Health care definitions — glossary

Adjustment
A transaction that affects the balance of an account. It could either lower how much you need to pay (a credit) or increase how much you need to pay (a debit).

Affordable Care Act
A 2010 federal law. Also called “Obamacare” and “health care reform.” Among other changes, it established the essential health benefits that most health plans must cover. 

Coinsurance
A percentage of cost you pay for services. For example, a 20% coinsurance on a $200 procedure means you pay $40. See deductible for how coinsurance works in a deductible plan.

Copay
A set amount you pay for services. For example, a $10 copay for an office visit. See deductible for how copays work in a deductible plan.

Cost share
See out-of-pocket expenses.

Deductible
If you have a deductible plan, your deductible is how much you pay for certain services each year before your health plan starts paying. You’ll pay the full cost for these services until you reach your deductible. After that, you’ll pay a copay  or coinsurance  until you reach your out-of-pocket maximum .^1,2

Essential health benefits
Ten categories of services that health plans must cover under the Affordable Care Act:

• Ambulatory patient services (outpatient care you get without being admitted to a hospital)
• Emergency services
• Hospitalization (like surgery and overnight stays)
• Pregnancy, maternity, and newborn care (both before and after birth)
• Mental health and substance-use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
• Laboratory services
• Preventive and wellness services, and chronic disease management 
• Pediatric services, including oral and vision care

Evidence of Coverage (EOC)
A document with detailed information about your benefits and coverage.

Explanation of Benefits
A summary of care you’ve received and what your health plan covers. You’ll get it after a visit, but it’s not a bill. 

Flexible spending account (FSA)
An account that lets you put aside money to help pay for qualified medical expenses .³  The money isn’t considered part of your wages, so you don’t need to pay taxes on it.⁴

Health insurance (also called “coverage” or “plan”)
A contract that requires your health insurance carrier to pay some or all of your health care costs in exchange for a premium you pay.

Health insurance marketplace
Sometimes called an “exchange.” A state- or federally run market where you can shop, compare, and buy health coverage.

Health reimbursement arrangement (HRA)
An account to help you pay for certain qualified medical expenses.⁵ Your employer adds money to the HRA. The money isn’t considered part of your wages, so you don’t need to pay taxes on it.⁴

Health savings account (HSA)
An account that lets you put aside money to help pay for qualified medical expenses.³ The money isn’t considered part of your wages, so you don’t need to pay taxes on it.⁴ You can keep the money if you change jobs or retire. And your account can earn interest.

Nonpreventive services
Services that diagnose or treat a condition. While many preventive care services are available for little or no cost, you’ll usually pay more for nonpreventive services.

Out-of-pocket expenses
Also called your “cost share.” How much you pay for services under the terms of your health coverage. These amounts include copays, coinsurance, and deductible payments. They are separate from the premium you pay. 

Out-of-pocket maximum
The most you’ll pay for covered services each year.¹

Preexisting condition
A medical condition that a person has before they apply for new health coverage.

Premium
The amount you and/or your employer pay for health coverage. Premiums are usually paid each month.

Preventive care
A defined set of services designed to help catch health problems before they get serious. For example, mammograms, blood pressure screenings, and cholesterol tests. You can get these services at little or no cost under most health plans. Contact your benefits administrator to find out which preventive care services your plan covers.

Provider
A health care professional or facility that can provide health care services under state law.

Qualified medical expense
If you have an HSA or FSA, you can use the money in your account to pay for qualified medical expenses. For a list of qualified medical expenses, download IRS Publication 502, Medical and Dental Expenses, at irs.gov/publications . You can also use an HRA to help pay for certain qualified medical expenses.⁵

Substantiation (validation)
With an HRA or FSA, you may be asked to submit proof of a claim. This could include an Explanation of Benefits, bills, or receipts. Check with your HRA or FSA administrator for specific requirements.

Summary of Benefits and Coverage
A summary of your benefits and coverage in plain language. It provides information such as:

• Cost share for common medical services such as office visits or lab tests
• Deductibles and out-of-pocket maximums
• Services not covered by the plan

Find out more about the Summary of Benefits and Coverage.