Understanding Common Insurance Terms

Health insurance and health insurance terminology can be tricky and sometimes confusing. That’s why we’ve broken down the most common insurance terms in easy-to-understand language. For more information on the rest of the most common insurance terms, please visit the Health Insurance Glossary.

The Affordable Care Act (ACA), also referred to as “Obamacare” is care that aims to expand access to coverage, control health care costs and improve health care delivery for U.S. citizens and legal residents. Most U.S. citizens and legal residents are now required to have health insurance coverage or pay a penalty to the government. ACA legislation includes the expansion of Medicaid eligibility, the establishment of health insurance exchanges and protects health insurance members from denied coverage due to pre-existing conditions.

A claim is a request for payment that lists the treatment performed. It’s sent to your insurance company after you receive get covered services.

Coinsurance is the percentage you owe for certain some covered services after reaching your deductible. For example, when you pay 20%, your plan pays 80%.

A copay is a fixed dollar amount that you pay upfront each time you pay for covered services. Copays can vary based on the service, such as when: seeing your primary care provider, visiting a specialist, or filling a prescription might all have different copays.

A deductible is the set amount you pay for covered services or drug costs before your plan starts paying.

drug formulary is a list of drugs your insurance plan covers. A drug’s formulary may also impact how much you pay for each drug.

The Explanation of Benefits (EOB) is a document that explains the costs for services you received. This includes what the provider billed for, what Highmark paid, and what you will need to pay. The EOB is not a bill, it’s a summary of the charges and payments related to your medical care. It’s designed meant to help you understand how your plan covers the services you received. Members get an EOB after we process certain types of claims. The EOB might include:

  • Patient information
  • Member ID number
  • Claims information
  • Information about your coinsurance, copay and your deductible
  • Member ID number
  • Patient information
  • What you owe the provider

The out-of-pocket is costs are not covered by your plan. These include co-payments, coinsurance, deductibles and fees paid for treatment or prescriptions.

The total maximum out-of-pocket is the most you’d you pay for any covered services within a plan year. Your deductible, coinsurance, and copays all go toward meeting it. If you hit this amount, your plan pays 100% of covered services.