Health insurance terms, explained clearly.

A

Actuarial value

The percentage of average covered medical costs a health plan is designed to pay across a standard population. It does not predict what the plan will pay for one specific member.

Advanced Premium Tax Credit (APTC)

Financial help that eligible households can apply in advance to lower the monthly premium for a health plan purchased through Covered California.

Financial Help →

Affordable Care Act (ACA)

The federal health care law that established insurance marketplaces, consumer protections, financial assistance, and coverage standards for individual and small-group health plans.

Allowed amount

The maximum amount a plan recognizes for a covered service. Cost sharing is generally calculated from this amount rather than the provider’s full billed charge.

B

Balance billing

A bill for the difference between a provider’s charge and the amount recognized by the health plan. Federal and California protections prohibit many surprise bills, but protections depend on the service and circumstances.

Benefit

A health care item or service covered under the terms of an insurance plan, subject to applicable copays, deductibles, limitations, and exclusions.

Bronze plan

A metal-tier plan that generally has lower monthly premiums and higher costs when care is used than Silver, Gold, or Platinum plans.

Health Plans →

C

Claim

A request submitted to an insurer for payment or review of health care services provided to a plan member.

Coinsurance

The percentage of an allowed amount that a member pays for a covered service, often after satisfying the applicable deductible.

Copayment (copay)

A fixed dollar amount a member pays for a covered service or prescription. The amount can vary by service, provider type, drug tier, and plan.

Cost sharing

The member’s portion of covered health care expenses, such as deductibles, copays, and coinsurance. Premiums are not considered cost sharing.

Cost-sharing reduction (CSR)

Extra financial help that lowers deductibles, copays, coinsurance, and the out-of-pocket maximum for eligible people who enroll in an Enhanced Silver plan through Covered California.

Financial Help →

Covered California

California’s official health insurance marketplace, where eligible individuals and families can compare qualified health plans and apply for financial help.

Covered California Overview →

D

Deductible

The amount a member pays for services subject to the deductible before the plan begins paying its share. Some benefits may be covered before the deductible is met.

Dependent

A person, such as a spouse, domestic partner, or child, who may be eligible for coverage through another person’s health plan under the plan’s rules.

E

Enhanced Silver plan

A Covered California Silver 73, Silver 87, or Silver 94 plan with reduced cost sharing for households that meet the applicable eligibility requirements.

Compare Metal Tiers →

Essential health benefits

Ten broad categories of services that individual and small-group plans must cover, including hospitalization, prescriptions, preventive care, maternity care, mental health services, and pediatric care.

Evidence of Coverage (EOC)

The detailed contract describing a plan’s covered benefits, exclusions, limitations, cost sharing, provider rules, and member responsibilities.

Exclusive Provider Organization (EPO)

A plan type that generally covers non-emergency care only within its provider network but may not require referrals to see specialists.

Explanation of Benefits (EOB)

A statement showing how a claim was processed, including the billed charge, allowed amount, plan payment, and possible member responsibility. An EOB is not a bill.

F

Federal poverty level (FPL)

An income measure updated annually by the federal government and used with household information to determine eligibility for programs and financial assistance.

Income and Financial Help →

Formulary

A plan’s list of covered prescription drugs. Formularies organize medications into tiers and may apply prior authorization, quantity limits, or step therapy.

G

Gold plan

A metal-tier plan that generally has higher monthly premiums but lower costs when care is used than Bronze and standard Silver plans.

Health Plans →

Group health plan

Health coverage offered through an employer or another eligible group to employees or members and, when offered, their eligible dependents.

Group Health Overview →

H

Health Maintenance Organization (HMO)

A plan type that generally requires members to use a defined network, select or work through a primary care provider, and obtain referrals for certain specialist care.

Health Savings Account (HSA)

A tax-advantaged account that eligible people can use for qualified medical expenses. Contributions generally require enrollment in an HSA-qualified high-deductible health plan.

High-deductible health plan (HDHP)

A plan that meets federal deductible and out-of-pocket requirements. Only plans meeting additional federal rules are HSA-qualified.

I

In network

Providers, facilities, pharmacies, or suppliers that have contracted with the specific health plan network. Using in-network care generally results in lower member costs.

Individual health insurance

Coverage purchased by a person or family rather than obtained through an employer or government program.

Individual Health Overview →

M

Medi-Cal

California’s Medicaid program, which provides free or low-cost health coverage to people who meet applicable income and eligibility requirements.

Medically necessary

Health care services or supplies needed to prevent, diagnose, or treat a condition and that meet accepted standards of medical practice.

Metal tier

A category indicating how a plan generally shares covered costs with members. Covered California uses Bronze, Silver, Gold, and Platinum tiers; the tier does not measure provider quality.

Compare Metal Tiers →

N

Network

The contracted doctors, hospitals, pharmacies, laboratories, and other providers available through a specific health plan.

Carriers and Networks →

O

Open enrollment

The annual period when eligible consumers can enroll in or change individual health coverage without needing a qualifying life event.

Enrollment →

Out of network

A provider or facility that does not participate in the plan’s applicable network. Non-emergency out-of-network care may cost more or may not be covered.

Out-of-pocket maximum

The most a member pays during a plan year for covered, in-network essential health benefits through deductibles, copays, and coinsurance. Premiums and non-covered services do not count.

P

Platinum plan

A metal-tier plan that generally has the highest monthly premiums and lowest costs when covered care is used among the four standard metal tiers.

Health Plans →

Preferred Provider Organization (PPO)

A plan type that generally offers in-network and out-of-network benefits and usually does not require specialist referrals. Out-of-network care can cost substantially more.

Premium

The recurring amount paid to keep health coverage active. The premium is separate from deductibles, copays, coinsurance, and other costs when care is received.

Preventive care

Routine services intended to prevent illness or detect health concerns early. Many recommended preventive services are covered without member cost sharing when plan requirements are met.

Primary care provider (PCP)

A health professional who provides or coordinates routine care and may manage referrals under certain plan types.

Prior authorization

Approval required from a health plan before certain services, treatments, or prescriptions will be covered. Authorization does not guarantee payment if other plan requirements are not met.

Q

Qualified health plan (QHP)

A health plan certified by a marketplace that covers essential health benefits, follows applicable cost-sharing limits, and meets other federal and marketplace requirements.

Qualifying life event (QLE)

A life change, such as losing qualifying coverage, marriage, birth, adoption, or certain moves, that may create a special enrollment opportunity.

Special Enrollment →

S

Silver plan

A metal-tier plan with moderate premiums and cost sharing. Eligible Covered California households must select Silver to receive cost-sharing reductions.

Health Plans →

Special enrollment period (SEP)

A limited period outside annual open enrollment when an eligible person can enroll in or change coverage after a qualifying life event.

Enrollment Rules →

Summary of Benefits and Coverage (SBC)

A standardized document summarizing a plan’s benefits, cost sharing, coverage examples, exclusions, and consumer rights so plans can be compared consistently.