Medical & Insurance Glossary

Clear definitions of healthcare and insurance terms every patient should know. Understand your bills and coverage.

A B C D E F G H I M N O P Q R S T U

A

Allowed AmountBilling: The maximum amount your insurance plan will pay for a covered service, based on negotiated rates with in-network providers. Also called the eligible expense, payment allowance, or negotiated rate. You are responsible for any difference between the billed amount and allowed amount only if the provider is out-of-network.
Ambulatory Surgery CenterFacilities: An outpatient facility where surgical procedures that do not require an overnight hospital stay are performed. ASCs typically cost 30-60% less than hospital outpatient departments for the same procedures, with comparable quality and safety outcomes.
AppealInsurance: A formal request to your insurance company to review and reconsider a denied claim or coverage decision. You have the right to appeal any denial. Internal appeals go to the insurer; external appeals go to an independent review organization. Many denied claims are overturned on appeal — always appeal significant denials.
Anesthesia FeeBilling: The charge for anesthesia services during a procedure, calculated based on time units (typically 15-minute increments) plus base units for the type of procedure. Anesthesia fees range from $500 for minor procedures to $3,000+ for complex surgeries. Verify your anesthesiologist is in-network before any procedure.
Actuarial ValueInsurance: The percentage of total average costs for covered benefits that a health plan pays. ACA metal tiers are based on actuarial value: Bronze (60%), Silver (70%), Gold (80%), Platinum (90%). A plan with 80% actuarial value pays 80% of costs on average; you pay 20%.
Assignment of BenefitsBilling: An agreement that allows your insurance company to pay the healthcare provider directly instead of sending payment to you. Most in-network providers have assignment of benefits agreements. Without it, the insurer pays you and you must pay the provider separately.

B

Balance BillingBilling: When an out-of-network provider bills you for the difference between their billed charge and the amount your insurance pays. The No Surprises Act now protects patients from surprise balance billing in emergency situations and certain non-emergency situations at in-network facilities.
Bundled PaymentBilling: A single payment that covers all services related to a treatment or condition over a defined period. For example, a bundled joint replacement payment covers the surgery, hospital stay, implant, anesthesia, and rehab. Bundled payments incentivize efficient, coordinated care and provide cost predictability for patients.

C

CopayInsurance: A fixed amount you pay for a covered healthcare service after you have met your deductible. For example, you might pay $30 for a doctor visit or $15 for a generic prescription. Copays can vary by the type of service (primary care vs specialist) and are set by your insurance plan.
CoinsuranceInsurance: Your share of the costs of a covered healthcare service, calculated as a percentage of the allowed amount. For example, if your coinsurance is 20%, you pay 20% of each medical bill after meeting your deductible, and your insurance pays the remaining 80%.
CPT CodeBilling: Current Procedural Terminology code — a standardized 5-digit numeric code used to describe medical, surgical, and diagnostic services. CPT codes are used by providers, insurers, and billing departments to communicate exactly what procedure was performed. Example: 99213 = established patient office visit.
ChargemasterBilling: A hospital's comprehensive list of prices for every item and service, from aspirin to surgery. Chargemaster prices are typically 3-10x the actual cost and rarely reflect what anyone actually pays. These inflated list prices serve as the starting point for negotiations with insurers.
ClaimInsurance: A formal request submitted by a healthcare provider (or patient) to an insurance company for payment of medical services rendered. Claims include procedure codes (CPT), diagnosis codes (ICD-10), and patient/provider information. Claims can be approved, denied, or partially paid.
Coordination of BenefitsInsurance: The process used when a patient is covered by two or more insurance plans to determine which plan pays first (primary) and which pays second (secondary). This prevents duplicate payments and can reduce out-of-pocket costs for patients with dual coverage.
COBRAInsurance: The Consolidated Omnibus Budget Reconciliation Act allows employees to continue their employer-sponsored health insurance for 18-36 months after leaving a job. However, you must pay the full premium (employer + employee share) plus a 2% admin fee, making COBRA expensive — often $600-$2,000/month.
Centers of ExcellenceFacilities: Healthcare facilities recognized for their expertise, outcomes, and efficiency in specific procedures or conditions. Some insurance plans offer reduced cost-sharing or waived deductibles for patients who use designated centers of excellence, especially for complex surgeries like joint replacement or cardiac surgery.
Cost-Sharing ReductionInsurance: A discount that lowers the amount you pay for deductibles, copays, and coinsurance in ACA marketplace Silver plans. Available to people earning 100-250% of the federal poverty level. CSR plans have lower deductibles and out-of-pocket maximums than standard Silver plans.

