are in-network for a particular insurance plan.
  • First Dollar or Out of Pocket - The amount of money you pay from your own funds before your insurance company pays for any medical costs. This term generally applies to the sum of your co-pay, deductible and any co-insurance you are directly billed for when you receive a medical service.
  • Co-Pay - The amount of money you will pay out of your pocket each time you seek medical service, and almost every health insurance plan includes a co-pay system. For many insurance plans, each time you see a doctor or purchase a prescription drug, you will pay between $20 and $50 before your health insurance will pay any part of the cost – this is the co-pay. You’ll also be charged a co-pay for outpatient x-rays and surgeries and these are often more expensive than a doctor’s visit or prescription. Generally, co-pays are not credited to your deductible or co-insurance (see definitions below)
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