Glossary of Health Care, Insurance, and Patient Financial Wellness Terms

Health Insurance Literacy | Medical Debt and Billing | Patient Financial Wellness and Access | Laws and Regulations

Health Insurance Literacy

Actuarial Value: A measure of the percentage of total average costs for covered benefits that a health plan will pay, used to determine metal levels (Bronze, Silver, Gold, Platinum) for insurance comparison.

Affordable Care Act (ACA) Exchanges: Another name for the federal and state health insurance marketplaces, such as healthcare.gov.

Assisters: Trained and certified professionals, including Navigators and Certified application counselors, who provide free help to consumers with Marketplace applications and enrollment.

Benchmark Plan: The second-lowest-cost silver health plan available in a specific geographic area, used by the federal government to calculate premium tax credit subsidies.

Catastrophic Plans: Health plans featuring very high deductibles ($10,600 for individuals in 2026) and lower premiums, available primarily to people under age 30 or those with specific hardship exemptions.

Certified Application Counselors (CACs): Individuals, sometimes trained volunteers, who help consumers enroll in insurance but typically have fewer responsibilities than navigators before and after enrollment.

Children’s Health Insurance Program (CHIP): A government health program providing health insurance coverage for children, often discussed alongside Medicaid eligibility.

Coinsurance: The percentage you pay of the total cost of a service, often charged after you reach your deductible.

Copayment (Co-Pay): The upfront fee that you must pay for covered health care services.

Cost Sharing: How covered health care costs are split between you and your health insurance plan or policy. This includes your deductible, copayment, coinsurance, and out-of-pocket maximum.

Cost-Sharing Reduction (CSR): A marketplace subsidy for eligible households making 100-250% of the federal poverty level that reduces out-of-pocket expenses, like deductibles and co-payments, for silver-level plans.

Deductible: The specific amount of money an individual must pay out-of-pocket for covered medical services before their health insurance plan begins to pay. However, many plans will pay for certain services such as preventive and wellness services and chronic disease management before meeting your deductible.

Denial: When an insurance company refuses to cover the costs of a service.  

Essential Health Benefits: See Ten Essential Health Benefits

Explanation of Benefits (EOB): A document sent by an insurance company that explains which medical services were covered, what portion of the bill the patient is responsible for paying, and other information such as the remaining deductible and out-of-pocket maximum. It also explains any items not covered and contains instructions on how to appeal a denial.

Family Health Plan: Health insurance that covers spouses and children (or tax dependents) on the same plan.

Formulary: The official list of prescription drugs covered by a health insurance plan, typically organized into tiers that determine how much the patient pays for generic versus brand-name medications.

Ghost Network: An inaccurate or misleading health insurance provider directory that lists providers or clinics as available and in-network when they are not.

Grandfathered Health Plan: A type of comprehensive, employer plan created before March 23, 2010 that doesn’t have to comply with ACA mandates. Many of these plans offer comprehensive benefits, but are not certified QHPs.

Group Health Insurance: A type of coverage that spreads the costs of healthcare across a larger pool of people, historically often tied to employment.

Health Insurance Literacy: An individual’s ability to seek, understand, select, and use their health insurance services effectively to maximize benefits and minimize out-of-pocket costs.

Health Insurance Marketplace: A platform, operated by either the federal (healthcare.gov) or state government, where individuals can compare and buy Qualified Health Plans (Obamacare or QHPs) that comply with ACA mandates.

Health Literacy: The ability to find, understand, and use health-related information and services to make informed health decisions.

High-Deductible Health Plan (HDHP): A health insurance plan with a minimum deductible ($1,700 for individuals or $3,400 for families in 2026) required for an individual to be eligible to contribute to an HSA.

Individual Health Insurance: Health insurance intended for people without access to other sources of medical coverage like employment-based “group” insurance or government-sponsored coverage, such as Medicaid or Medicare.

In-Network: Healthcare providers and facilities that have negotiated lower rates with a specific insurance company or other health plan.

