Health insurance terms describe what you pay and what your plan covers. The core five are the premium (your monthly payment), the deductible (what you pay before the plan shares costs), the copay and coinsurance (your share after that), and the out-of-pocket maximum (the most you pay for covered care in a year).
Updated October 2026 for the 2027 plan year
Key facts (2027 plan year)
- Open Enrollment for 2027 coverage on HealthCare.gov runs November 1, 2026 to January 15, 2027; enroll by December 15 for coverage from January 1 (HealthCare.gov).
- The 2027 out-of-pocket maximum for Marketplace plans is $12,000 for an individual and $24,000 for a family (HealthCare.gov).
- Marketplace plans must cover 10 categories of essential health benefits and can’t refuse you or charge more for a pre-existing condition.
- Young adults can generally stay on a parent’s plan until age 26 (HealthCare.gov).
- For 2027 coverage, there is no premium tax credit above 400% of the federal poverty level (IRS Rev. Proc. 2026-26).
- A qualifying life event generally gives you 60 days to enroll in a Special Enrollment Period (HealthCare.gov).
What are the most important health insurance terms?
Five health insurance terms decide most of what you pay: premium, deductible, copay, coinsurance and out-of-pocket maximum. Understand those and you can compare almost any plan.
| Term | What it is | When you pay it | Counts toward out-of-pocket maximum? |
|---|---|---|---|
| Premium | Monthly payment to keep coverage | Every month | No |
| Deductible | What you pay before the plan shares costs | When you use care, until met | Yes |
| Copay | Fixed amount per service | At the visit or pharmacy | Yes (in-network) |
| Coinsurance | Percentage of each bill, such as 20% | Usually after the deductible | Yes (in-network) |
| Out-of-pocket maximum | Yearly cap on your cost sharing | Reached through the other four (except premium) | It is the cap |
How do the cost terms work together?
The cost terms apply in a set order during each plan year. You pay the premium all year. You pay toward the deductible first, then copays or coinsurance, and the out-of-pocket maximum stops your cost sharing once you reach it.
Many in-network preventive services cost nothing even before the deductible. For a walk-through with real plan choices, see how health insurance works.
Health insurance terms A–C
- Advance premium tax credit (APTC)
- A premium tax credit paid straight to your insurer each month to lower your premium. You reconcile it on IRS Form 8962 when you file taxes. See health insurance subsidies 2027.
- Affordable Care Act (ACA)
- The 2010 federal law, also called Obamacare, that created the Marketplaces, premium tax credits and pre-existing condition protections. See Obamacare explained.
- Allowed amount
- The maximum your plan will pay for a covered service, usually the price it negotiated with in-network providers. Your deductible and coinsurance are based on this amount, not the provider’s list price.
- Balance billing
- When an out-of-network provider bills you for the difference between its charge and your plan’s allowed amount. The No Surprises Act bans this for emergency care and some care at in-network facilities.
- Benchmark plan
- The second-lowest-cost Silver plan available to you on the Marketplace. Your premium tax credit is calculated from its price.
- Catastrophic plan
- A low-premium, very high-deductible plan for people under 30 or with a hardship exemption. It doesn’t qualify for premium tax credits. See catastrophic health insurance.
- Children’s Health Insurance Program (CHIP)
- Low-cost coverage for children in families that earn too much for Medicaid. You can apply any time of year. See health insurance for kids.
- COBRA
- A federal law that lets you keep your employer’s group plan after leaving a job, usually for up to 18 months, at up to 102% of the full premium (U.S. Department of Labor). Compare it in COBRA vs Marketplace.
- Coinsurance
- Your percentage share of a covered bill after the deductible, such as 20%. See what is coinsurance.
- Copay (copayment)
- A fixed amount you pay for a covered service, such as a doctor visit or a generic prescription.
- Cost-sharing reductions (CSR)
- Extra savings that lower your deductible, copays, coinsurance and out-of-pocket maximum. They are available only on Silver plans for incomes up to 250% of the federal poverty level.
Terms D–F
- Deductible
- The amount you pay for covered care each plan year before your plan starts sharing costs. Read what is a deductible.
- Dependent coverage
- Coverage for a spouse or children on your plan. Plans that offer dependent coverage must let children stay on a parent’s plan until age 26. See family health insurance.
- Essential health benefits
- Ten categories every Marketplace plan must cover, including emergency care, hospital stays, maternity and newborn care, mental health, prescription drugs and preventive care.
- Exclusive provider organization (EPO)
- A plan that covers only in-network care except emergencies, usually without referrals. See HMO vs PPO vs EPO vs POS.
- Explanation of benefits (EOB)
- A statement from your insurer showing what was billed, what the plan paid and what you may owe. It is not a bill.
- Federal poverty level (FPL)
- A yearly income measure from HHS used to decide eligibility for Medicaid, CHIP and premium tax credits. 2027 coverage uses the 2026 guidelines. See federal poverty level 2026.
- Form 1095-A
- The tax form the Marketplace sends early each year listing your coverage, premiums and advance credits. You need it to complete IRS Form 8962. See Form 1095-A.
