Getting Started is Easy


I’m new here. To help me get adjusted to my role at Kuzneski Insurance Group, and to get a grasp on all the terms that have been swirling around me like a tornado, I’ve been compiling a glossary of health insurance terminology.  

Turns out I’m not alone: Several surveys have revealed that most people don’t understand much about health insurance, as important as it is. One survey by Policygenius found that a whopping 96 percent of people could not correctly identify four common health insurance terms: “deductible,” “co-insurance,” “co-pay” and “out-of-pocket maximum.” (I have to say, it makes me feel somewhat better to know I’m not in the minority.) 

So, with this in mind, I’m sharing my ever-expanding, alphabetized list of succinct definitions of some of the more common health insurance terms. You're welcome!

Allowed amount: The amount agreed upon between the provider and the insurance company for a service provided. It is almost always less than the billed amount. 

Balance billing: Typically involving out-of-network providers, the enrollee is charged the difference between the billed amount and the amount the insurance company allows. 

Co-insurance: The percentage of medical expenses you are responsible for after the deductible has been met. 

Copayment: A “copay” is the amount you are responsible for when seeing a doctor, picking up a prescription or visiting a medical facility. 

Deductible: The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services before the insurance starts to contribute.

Dependent: An immediate relative who is eligible to be covered on a health insurance policy. (Children generally qualify until age 26.)

Excepted Benefit HRA (EBHRA -- “e-brah”): Used by employers offering traditional group health insurance to reimburse employees for qualified medical expenses. Employees can enroll in an EBHRA even if they decline group health insurance coverage, but they cannot use the money to buy comprehensive health insurance. They can, however, use the money to pay for short-term health insurance, dental and vision insurance premiums, and qualified medical expenses. 

Explanation of benefits: The cool kids call this an EOB. It’s a record detailing the amount a provider charged compared to what the insurance company will pay, and what you now owe. An EOB is issued for every claim, including prescriptions. It’s important to know that this is not a bill. That, unfortunately, comes later.

Flexible spending account (FSA): Type of savings account that provides the account holder with specific tax advantages. Sometimes called a “flexible spending arrangement,” it can be established by an employer for employees. The account allows you to contribute a portion of your regular earnings; employers also can contribute to employees’ accounts. Distributions from the account must be used to reimburse the employee for qualified expenses related to medical and dental services.

Health care network: A health care network, or health care provider network, refers to the doctors, hospitals, and pharmacies that insurance carriers contract with to deliver services at a negotiated rate. Because not all doctors contract with every insurance carrier, it is important to ask if a doctor is in a carrier's network. This often gets confused with an insurance carrier.

Health reimbursement arrangement (HRA): Employer-funded plan that reimburses employees for qualified medical expenses and, in some cases, insurance premiums. Employers are allowed to claim a tax deduction for the reimbursements they make through these plans, and reimbursement dollars received by employees are generally tax-free.

Health savings account (HSA): A tax-advantaged savings account that is created for people who get their insurance coverage through a high-deductible health plan. Regular contributions to the account are made by the employee or employer and can be used to pay for qualified medical expenses that are not covered by HDHPs.

High-deductible health plan (HDHP): Type of health insurance that allows individuals to pay less in premiums and cover more health expenses through out-of-pocket deductibles. Typically, healthier people benefit most from such a plan. 

Individual Coverage HRA (ICHRA -- “ick-rah”): Offered by an employer in lieu of group health insurance. Employees can use these HRAs to buy their own comprehensive individual health insurance with pretax dollars either on or off the Affordable Care Act’s Health Insurance Marketplace. An ICHRA can also reimburse employees for qualified health expenses, such as copayments and deductibles.

Insurance carrier: Also called an insurance provider or an insurance company, this is the financial resource behind the coverage provided in an insurance policy. (Think Highmark, UPMC, Aetna, Cigna, United Healthcare, etc.) It is the issuer of the policy and the one who charges the premium and pays for losses and claims covered under the policy. This often gets confused with a health care network.

Limited benefit plan: Plan that assists with things like doctor visits, prescriptions and brief hospital stays. Not a traditional health plan such as a more comprehensive major medical plan that would cover larger medical expenses. 

Open enrollment: A period when a health insurance company is required to accept applicants without regard to health history. This usually starts Nov. 1 and runs through mid-January, but it varies by state. 

Out-of-pocket maximum: The maximum amount that can be expected to be paid in out-of-pocket expenses in a plan year. Included are deductibles and coinsurance, but not usually premiums, prescriptions or co-pays. 

Premium: The amount that must be paid for your health insurance plan after premium contributions are paid by an employer. 

Primary care physician (PCP): A doctor who provides a wide range of medical services for a patient; the opposite of a specialist. Often known as a “family doctor.” 

Qualifying life event: QLEs are major events (birth, death, marriage divorce, etc.) in someone’s life that allow them to make specific changes to their insurance policy outside of an annual open enrollment period. 

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA -- “Q-Sarah”): Available for businesses that employ fewer than 50 full-time workers. Also known as a “small business HRA,” a QSEHRA can be used to offset health insurance coverage or repay medical expenses that would be otherwise uncovered. The money that is reimbursed is tax-free for employees and tax-deductible for employers. The yearly limits are set by the IRS. 


Jason Levan

Jason Levan joined Kuzneski Insurance Group in 2021 as Director of Communications and Content after his first career as a newspaper reporter and editor. In Act II, he oversees the content marketing for the company, with the goal of making the insurance world easier to understand and navigate for our clients. When he’s not at work, you can often find him “banging and clanging” in the gym, or spending time with his family.

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