Letter of Medical Necessity: A formal letter explaining why a service is essential for your health, which your doctor submits to your insurer when they question the medical necessity of a claim.

Managed Care Plans: Health insurance models, such as HMOs and PPOs, that utilize provider networks, referrals, and prior authorizations to control healthcare costs and quality.

Marketplace: ACA Marketplace or Health Insurance Marketplace—a platform, operated by either the federal (healthcare.gov) or state government, where individuals can compare and buy ACA-compliant health insurance plans (Obamacare).

Medicaid: A joint federal-state partnership program that provides health insurance and long-term care for qualified lower-income individuals and families. Eligibility is determined by the states.

Medical Underwriting: An insurance practice, largely restricted by the ACA, where companies review an applicant’s medical history to determine coverage or pricing based on health status.

Medicaid Expansion: An optional program, under the Affordable Care Act (ACA), for states to widen Medicaid eligibility to adults with incomes at or below 138% of the federal poverty level.

Medicare: Often confused with Medicaid, Medicare is a federal health insurance program for people 65 and over, as well as people with certain disabilities and other health conditions or end-stage diseases.

Minimum Essential Coverage (MEC): A broad legal definition for any insurance that meets ACA standards. It includes marketplace plans, job-based coverage, Medicare, and most Medicaid.

Navigators: Individuals or organizations funded by federal grants to help people, particularly vulnerable and underserved populations, enroll in Marketplace health plans.

Network: The providers, facilities, and suppliers your health plan has contracted with to provide services.

• In-network: Providers, facilities, and suppliers contracted with your health plan. 
• Out-of-network: Providers, facilities, and suppliers not contracted with your health plan. Sometimes a facility may be covered while a provider is not, leading to unexpected medical bills.   

Obamacare: A common nickname for the Affordable Care Act (ACA), which was signed into law in March 2010 by President Obama, which created the Health Insurance Marketplace (healthcare.gov).

Obamacare Plans: A nickname for Qualified Health Plans (QHPs) that comply with the mandates of the ACA. However, junk plans have also used the term to mislead consumers.

Open Enrollment: A specific annual time period during which individuals can sign up for health insurance.

Out-of-Pocket Costs: Includes cost sharing plus extra expenses like your monthly insurance premium and the costs of health care not covered by your insurance.

Out-of-Pocket Maximum: The maximum amount you have to pay in a calendar year for covered, in-network medical services before your insurance plan pays 100% of the costs.

Preexisting Conditions: Health statuses, medical illnesses, or conditions a patient had before starting a new health insurance plan.

Premium: The fixed amount you pay for your insurance every month, whether you visit a doctor or not. Similar to a subscription fee, it keeps your coverage active.

Premium Tax Credits (PTC): Federal tax subsidies created by the ACA to reduce monthly premium costs for eligible individuals based on their income. PTCs are paid directly to your insurance company and reported as a tax credit with your federal income taxes.

Primary Care Provider or Primary Care Physician (PCP): A health care provider who coordinates your health care services. Many health plans require you to choose a PCP.

Prior Authorization: (also called preauthorization, precertification, or prior approval) A formal decision by your health insurance company that a medical service, treatment plan, prescription drug, or durable medical equipment is medically necessary before you receive the care. However, it’s not a promise or guarantee that your health insurance or plan will cover the final cost.

Private Health Insurance: Health plans that are sold and administered by private companies rather than government agencies

Provider: A licensed person or organization that provides health care services. This includes doctors or physicians, nurses, therapists, labs, hospitals, clinics, imaging labs, urgent care centers, and other health care centers.  

Provider Network: The list of providers whose services are covered by your health plan.  Depending on the type, your plan may only cover care using network providers (except in an emergency). Otherwise, you may have to pay more, and/or get a referral if your provider is outside of your plan’s network.

Public Health Insurance: Health coverage programs, such as Medicaid and Medicare, that are provided through government agencies.

