Health plans and policies can be confusing. Without knowing the basics, it’s hard to understand how things work. Look up clear definitions of common terms you will encounter while looking for a Family and Individual Health Plan.

Coinsurance

A percentage of the charges that you pay for covered services. For example, a 20 percent coinsurance for a $200 procedure means you pay $40.

Copay

The set amount you pay for covered service. For example, $10 for an office visit.

Deductible

The amount you pay for covered services each year before Kaiser Permanente starts paying. Depending on your plan, you may pay copays or coinsurance for some services without having to reach your deductible.

Formulary

Formulary drugs are medications that have been thoroughly reviewed by a team of expert pharmacists and physicians and identified as safe, effective, and beneficial for treating medical conditions. When deciding between drugs that are equally safe and effective, the formulary team considers the relative costs of medications. These savings are then passed on to members through lower premiums or lower out-of-pocket expenses.

Health benefit exchange

Sometimes called a “marketplace.” A state- or federally run market where you can shop, compare, and buy health coverage.  To receive federal assistance for either premium or cost sharing, you must enroll through a health benefit exchange.

Health reimbursement arrangement (HRA)

An account that gives you money to pay for care. Your employer sets up an account and puts money into it. Because the money isn’t part of your wages, you won’t pay taxes on it. You can use this money to help pay your health care costs.  Under an Individual Coverage HRA or a Qualified Small Employer HRA, you may be able to use the employer’s funds to pay for individual plan premium.  If you do not know what kind of HRA you have, ask your employer.

Health savings account (HSA)

An account you can use with a high deductible health plan.  You can set money aside on a pre-tax basis to pay for qualified medical expense, like deductibles, copays and coinsurance.  You won’t pay federal taxes on this money, and you can use it anytime to pay for care. Your account may earn interest, and HSA funds roll over year to year if you do not use them.  You must be enrolled in an HSA-qualified high deductible health plan to deposit money in an HSA.  For a list of qualified medical expenses, download IRS Publication 502, Medical and Dental Expenses, at irs.gov/publications.

High deductible health plan (HDHP)  

HSA-qualified high deductible health plans give a member flexibility and control over how and when to use health care dollars. Members get health care coverage while saving for future medical expenses through a health savings account (HSA), which offers some tax benefits.

With an HSA-qualified HDHP , a member typically receives preventive care that is not subject to a deductible at no charge. For all other covered medical services and prescription drugs, the member and the member's family (if applicable) must meet the individual or family annual deductible. Once the member has met the deductible, he or she only pays a portion of the charges for covered medical services in the form of coinsurance or copayment. If the member has a lot of health care expenses in a year, an HSA-qualified HDHP can limit the amount paid out of pocket for most services.

While HDHP plans have higher cost-sharing, by using your HSA you are paying for the costs with pre-tax dollars.  When a member enrolls in a Kaiser Permanente HSA-qualified health plan and chooses to open an HSA account with our preferred institution, the member will receive competitive pricing on fees with a range of investment options and dedicated customer service support.

Lifetime maximum

The lifetime maximum is the maximum amount of money a plan will pay toward a member's health care services.  Kaiser Permanente does not have a lifetime maximum on any of its individual plans.

Out-of-pocket maximum

The most you’ll pay for covered services each year. For a small number of services, you may need to keep paying copays or coinsurance after reaching your out-of-pocket maximum.

Open enrollment period

A period of time each year when you can purchase or change health care coverage.

Special enrollment period

A period of time outside of the annual open enrollment when you can enroll in health care coverage. To be eligible for special enrollment, you must have experienced a situation known as a qualifying life event, which is defined by ACA regulations. Examples of qualifying life events include getting married, moving to a new Kaiser Permanente service area, and losing coverage because you lost your job. Even if your qualifying life event occurs during open enrollment, you’ll still have a special enrollment period and your coverage effective date may be different from open enrollment effective dates. Certain special enrollments will require prior coverage Visit kp.org/specialenrollment for more information.

Premium

The amount you pay for health coverage. Premiums are usually paid each month.