middle aged man researching health insurance terms

17 health insurance terms to boost your insurance IQ

Have you ever tried reading a health insurance document and felt like you just tried to decipher Klingon (or Dothraki, if that’s more your thing)?

It’s not uncommon for insurance to feel confusing for consumers. In fact, a recent poll conducted by the University of Michigan found that many American adults have little confidence in their understanding of health insurance. According to the National Poll on Healthy Aging, 1-in-5 adults age 50 to 60 are just “slightly confident or not confident at all” when it comes to their ability to understand health insurance terminology.1

What’s more, one-in-four Americans say they have “little or no confidence in their ability to find out what is covered before they receive a health care service.”2 In addition, 29% have little or no confidence in their ability to find out their out-of-pocket costs before receiving a health care service.3

Keeping the doctor away

For many Americans, frustration over understanding health insurance is preventing them from receiving the care they need. A recent study found a link between people’s confidence in understanding their health insurance policies and their tendency to avoid health care because of cost. The study found that nearly 30% of insured adults avoided seeking care because of potential costs. 4 And those with the least confidence in their understanding of common health insurance terms were more likely to say they avoided care because of cost.5

As you know, regular health exams are extremely important! Check-ups can help your doctor identify your risk factors and find problems before they start. And if there is a problem, catching it early gives you the best chance for a successful outcome.

Boost your health insurance IQ!

To help boost your health insurance IQ, we’re going to share some important health insurance terminology with which you should be familiar.  Understanding these basic health insurance terms is the first step in becoming an expert on your health insurance policies—and your own best advocate when it comes to your health care.

  1. Benefits: Your benefits are the health care services or items that are covered under your health insurance plan. Your covered benefits are defined in your policy.
  2. Claim: A claim is a request for payment from your health insurer for services you think are covered. You or your health care provider may submit claims.
  3. Open enrollment period: Every year, people can enroll in a health insurance plan during the open enrollment period.
  4. Qualifying life event: This is a change in your situation that can make you eligible for a special enrollment period outside of the open enrollment period. Getting married, having a baby or losing health coverage are all examples.
  5. Premium: This is the money you pay every month for your health insurance. Your employer may contribute a portion of your monthly premium, while your portion may automatically be deducted from your paychecks.
  6. Deductible: Your deductible is the amount you pay for covered health care services before your health insurance plan will start paying benefits. For example, if your health insurance policy has a $2,000 deductible, you pay the first $2,000 of covered services yourself. Even after you pay your deductible, you may still need to pay a copayment or coinsurance for covered services out of pocket.
  7. High deductible health plan (HDHP): With a high deductible health plan, you pay lower monthly premiums, but your deductible amount is higher. The IRS defines a HDHP as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family.6
  8. Rider: This is an amendment to an insurance policy. A rider oftentimes adds coverage.
  9. Dependent coverage: This is insurance coverage for a policyholder’s family, such as their spouse or children.
  10. Allowed amount: This is the maximum amount a health insurance plan will pay for a covered health care service. If your health care provider charges more than your plan’s allowed amount, you may have to pay the difference out of pocket.
  11. Balance billing: Balance billing occurs when your health care provider bills you for the difference between their charge and your insurance plan’s covered amount. For example, if your provider’s charge is $120 and the allowed amount is $80, the provider may bill you for the remaining $40.
  12. Copayment: A copayment—or copay—is a fixed amount you pay for covered health care services after you’ve paid your deductible. For example, consider a health insurance plan with an allowable cost for a doctor’s visit of $100, and a copayment of $20. If you’ve paid your deductible, you pay $20 at the time of the visit. If you haven’t met your deductible, you pay $100, the full allowable amount for your visit.
  13. Coinsurance: This is a percentage that you pay for covered health care services after you’ve met your deductible. For example, consider a health insurance plan with an allowed amount of $100 and 20% coinsurance. If you’ve met your deductible, you pay $20 (20% of $100). If you haven’t met your deductible, you pay the full allowed amount of $100.
  14. Network: This is the health care facilities, providers and suppliers your health insurance plan has contracted to provide health care services.
  15. Out-of-pocket cost: These are expenses that aren’t reimbursed by insurance and you have to pay on your own. Some out-of-pocket costs include deductibles, coinsurance and copayments, plus costs for services that aren’t covered.
  16. Excluded services: These are health care services that your health insurance plan doesn’t pay for.
  17. Supplemental health insurance: Supplemental health insurance can help cover the out-of-pocket expenses left by traditional health insurance. Supplemental health insurance can help cover your deductibles, copays, coinsurance and excluded services.*

We’re here to help!

We hope the health insurance terms above help you take the first step in gaining more confidence when it comes to using your health insurance. Here at Washington National, we want all of our policyholders to feel confident in their understanding of their policies. If you ever have questions about your Washington National policy, your Washington National agent is a great resource. In addition, our customer care specialists, who can be reached at (800) 525-7662, are ready to help answer your questions.

*Supplemental health insurance policies are limited-benefit policies that have limitations and exclusions.


1University of Michigan, National Poll on Healthy Aging, https://www.healthyagingpoll.org/report/health-insurance-decision-making-near-retirement, January 3, 2019.
4Jama Network, Literacy and Avoidance of Health Care Services Owing to Cost, https://jamanetwork.com/journals/jamanetworkopen/article-abstract/2714507, November 16, 2018.
6Healthcare.gov, High Deductible Health Plan (HDHP), https://www.healthcare.gov/glossary/high-deductible-health-plan/, 2018.