D

DeductibleInsurance: The amount you must pay out of pocket for covered healthcare services before your insurance plan starts to pay. For example, with a $2,000 deductible, you pay the first $2,000 of covered services yourself. After that, you typically share costs through copays or coinsurance. Most plans cover preventive care before the deductible.
Diagnostic vs PreventiveInsurance: Preventive care (screenings, immunizations, wellness visits) is covered at 100% with no cost-sharing under the ACA. Diagnostic care (evaluating a known symptom or condition) involves normal cost-sharing. A screening colonoscopy is preventive; a colonoscopy ordered because of symptoms is diagnostic.
Durable Medical EquipmentBilling: Medical equipment prescribed for home use, such as wheelchairs, walkers, CPAP machines, hospital beds, and oxygen equipment. Insurance typically covers DME at 80% after deductible when prescribed by a doctor and obtained from an in-network supplier. Medicare requires competitive bidding for DME suppliers.

E

Explanation of Benefits (EOB)Insurance: A document from your insurance company that explains what medical services were billed, what the insurer paid, and what you owe. An EOB is not a bill — it is a statement showing how a claim was processed. Always compare your EOB to the provider's bill.

F

FormularyPrescriptions: A list of prescription drugs covered by your health insurance plan, organized into tiers. Tier 1 (generic) drugs have the lowest copays, while Tier 4 (specialty) drugs are the most expensive. Drugs not on the formulary may not be covered at all, or may require prior authorization.
Flexible Spending Account (FSA)Insurance: An employer-sponsored benefit account that lets you set aside pre-tax dollars for qualified medical expenses. Unlike HSAs, FSAs have a "use it or lose it" rule — unused funds expire at the end of the plan year (some employers allow a $610 rollover or 2.5-month grace period).
Facility FeeBilling: A separate charge by the hospital or surgery center for the use of their facility, equipment, and nursing staff. This is billed in addition to the surgeon's professional fee and anesthesia fee. Hospital facility fees are typically 2-5x higher than ASC facility fees for the same procedure.

G

Generic DrugPrescriptions: A prescription medication that contains the same active ingredient as a brand-name drug but costs 80-85% less. The FDA requires generics to be bioequivalent to the brand version. Always ask your doctor or pharmacist if a generic alternative is available for your medication.

H

Health Savings Account (HSA)Insurance: A tax-advantaged savings account available to people enrolled in a High Deductible Health Plan (HDHP). Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. HSA funds roll over year to year and are portable between employers.
Health Insurance ExchangeInsurance: An organized marketplace where individuals and small businesses can compare and purchase health insurance plans. The federal exchange is Healthcare.gov, while some states run their own exchanges. Plans are standardized and may qualify for subsidies based on income. Open enrollment is typically November through January.

I

In-NetworkInsurance: Doctors, hospitals, and other providers who have contracted with your insurance company to provide services at negotiated rates. Using in-network providers results in significantly lower out-of-pocket costs than going out-of-network.
ICD-10 CodeBilling: International Classification of Diseases, 10th Revision — a standardized code system used to classify diagnoses and health conditions. ICD-10 codes tell the insurer why a medical service was needed. They are required for insurance claims and must match the CPT procedure codes to avoid denials.
Inpatient vs OutpatientFacilities: Inpatient care requires admission to a hospital with an overnight stay, while outpatient care allows you to go home the same day. Inpatient care costs significantly more due to room, board, and nursing charges. Many procedures that once required inpatient stays are now performed outpatient.

