Before comparing health insurance plans, understanding the key terms will help you make a more informed decision. These definitions directly affect what you pay — both monthly and when you actually use your insurance.
Premium
The monthly amount you pay for your health insurance plan — whether you use it or not. Premiums can be significantly reduced by Premium Tax Credits if you qualify based on your household income.
Deductible
The amount you pay out-of-pocket for covered services before your insurance begins to pay. With a $3,000 deductible, you pay the first $3,000 of covered care each plan year before the insurer starts sharing costs. Preventive care is typically covered before the deductible is met.
Copay
A fixed dollar amount you pay for a covered health service — for example, $30 for a primary care visit or $50 for a specialist. Copays typically apply after the deductible is met, though some plans waive them for preventive care.
Coinsurance
Your percentage share of costs after meeting your deductible. With 20% coinsurance, if a procedure costs $1,000, you pay $200 and the insurer pays $800. Coinsurance applies until you reach your out-of-pocket maximum for the year.
Out-of-Pocket Maximum
The most you will pay for covered services in a plan year. After reaching this limit, your insurer pays 100% of covered costs. In 2025, the ACA limits individual out-of-pocket maximums to $9,200 and $18,400 for families.
Network / In-Network vs. Out-of-Network
In-network providers have contracts with your insurer and cost you less. Out-of-network providers may not be covered at all (in HMO and EPO plans) or covered at higher cost-sharing (in PPO and POS plans). Always verify your doctors are in-network before enrolling in a plan.
Formulary
The list of prescription drugs covered by your health plan, organized into cost tiers. Tier 1 (generic) drugs are cheapest; Tier 4 or 5 (specialty) drugs can be very expensive. Always check that your regular medications are on a plan’s formulary before enrolling.
HSA (Health Savings Account)
A tax-advantaged savings account available only with High-Deductible Health Plans (HDHPs). Contributions are tax-deductible, grow tax-free, and are withdrawn tax-free when used for qualified medical expenses. In 2025, contribution limits are $4,300 for individuals and $8,550 for families.
Call us at 1-888-972-0024 — our advisors can walk you through these terms in the context of any specific plan you’re considering.