A–Z Insurance Reference

Insurance Glossary

Plain-English definitions for every term you'll encounter when shopping for Medicare, ACA, or supplemental insurance.

A

Annual Enrollment Period (AEP): The Medicare open enrollment window each year from October 15 – December 7, during which you can switch, join, or drop a Medicare Advantage or Part D plan. Changes take effect January 1.
Annual Out-of-Pocket Maximum: The most you'll pay in a plan year for covered services. After hitting this cap, your insurance covers 100% of in-network costs for the rest of the year.
APTC (Advanced Premium Tax Credit): A federal subsidy that reduces your monthly ACA marketplace premium. Eligibility is based on your income (100–400% of the federal poverty level). The credit is sent directly to your insurer.
Authorization (Prior Authorization): Approval from your insurance company required before receiving certain services, medications, or procedures. Without it, the insurer may deny coverage.

B

Beneficiary: A person enrolled in and receiving benefits from an insurance plan, particularly Medicare.
Benefit Period: In Medicare, a benefit period begins when you are admitted as an inpatient in a hospital or skilled nursing facility and ends when you haven't received inpatient care for 60 consecutive days.
Balance Billing: When an out-of-network provider bills you for the difference between their charge and what your insurer pays. Many ACA plans prohibit balance billing for emergency services.

C

Carrier: An insurance company that underwrites and issues health insurance policies (e.g., Aetna, Horizon BCBS NJ, AmeriHealth).
Coinsurance: Your share of costs for a covered service, expressed as a percentage. For example, if your plan has 20% coinsurance, you pay 20% of the cost after meeting your deductible.
COBRA: Consolidated Omnibus Budget Reconciliation Act. A federal law that lets you keep your employer's group health plan for up to 18–36 months after losing job-based coverage, though you pay the full premium.
Copay (Copayment): A fixed dollar amount you pay for a covered service, such as $25 for a primary care visit or $10 for a generic drug. Copays don't usually count toward your deductible.
Coordination of Benefits (COB): The process used when you have two health plans to determine which plan pays first (primary) and which pays second (secondary).
Creditable Coverage: Health or drug coverage that meets a minimum standard set by Medicare. Having creditable coverage lets you delay enrolling in Part D without a late enrollment penalty.
CSR (Cost-Sharing Reduction): An ACA subsidy that lowers your out-of-pocket costs (deductibles, copays, coinsurance) if your income falls between 100–250% of the federal poverty level and you enroll in a Silver plan.

D

Deductible: The amount you pay out-of-pocket each year before your insurance starts sharing costs. For example, a $1,500 deductible means you pay the first $1,500 in covered care.
Dual Eligible: A person who qualifies for both Medicare (federal) and Medicaid (state) coverage. Dual-eligible individuals may qualify for special plans (D-SNPs) that coordinate both benefits.
Drug Formulary: A list of prescription drugs covered by an insurance plan. Drugs are typically grouped into tiers that determine your cost-sharing.

E

Effective Date: The date your insurance coverage begins. Plans purchased during open enrollment typically start January 1.
Enrollment Period: A specific window of time during which you can sign up for or change health coverage. Missing your enrollment window may mean waiting until the next one.
EOB (Explanation of Benefits): A statement from your insurer detailing what was billed, what the plan paid, and what you owe. An EOB is not a bill — it's a record of how your insurance processed a claim.
EPO (Exclusive Provider Organization): A managed care plan that covers services only from providers in-network (except emergencies), but doesn't require referrals to see specialists.
Extra Help (Low Income Subsidy / LIS): A federal Medicare program that helps people with limited income and resources pay for Part D prescription drug costs including premiums, deductibles, and copays.

F

Formulary: See Drug Formulary. Each plan's formulary varies — always verify your medications are covered before enrolling.
FPL (Federal Poverty Level): A measure of income set each year by the federal government. Many subsidy and Medicaid eligibility thresholds are expressed as a percentage of the FPL.

G

Grace Period: A short time after your premium due date during which your coverage remains active even if you haven't paid. Typically 30 days for ACA plans.
Guaranteed Issue: A right to enroll in a health plan without being denied or charged more based on your health status. ACA Marketplace plans are guaranteed issue year-round for SEPs and during open enrollment.
Group Health Plan: Health coverage offered by an employer or other group (e.g., union). Premiums are often shared between the employer and employee.

H

HIPAA: Health Insurance Portability and Accountability Act. A federal law protecting the privacy of your medical records and health information, and guaranteeing certain rights when you lose job-based coverage.
HMO (Health Maintenance Organization): A managed care plan that requires you to use in-network providers and get a referral from your primary care physician to see specialists. Generally lower cost than PPOs.
HSA (Health Savings Account): A tax-advantaged savings account you can use to pay qualified medical expenses. Only available with High-Deductible Health Plans (HDHPs). Unused funds roll over year to year.