Qualified Health Plan (QHP): An insurance policy with Minimum Essential Coverage that’s certified to be sold on the Health Insurance Marketplace (healthcare.gov or your state marketplace). It meets the rules of the Affordable Care Act (ACA), provides essential health benefits, limits out-of-pocket costs, and covers pre-existing health conditions. Plans that are identical to QHPs or equivalent ACA-compliant plans are widely sold off-exchange through brokers and many employers. However, you can only get subsidies (tax credits) on the federal and state marketplaces.

Qualifying Life Event (QLE): A major change in your life situation that makes you eligible to sign up for health insurance outside the standard yearly Open Enrollment Period. Common QLEs include loss of insurance, moving, changes in household or income, and turning 26.

Referral: A written order from your primary care provider for you to see a specialist or get certain medical tests or services. If your plan requires a referral and you skip it, the insurance company will likely refuse to pay, leaving you with the full bill.

Retroactive Insurance Coverage (or Backdated Coverage): An insurance policy that applies to a period before the actual enrollment date, potentially covering past medical bills.

Special Enrollment Period (SEP): A timeframe outside of open enrollment when individuals can sign up for insurance due to qualifying life events like marriage, birth, adoption, moving, or involuntary loss of coverage.

Standardized plans: Also known as easy pricing, these are plans standardized within their metal level (bronze, silver, gold) to offer the same deductibles, out-of-pocket limits, copays, and coinsurance. This makes it easier for people to compare across plans when shopping for coverage.

Ten Essential Health Benefits: A set of ten mandatory service categories, such as hospitalization, prescription drugs, and maternity care, that all Marketplace and ACA-compliant individual and small-group plans must cover.

Medical Debt and Bills

Bad Debt: Bad debt refers to debt that a hospital tried to collect and failed, typically owed by patients ineligible for financial assistance.

Balance Billing: The practice where a healthcare provider bills a patient for the difference between the provider’s total charge and the amount covered by the patient’s insurance, which the No Surprises Act now limits for certain services.

Charity Care: Means-tested, financial assistance programs that provide sliding-scale free or discounted emergency and medically necessary care — often included as part of a hospital’s financial assistance policy (FAP).

Community Benefit Requirements: Nonprofit hospitals are required by federal law and some state laws to provide community benefits, such as financial assistance and other investments targeting community need, in exchange for a tax exemption.

Consumer Debt: Debt incurred through credit cards or loans, including medical-specific credit cards, which always appears on credit reports regardless of whether the funds were used for health care.

CPT Code: The Current Procedural Terminology (CPT®) code set is a listing of terms and five-digit codes that primarily describe medical services and procedures performed by physicians and other qualified health care professionals. In medical billing, each code is associated with a price tag that is billed to your insurance company.

Credit Reporting Agencies (CRAs): Also known as credit bureaus—Experian, Equifax, and TransUnion. CRAs maintain consumer credit records and have established specific protections regarding how medical debt is reported.

Credit Utilization Ratio: The percentage of available credit a consumer is using, which can be negatively impacted if a person uses credit cards to pay for high medical expenses.

Creditor: A party seeking to collect medical debt. This can be a hospital, a debt collector acting on behalf of a hospital, or a third-party debt buyer.

Debt Collectors or Collections Agencies: Businesses that focus on collecting unpaid debt. They may collect on behalf of a hospital (while the hospital still technically holds the debt) or buy the debt.

Debt Parking: An illegal practice where debt collectors put a collection account on your credit report without telling you first. They do this in secret to pressure you into paying fake or old debts. You usually find out only when your credit score drops or when you apply for a loan, a job, or an apartment.

Debt Validation: A legal requirement for debt collectors to provide written notice within five days of contact detailing the debt owed and allowing the consumer to challenge its accuracy.

Extraordinary Collection Activities (ECAs): Aggressive legal or financial actions used by hospitals to collect debt, which can include filing lawsuits, garnishing wages, placing liens on property, or seizing bank accounts.

Debtor: An individual who owes medical debt over unpaid medical bills (or a person who owes debt).