- Formulary
- Your plan’s list of covered prescription drugs, usually sorted into cost tiers.
- Flexible spending account (FSA)
- An employer-sponsored account you fund with pre-tax pay to cover medical costs. Unlike an HSA, it doesn’t require a high deductible plan, and unused money can be forfeited at year end unless your employer allows a carryover or grace period.
Ask Honesty.AI to explain any plan’s fine print, 24/7.
Terms G–M
- High deductible health plan (HDHP)
- A plan with a deductible of at least $1,750 self-only or $3,500 family for 2027 (IRS Rev. Proc. 2026-24). It lets you open a health savings account.
- Health maintenance organization (HMO)
- A plan that covers in-network care only, except emergencies, and usually requires referrals to specialists.
- Health savings account (HSA)
- A tax-advantaged savings account paired with an HSA-eligible plan. Since 2026, Exchange Bronze and Catastrophic plans also qualify. See what is an HSA.
- In-network and out-of-network
- In-network providers have a contract with your plan and charge its negotiated rates. Out-of-network care costs more or isn’t covered, and usually doesn’t count toward your out-of-pocket maximum. Check that your doctors are in a plan’s network before you enroll.
- Marketplace (Exchange)
- The government-run service where you compare and buy ACA plans and get premium tax credits: HealthCare.gov or your state’s own exchange. See health insurance marketplace.
- Medicaid
- Joint federal-state coverage for people with low income. In expansion states, most adults qualify up to 138% of the poverty level. See Medicaid eligibility.
- Medicare
- Federal coverage for people 65 and older and some younger people with disabilities. See Medicaid vs Medicare.
- Metal tiers
- Bronze, Silver, Gold and Platinum plans pay on average 60%, 70%, 80% and 90% of covered costs (HealthCare.gov). See Bronze vs Silver vs Gold vs Platinum.
Terms N–P
- Open Enrollment
- The yearly window to buy or change a Marketplace plan. For 2027 coverage it runs November 1, 2026 to January 15, 2027 on HealthCare.gov. See open enrollment 2027.
- Out-of-pocket maximum
- The most you pay for covered, in-network care in a plan year: $12,000 individual or $24,000 family for 2027. Premiums don’t count. See deductible vs out-of-pocket maximum.
- Preferred provider organization (PPO)
- A plan that covers in-network and, at higher cost, out-of-network care, usually without referrals.
- Pre-existing condition
- A health problem you had before coverage starts. ACA plans can’t refuse you, charge you more or exclude it; short-term plans can.
- The amount you pay, usually monthly, to keep coverage active. Read what is a premium.
- Premium tax credit
- A federal tax credit that lowers Marketplace premiums based on household income. For 2027 coverage it ends above 400% of the poverty level.
- Preventive care
- Screenings, vaccines and checkups that Marketplace plans cover in-network with no copay or coinsurance, even before the deductible (HealthCare.gov).
- Approval your plan requires before it will cover certain services or drugs. Without it, the plan may deny payment.
Terms Q–Z
- Qualifying life event
- A change such as losing coverage, moving, marriage or having a baby that lets you enroll outside Open Enrollment.
- Special Enrollment Period (SEP)
- A window, generally 60 days after a qualifying life event, to enroll in or change a Marketplace plan. See special enrollment period.
- Short-term health insurance
- Temporary coverage sold outside the ACA. It can exclude pre-existing conditions and never gets premium tax credits. See short-term health insurance.
- Summary of Benefits and Coverage (SBC)
- A standard, easy-to-compare document every plan must provide, listing its deductible, copays, coinsurance, out-of-pocket maximum and coverage examples.
Turn these terms into a real plan choice
Honesty®, a licensed AI insurance agent from Honesty® Insurance Services, LLC (NPN 21094885), explains the terms in your real plan options, compares ACA, alternative and ancillary plans and applies your subsidy, 24/7 by chat, voice or text.
Frequently asked questions
What are the basic health insurance terms I need to know?
Start with five: premium, deductible, copay, coinsurance and out-of-pocket maximum. Together they decide what you pay each month and what you pay when you use care.
What is the difference between a deductible and a premium?
A premium is what you pay every month to keep coverage. A deductible is what you pay for covered care before the plan starts sharing costs. Premiums don’t count toward the deductible.
What is the difference between a copay and coinsurance?
A copay is a fixed amount per service. Coinsurance is a percentage of the bill, such as 20%. Both count toward your out-of-pocket maximum for covered, in-network care.
What does out-of-pocket maximum mean?
It is the most you pay for covered, in-network care in a plan year, including your deductible, copays and coinsurance. For 2027 Marketplace plans the cap is $12,000 for an individual and $24,000 for a family.
Where can I find these health insurance terms for my own plan?
Every plan must give you a Summary of Benefits and Coverage. It lists the plan’s deductible, copays, coinsurance and out-of-pocket maximum in a standard format, so you can compare plans side by side.
Keep learning: how health insurance works, how to choose a health plan, health insurance subsidies 2027 and how Honesty.AI works.