M

Medical Loss RatioInsurance: The percentage of premium revenue an insurance company must spend on medical claims and quality improvement. Under the ACA, large group insurers must spend at least 85% and individual/small group insurers must spend at least 80%. If they don't, they must issue rebates to customers.
Marketplace PlanInsurance: Health insurance purchased through the ACA Health Insurance Marketplace (Healthcare.gov or state exchanges). Marketplace plans are standardized into metal tiers (Bronze, Silver, Gold, Platinum) and may qualify for premium tax credits based on income. Open enrollment runs November to January.
Metal TierInsurance: The four standardized levels of ACA marketplace plans: Bronze (60% coverage, lowest premiums), Silver (70%), Gold (80%), and Platinum (90%, highest premiums). The percentage represents the plan's actuarial value — the share of costs the plan pays on average. Catastrophic plans are also available for those under 30.
MedicaidInsurance: A joint federal and state program that provides free or low-cost health coverage to low-income individuals, families, pregnant women, seniors, and people with disabilities. Eligibility varies by state. In expansion states, adults earning up to 138% of the federal poverty level ($20,783 for an individual) may qualify.
MedicareInsurance: The federal health insurance program for people age 65 and older, certain younger people with disabilities, and people with End-Stage Renal Disease. Medicare has four parts: Part A (hospital), Part B (medical), Part C (Medicare Advantage), and Part D (prescriptions). Part A is usually premium-free; Part B costs about $175/month.

N

No Surprises ActBilling: A federal law effective January 2022 that protects patients from surprise medical bills for emergency services and certain non-emergency services at in-network facilities. It requires insurers to cover out-of-network emergency care at in-network rates and provides a dispute resolution process for billing disagreements.
NetworkInsurance: The group of doctors, hospitals, pharmacies, and other healthcare providers that have contracted with an insurance company to provide services at pre-negotiated rates. Plan types like HMO, PPO, EPO, and POS differ primarily in how they handle in-network vs out-of-network care.

O

Out-of-Pocket MaximumInsurance: The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copays, and coinsurance, your health plan pays 100% of covered services. The 2026 ACA limit is $9,450 for individuals and $18,900 for families.
Out-of-NetworkInsurance: Providers who do not have a contract with your insurance plan. Out-of-network care typically costs much more — you may pay the full billed amount minus any out-of-network benefits. Some plans (like HMOs) offer no out-of-network coverage except in emergencies.
Open EnrollmentInsurance: The annual period when you can enroll in, change, or drop health insurance coverage. For ACA marketplace plans, open enrollment typically runs November 1 through January 15. Employer plans have their own open enrollment periods. Outside this window, you need a qualifying life event to change coverage.
Observation StatusBilling: A hospital classification where you are technically an outpatient even though you occupy a hospital bed. This distinction significantly affects costs — under observation status, Medicare Part B (not Part A) applies, and skilled nursing facility coverage may not kick in afterward. Always ask your hospital whether you are admitted or under observation.

