Health Insurance Terms You Need to Know: A Glossary for Covered California

Navigating health insurance can sometimes feel like learning a new language. Between all the acronyms, jargon, and fine print, it’s easy to get lost in the terminology. But understanding these key terms is crucial when selecting the best plan for you and your family—especially when it comes to Covered California. That’s why we’ve put together this simple, straightforward glossary to help you make informed decisions with confidence. Let’s dive into the essential health insurance terms you need to know!

1. Premium

Think of your premium as a subscription fee to your health plan. It’s the amount you pay every month to keep your coverage active, even if you don’t use any medical services. Covered California offers financial assistance to help reduce premiums for qualifying individuals and families, making it more affordable to stay insured.

2. Deductible

This is the amount you’ll pay out of pocket before your insurance kicks in. For example, if you have a $2,000 deductible, you’ll cover the first $2,000 of your medical expenses before your insurance starts sharing costs. Some plans, like those with high deductibles, may have lower premiums, but you’ll pay more upfront before getting help with costs.

3. Co-Payment (Co-Pay)

A co-pay is a fixed amount you pay for a covered health service, such as $30 for a doctor’s visit. These fees vary based on the service and the plan you choose. Co-pays are your portion of the cost, while the rest is picked up by your insurance company.

4. Coinsurance

Coinsurance is similar to a co-pay, but instead of a flat fee, it’s a percentage of the cost of the service. For instance, if your plan has 20% coinsurance and you receive a $200 medical bill, you’ll pay $40 while your insurance covers the rest.

5. Out-of-Pocket Maximum

This is the most you’ll have to pay for covered services in a plan year. Once you hit your out-of-pocket maximum, your insurance will cover 100% of your remaining medical expenses. This cap is a safeguard that prevents you from facing overwhelming medical costs in the event of a major illness or accident.

6. Subsidy

Covered California offers financial assistance through subsidies, which lower the cost of your premiums or reduce out-of-pocket expenses for qualifying individuals. If your income falls within certain limits, you could be eligible for subsidies under the Affordable Care Act (ACA).

7. HMO (Health Maintenance Organization)

HMO plans require you to choose a primary care doctor who coordinates all your care. Referrals are typically needed to see specialists, and services are generally only covered if you stay within the plan’s network of doctors and hospitals.

8. PPO (Preferred Provider Organization)

PPO plans give you more flexibility by allowing you to see any doctor or specialist without a referral. You can choose to go out-of-network, but your costs will be higher. These plans typically come with higher premiums in exchange for that extra freedom.

9. EPO (Exclusive Provider Organization)

An EPO plan is a mix between an HMO and a PPO. You don’t need referrals to see a specialist, but you’re required to stay within your network for coverage. If you venture out-of-network, you’ll be responsible for the full cost of care.

10. Formulary

A formulary is a list of prescription drugs covered by your health plan. It’s important to check if your medications are on your plan’s formulary, as it can save you money and ensure your prescriptions are covered. Drugs not on the formulary may come with higher costs or may not be covered at all.

11. Network

Your network is the group of doctors, hospitals, and healthcare providers that have agreed to provide services at discounted rates under your health plan. Staying within your network is key to keeping your medical costs lower, especially with HMO or EPO plans.

12. Covered Services

Covered services are medical procedures or treatments that your insurance plan agrees to pay for, either fully or partially. These services vary by plan, so it’s important to review what’s covered when choosing your insurance.

13. Explanation of Benefits (EOB)

An EOB is a document your insurance company sends you after you’ve received medical services. It details what was billed, what your insurance covered, and what you still owe. While it’s not a bill, it’s a helpful tool to understand how your health benefits were applied to your care.

14. Primary Care Physician (PCP)

Your PCP is the doctor you’ll see for most of your general health concerns, like check-ups or minor illnesses. If you have an HMO plan, your PCP will be the one to refer you to specialists or other services.

15. Open Enrollment

Open enrollment is the time of year when you can sign up for or make changes to your health insurance plan. For Covered California, this period usually runs from November to January. Outside of this window, you can only make changes if you qualify for a Special Enrollment Period due to life events like marriage or losing coverage.

16. Special Enrollment Period (SEP)

The SEP allows you to enroll in or change your health insurance outside of open enrollment if you experience certain life changes, such as moving, getting married, or losing other health coverage. It's important to act quickly—there’s usually a limited time to sign up after your qualifying event.

In Summary: Health insurance doesn’t have to be intimidating! By getting familiar with these terms, you’ll be better equipped to make sense of your options, especially when it comes to selecting the right plan through Covered California. Remember, the right coverage can protect both your health and your wallet, so take the time to understand your plan and what’s available to you. If you have any questions, feel free to set up an appointment with us and we'd be happy to help you solve any of your health insurance needs!