Facility Fee: An extra administrative charge sometimes added to medical bills by hospital-owned clinics and facilities to cover the hospital’s overhead costs.

Financial Assistance Policy (FAP): A hospital’s policy to provide free or discounted care (charity care) to certain eligible patients. Eligibility for financial assistance can depend on income, insurance status, and/or residency status and is determined by each hospital. Nonprofit hospital organizations are required by law to have a financial assistance policy, and many for-profit hospitals also have one. You can view the FAP on the hospital’s website or ask for free paper copies.

Financial Toxicity: The combined financial strain and emotional stress that patients and their families face due to the high direct and indirect costs of medical care.

Financially Indigent: People earning less than two to three times the federal poverty level.

Foreclosure or Forced Sale: A creditor can repossess and sell a patient’s home to pay off their medical debt. Often, creditors are required to obtain a court order to do so.

Itemized Bill: A detailed record of all medical charges, along with their billing codes that patients can request under HIPAA, to check for price gouging, duplicate charges, errors, or services they did not actually receive.

Medical Billing and Insurance Advocates: Patient advocates who specialize in challenging high medical bills, assisting with insurance appeals, and negotiating lower rates.

Medical Collections: Unpaid medical bills that have been reported to third-party debt collectors. This occurs after a doctor, clinic, or hospital fails to get payment from you or your insurance after 90 to 180 days.

Medical Credit Cards: Consumer credit products marketed specifically for health and wellness expenses but are legally treated as consumer debt rather than medical debt, and often carry high interest rates.

Medical Debt: Personal debt incurred from unpaid medical bills.

Medical Identity Theft: Medical identity theft, or patient identity theft, occurs when someone uses your personal information — like your name, Social Security number, or health insurance details without your permission to get medical care, see a doctor, get prescription drugs, buy medical devices, or submit claims with your insurance provider.

Medically Indigent: People whose medical bills, after all third-party payments, exceed a certain percentage of their yearly household income or assets.

Placing a lien: A legal claim that a creditor can place on a patient’s home, prohibiting the patient from selling, transferring, or refinancing their home without first paying off the creditor. Most states require creditors to get a court order before placing a lien on a home.

Sale of Medical Debt: Hospitals sometimes sell the debt patients owe them to third-party debt debt collectors. Although governed by the Fair Debt Collections Practices Act (FDCPA), these entities can be aggressive in seeking repayment of the debt.

Surprise Bills: Unexpected medical charges. These typically occur when a patient receives emergency care or is treated by an out-of-network provider at an in-network facility.

Wage garnishment: The ability of a creditor to get a court order that would allow them to deduct a portion of a debtor-patient’s paycheck before it reaches the patient. Federal law limits how much can be withheld from a debtor’s paycheck, and some states exceed this federal protection.

Zombie Debt:  Old, forgotten debt—often past the legal statute of limitations or already paid off—that third-party collection agencies buy for pennies on the dollar and try to resurrect. You are generally not legally required to pay it, and in some states, paying even a tiny fraction can restart the collection clock, but others have passed laws to prevent lawsuits from being initiated on zombie debts.   

Patient Financial Wellness and Access

Alternative Healthcare Options: Healthcare coverage choices for individuals who cannot afford traditional comprehensive health insurance, choose not to use insurance for specific services, or are underinsured.

Cash Pay (or Self-Pay): Paying a healthcare provider directly at the time of service rather than using insurance, which often eliminates paperwork and may lead to negotiated cash discounts.

Community Health Centers (CHC): Federally qualified health care centers and clinics that provide primary care and other health services to anyone regardless of insurance status. They charge patients on a sliding-scale basis according to their income, and also take insurance. Designed to serve low-income, uninsured, or medically underserved areas, community clinics are almost always non-profit organizations that receive government grants.

Diagnostic Health Care: Care that occurs the moment a doctor begins investigating a specific health problem or symptom you have mentioned. 

Direct Primary Care (DPC): A membership-based healthcare model where patients pay a Primary Care Provider (PCP) a monthly fee in exchange for increased access and more personalized attention.