P

PremiumInsurance: The amount you pay each month for your health insurance coverage, regardless of whether you use medical services. Premiums are separate from deductibles, copays, and coinsurance. Employer-sponsored plans typically split the premium between employer and employee.
Pre-AuthorizationInsurance: A requirement that your health insurer approve a medical service, procedure, or prescription before you receive it. Also called prior authorization or precertification. Without pre-authorization, insurance may deny the claim, leaving you responsible for the full cost.
Prior AuthorizationInsurance: A utilization management process used by insurance companies to determine if a prescribed procedure, service, or medication will be covered. Getting prior authorization before treatment helps ensure your claim won't be denied. Failure to obtain required prior authorization can result in the full cost being shifted to the patient.
Primary Care PhysicianCare Navigation: A doctor who provides general medical care and serves as your main point of contact for health issues. PCPs coordinate referrals to specialists and manage preventive care. Having a PCP is associated with lower overall healthcare costs and better health outcomes.
Professional FeeBilling: The charge for the physician's or surgeon's services, billed separately from the facility fee. Also called the surgeon fee. For a surgery, you typically receive at least three separate bills: the facility fee, the surgeon's professional fee, and the anesthesiologist's fee.
Preventive CareCare Navigation: Healthcare services designed to prevent illness or detect conditions early, including annual checkups, vaccinations, screenings (mammograms, colonoscopies), and counseling. Under the ACA, most preventive services are covered at 100% with no cost-sharing when provided by in-network providers.

Q

Qualifying Life EventInsurance: A major life change that allows you to enroll in or change health insurance outside of open enrollment. Examples include marriage, divorce, having a baby, losing employer coverage, moving to a new state, or aging out of a parent's plan at 26. You typically have 60 days from the event to enroll.

R

ReferralInsurance: A written order from your primary care physician to see a specialist or receive certain medical services. HMO and POS plans typically require referrals, while PPO and EPO plans do not. Without a required referral, insurance may deny coverage for the specialist visit.

S

Surprise BillBilling: An unexpected medical bill from an out-of-network provider that a patient did not choose, such as an out-of-network anesthesiologist at an in-network hospital. The No Surprises Act now protects patients from most surprise bills by limiting what they can be charged to in-network cost-sharing amounts.
SpecialistCare Navigation: A physician who focuses on a specific area of medicine, such as cardiology, orthopedics, or dermatology. Specialist visits typically cost more than primary care visits ($250-$500 vs $150-$300). Some insurance plans require a referral from your PCP before seeing a specialist.
Specialty DrugPrescriptions: High-cost medications used to treat complex chronic conditions such as cancer, rheumatoid arthritis, or multiple sclerosis. Specialty drugs can cost $1,000 to $10,000+ per month. Insurance typically places these on the highest formulary tier with 25-50% coinsurance, and may require prior authorization.
Skilled Nursing FacilityFacilities: A facility that provides skilled medical care and rehabilitation services on a 24-hour basis. Medicare covers up to 100 days per benefit period after a qualifying 3-day inpatient hospital stay (days 1-20 at no cost, days 21-100 with a daily copay). Costs without insurance can exceed $300 per day.
Step TherapyPrescriptions: An insurance requirement that you try less expensive medications before the insurer will cover a more expensive drug. Also called "fail first." For example, you may need to try a generic before your plan will cover a brand-name medication. You can appeal step therapy requirements if medically inappropriate.

T

TelehealthCare Navigation: Remote healthcare delivery using video, phone, or messaging to connect patients with providers. Telehealth visits typically cost $50-$75 or are free with many insurance plans. Useful for prescription refills, UTIs, rashes, cold/flu symptoms, and mental health consultations.
Tiered NetworkInsurance: An insurance network structure where providers are grouped into tiers based on cost and quality metrics. Tier 1 providers have the lowest cost-sharing (preferred), while Tier 2 and 3 providers cost more out of pocket. This encourages patients to use cost-effective, high-quality providers.

U

Urgent CareCare Navigation: A walk-in medical facility that provides immediate care for non-life-threatening conditions such as minor injuries, infections, and flu symptoms. Urgent care visits average $200 compared to $2,200 for ER visits, making them a cost-effective alternative for non-emergency situations.
Utilization ReviewInsurance: The process by which insurance companies evaluate the medical necessity and appropriateness of healthcare services before, during, or after they are provided. Pre-service reviews determine if a treatment is covered. Concurrent reviews assess ongoing hospital stays. Retrospective reviews may deny payment after services are rendered.