I

In-Network: Providers (doctors, hospitals, labs) who have a contract with your insurer to provide services at negotiated rates. Using in-network providers typically costs you less.
Initial Coverage Election Period (ICEP): A 7-month window around your 65th birthday to enroll in Medicare for the first time. It begins 3 months before, includes the month of, and extends 3 months after your 65th birthday.
IRMAA (Income-Related Monthly Adjustment Amount): An additional premium surcharge on Medicare Part B and Part D for higher-income beneficiaries. Your income from two years ago determines your IRMAA.

L

Late Enrollment Penalty: A permanent increase to your Medicare Part B or Part D premium if you don't enroll when first eligible and don't have creditable coverage.
LEP (Late Enrollment Penalty): See Late Enrollment Penalty.

M

Medicare: A federal health insurance program primarily for people 65 and older, and for certain younger people with disabilities or End-Stage Renal Disease (ESRD).
Medicare Advantage (Part C / MA): An alternative to Original Medicare offered by private insurers. MA plans must cover everything Original Medicare covers (except hospice) and often include extra benefits like dental, vision, and hearing.
Medicare Part A: Hospital insurance covering inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most people get Part A premium-free.
Medicare Part B: Medical insurance covering doctor visits, outpatient care, preventive services, and durable medical equipment. Most people pay the standard Part B premium (~$185/month in 2026).
Medicare Part D: Prescription drug coverage, offered through private insurers. Part D plans have their own premiums, deductibles, and formularies.
Medigap (Medicare Supplement): Private insurance sold to fill the gaps in Original Medicare — covering costs like copays, coinsurance, and deductibles that Medicare doesn't pay.
Metal Tier (ACA Plans): ACA plans are sorted into Bronze, Silver, Gold, and Platinum tiers based on how costs are split between you and the insurer. Bronze = lowest premium, highest out-of-pocket. Platinum = highest premium, lowest out-of-pocket.

N

Network: The group of doctors, hospitals, and other providers your insurer has agreements with. Staying in-network typically saves you money.
Non-Formulary: A drug not covered on your plan's formulary. You typically pay full price unless you get an exception approved.

O

Open Enrollment Period (OEP): For ACA plans: November 1 – January 15. For Medicare: October 15 – December 7. Outside these windows, you generally need a Special Enrollment Period to change coverage.
Out-of-Network: Providers not contracted with your insurer. Using out-of-network providers usually costs more, and some plans (HMO, EPO) may not cover out-of-network care at all except in emergencies.
Out-of-Pocket Maximum: The most you'll pay in covered costs during a plan year. After reaching this limit, your insurer pays 100% of covered in-network services.

P

PCP (Primary Care Provider): Your main doctor who provides routine care, preventive screenings, and referrals. HMO plans typically require you to choose a PCP.
PFFS (Private Fee-for-Service): A type of Medicare Advantage plan that determines how much it will pay providers and how much you pay. Providers must accept the plan's terms.
PPO (Preferred Provider Organization): A flexible plan that lets you see any provider (in or out of network) without a referral, but in-network care costs less.
Premium: The amount you pay each month for your health insurance plan, regardless of whether you use medical services.
Pre-existing Condition: A health condition diagnosed or treated before your current coverage began. ACA plans cannot deny coverage or charge more due to pre-existing conditions.
Prior Authorization: See Authorization. Always check whether a procedure or medication requires prior authorization before proceeding.

R

Referral: A written order from your PCP directing you to see a specialist. Required by most HMO plans; not required by PPO or EPO plans.
Rider: An add-on to an insurance policy that expands or limits your coverage for an additional cost (e.g., a dental rider on a health plan).

S

SEP (Special Enrollment Period): A limited window outside of open enrollment when you can enroll in or change health coverage after a qualifying life event — such as losing coverage, moving, getting married, or having a baby.
SNP (Special Needs Plan): A type of Medicare Advantage plan designed for people with specific conditions (Chronic SNP), dual Medicare/Medicaid eligibility (Dual SNP), or institutional needs (Institutional SNP).
Subsidy: Financial assistance to help pay for health insurance. ACA subsidies include the APTC (premium reduction) and CSR (cost-sharing reduction). Eligibility is based on income.

T

Tier (Drug): Drug formularies group medications into tiers — typically 1 (generic, lowest cost) through 5 (specialty, highest cost). Your copay or coinsurance depends on the tier.
TRICARE: Health care coverage for active-duty U.S. military members, veterans, and their families. TRICARE counts as creditable coverage for Medicare.

U

Underwriting: The process insurers use to evaluate risk and determine premiums. ACA Marketplace plans cannot use medical underwriting — they cannot charge more based on your health history.
Utilization Management: Programs used by insurers to control costs and ensure appropriate care — including prior authorization, step therapy (trying lower-cost drugs first), and quantity limits.

W

Waiting Period: A period of time after your coverage starts during which certain benefits may not be available. Common in employer group plans for some services.
IRMAA Waiver: A process to appeal your Medicare IRMAA surcharge if your income significantly decreased due to a life-changing event (retirement, divorce, death of spouse, etc.).

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