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Health insurance terms and definitions
Health insurance terms and definitions
Jess avatar
Written by Jess
Updated over a week ago

Here are definitions to some of the most common health insurance terms associated with health insurance plans. For more terms, see our health guide.


A premium is the amount of money you pay for your health insurance plan every month. You pay a premium to keep your health insurance active, whether or not you use the insurance.


A deductible is a set amount you have to pay every year toward your medical bills before your insurance company starts paying.

This means if your plan has a $5,000 deductible, you'll be responsible to pay the full amount of the cost of a health visit until you have paid $5,000 in health insurance costs (excluding preventative services such as an annual physical by your PCP).

After you meet the deductible, you will be responsible for the co-pay amount associated with the health service you receive. 

Note: Often health insurance plans with lower premiums have higher deductibles, so be sure you check to make sure the deductible is something that works for you.


A co-pay is the flat fee you pay for certain health services after you meet your deductible.

For example, if there is a $25 co-pay associated with a primary care visit, you'll pay $25 each time you see your primary care doctor after you meet your deductible.


Co-insurance is the percentage of your medical bill you share with your insurance company after you’ve paid your deductible.

So, if you have a 50% co-insurance rate for a specialist visit, you will pay 50% of the total cost of the visit after you meet your deductible.

Out-of-pocket maximum/limit

Out-of-pocket expenses are any costs you have to pay yourself.

An out-of-pocket maximum/limit is the maximum amount of money you or your family will have to spend on health expenses each year. Once you reach your out-of-pocket maximum, your insurance will pay 100% of all covered services.

Note: Monthly premiums do not count towards your out-of-pocket maximum/limit.

Essential Health Benefits

Under the Affordable Care Act (ACA), all individual and small group health insurance plans must cover all of the following: 

  • Ambulatory patient services (visits to doctors and other healthcare professionals and outpatient hospital care)

  • Emergency services

  • Hospitalization

  • Maternity and newborn care

  • Mental health and substance use disorder services, including behavioral health treatment

  • Prescription drugs

  • Rehabilitative and habilitative services and devices

  • Laboratory services

  • Preventive and wellness services and chronic disease management

  • Pediatric services, including oral and vision care

Note: These services may still require you to meet a deductible and may require co-pays or co-insurance.

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