Navigating insurance options is easier if you know the lingo.
George Balteria, the founder and CEO of Collective:Choice, is here to define common health insurance terms to help streamline the sign-up process. Health insurance terms can feel like another language — but once you learn the concepts, it gets easier. “Even some of the most intelligent people don’t know how a deductible or a copay works,” says Balteria.
1. Health Insurance Marketplace
This is a free service that connects people with brand-name health insurance, as well as financial and enrollment help for those who need it. The federal government runs most services like this, but some states operate their own. Covered California is state-run.
You can use our "Shop and Compare Plans" tool to find a health insurance plan that works for you. If you have any questions, free expert help is available.
This program offers free or low-cost medical coverage to limited-income adults and children. While Covered California and Medi-Cal are separate programs, you can apply for Medi-Cal year-round through Covered California. Keep in mind that Medi-Cal is California’s version of the federal Medicaid program and both are different from Medicare, which is the federal program that provides health insurance primarily for people over age 65.
3. Open Enrollment
Each year, there is a designated time frame in which you or any qualified Californian can sign up for — or change — a health plan through Covered California or elsewhere. Typically, this period starts on November 1 and ends on January 31.
4. Special Enrollment
Special enrollment is an exception to open enrollment that allows you to sign up for health insurance outside the open enrollment window when you experience a qualifying life event. These events can include losing employer-sponsored coverage, having a child, moving to or within California or getting married, just to mention a few.
If your annual household income is at or below 150 percent of the federal poverty level (that’s up to $19,320 for individuals and $39,750 for a family of four), or if you qualify for Medi-Cal, you can also enroll year-round.
This is the amount of money you pay your insurance company each month to have a health insurance plan.
A network is a group of health care providers, such as doctors, specialists, and hospitals, that are covered through your health plan. Typically, different health insurance companies have different networks. You may incur additional expenses when seeking care outside of your provider’s network.
7. Out-of-Pocket Costs
These are health care expenses that your insurance company won’t reimburse you for, and they can include copays, coinsurance, and deductibles.
If every time you go to the doctor, your appointment costs $20 (or some other specific amount of money), that’s referred to as a copay. This is the fixed amount that you owe for certain services as outlined by your insurance plan. These services include emergency room visits, specialist visits, laboratory tests, and more. For plans that include a deductible, you may need to pay your deductible down before you owe copays for services.
Some health plans have coinsurance, which is used to pay for services not covered by a copay. Coinsurance is similar to copays, but instead of paying a set amount of money when you receive medical care, it’s a percentage of the total cost.
This is the amount of money you need to pay for health care services per year before your insurance company starts contributing. However, most plans pay for a limited number of provider visits, as well as basics like checkups and disease management prior to you reaching your deductible. When choosing a plan, keep in mind that plans with lower monthly premiums tend to have higher deductibles, while plans with higher monthly premiums might not have any deductible at all.
11. Out-of-Pocket Maximum
This maximum is the very most you could possibly pay out of your own pocket for covered medical services over the course of one year; your health plan will cover 100 percent of all medical expenses after the maximum is met.
12. Allowed Amount
If you have a PPO plan, you might encounter the term “allowed amount.” PPO plans offer the flexibility of seeing providers outside of the plan’s network (see #6), but they may not cover the full cost of treatment. Insurance companies decide how much a provider visit is worth in each area of the country — and they may only cover you up to that amount. For example, you might want to see an out-of-network therapist who charges $250 an hour, but the allowed amount in your area is only $100. If you choose to go to the out-of-network therapist, you will have to pay the difference in cost yourself. Keep in mind, this does not apply to HMO health plans, which do not provide coverage for out-of-network providers.
13. Financial Help
Applying for health insurance through Covered California is the only way to receive financial help to reduce the cost of health insurance. All financial help through Covered California is based on income, location and household size. See if you qualify here, and read more about the types of financial help below.
Premium Tax Credit and Advanced Premium Tax Credit (APTC): Federal financial help for health insurance comes in the form of federal tax credits and goes toward your monthly premium. That’s why it’s called a premium tax credit. If you qualify for this type of help, you can choose to receive this money in one lump sum at tax time. You can also choose to have tax credits paid directly to your insurance company each month to help reduce the amount of your premiums. These are called advanced premium tax credits.
Cost-Sharing Reductions: This type of federal financial help lowers the amount members owe for out-of-pocket health insurance expenses like copays and deductibles. Those who qualify for cost-sharing reductions can only receive this benefit by choosing a Silver plan. Silver is a health plan tier with cost-sharing financial help built in that allows qualified members to get the benefits of a Gold or Platinum plan for the monthly price of Silver if they fall into the required income bracket.
14. Household Size
This may seem straightforward, but according to experts like Balteria, it’s one of the most commonly misunderstood aspects of the sign-up process. When asked to indicate the number of people in their household, “people think they should include, for example, their aunt who lives with them. But in most cases, household size only refers to the people who are on your tax return,” he says.
15. Bronze, Silver, Gold, and Platinum Plans
Health plans are typically divided into four coverage tiers: Bronze, Silver, Gold, and Platinum. The benefits and quality of care are the same for each tier, but they differ in how the cost is split between you and your health plan. Typically, Bronze plans offer the lowest monthly premiums, but the highest out-of-pocket costs when health care is needed, and Platinum plans offer the highest monthly premiums, but the lowest out-of-pocket costs.
Use this new knowledge to explore your health insurance options through Covered California. You can learn about even more healthcare-related terms here.