Discount Plans and Cards: Membership-based arrangements or free cards that grant users access to pre-negotiated lower rates from a specific network of providers for services like dental, vision, or prescriptions

Federally Qualified Health Centers (FQHCs): Federally funded community health centers and clinics that charge based on income — Find one at findahealthcenter.hrsa.gov. 

Flexible Spending Account (FSA): An employer-sponsored account that allows you to use pre-tax payroll deductions to pay for qualified out-of-pocket health, dental, vision, or dependent care costs, lowering your overall taxable income. Employees using healthcare FSAs generally cannot open or contribute to an HSA.

Good Faith Estimate: A written estimate of expected charges that healthcare providers are required to give to uninsured or self-pay patients when requested at least three business days before a scheduled service.

Health Savings Account (HSA): A triple-tax-advantaged savings account available to people with qualifying high-deductible health plans to pay for qualified medical expenses with pre-tax dollars.

Junk Insurance: Alternative healthcare options that use deceptive marketing and advertising to look like traditional insurance, but they aren’t.

Medical Financial Literacy: The ability to understand, estimate, audit, reduce, and negotiate medical bills.

Medical Tourism: The practice of traveling to a different location where healthcare services are less expensive.

Modified adjusted gross income (MAGI) is the specific taxable income calculation, located on line 7 of federal tax form 1040, used to determine:

• Eligibility for Medicaid, the Children’s Health Insurance Program (CHIP), and health insurance marketplace subsidies
• If an employer’s health insurance premiums for a family are considered “affordable” (9.12% in 2023)
• Whether an extra adjustment amount (IRMAA) must be added to monthly premiums of Medicare beneficiaries with higher incomes

Patient Financial Wellness: Being protected from, or minimizing the devastating financial and psychological impacts of the healthcare system through health insurance literacy, medical billing literacy, and cost minimization.

Phantom Enrollees: A subset of the ACA exchange enrollees who are fraudulently enrolled in free or heavily subsidized plans but generate zero medical claims in a given year. These individuals are unaware of their enrollment and may already have other coverage.

Phantom Enrollment: A scam involving the unauthorized enrollment of zero-claim or low-utilizing healthy individuals into “free” or heavily subsidized insurance plans on Affordable Care Act (ACA) exchanges, without the enrollee’s knowledge.

Price Transparency: Clearly showing prices upfront.

Preventive Care: Healthcare services, screenings, and checkups you receive when you have no symptoms—designed to prevent illness before it starts, or to catch problems early — when they’re still small and far less expensive to treat.

Retail Health Clinics: Walk-in clinics located in retail stores (like CVS MinuteClinics) that offer basic services with transparent and typically lower pricing than traditional medical offices.

Self-Pay (Cash pay): Paying a healthcare provider directly at the time of service rather than using insurance.

Single-Payer Health Care: A proposed reform where the federal government would act as the sole health insurer for all citizens, potentially replacing private insurance companies.

Telemedicine: The use of digital technologies, such as video conferencing or mobile apps, to provide virtual healthcare services to patients remotely through a computer or phone, rather than in an in-person setting.

Underinsured: A status where an individual has health insurance but still faces significant financial barriers, such as high deductibles or copayments, that may prevent them from accessing care.

Urgent Care: A medical facility that treats minor illnesses and injuries after-hours and is generally less expensive than an emergency room.

Laws and Regulations

Affordable Care Act (ACA): Comprehensive health reform legislation passed in 2010 intended to increase the number of insured Americans through Medicaid expansion, health insurance marketplaces, and new consumer protections.

COBRA (Consolidated Omnibus Budget Reconciliation Act): A federal law allowing workers at businesses with 20 or more employees to temporarily maintain their employer-sponsored health insurance for up to 18 months after leaving a job.

Emergency Medical Treatment and Labor Act (EMTALA): A federal law requiring hospitals that accept Medicare to screen and stabilize any patient seeking emergency care, regardless of their ability to pay or insurance status.

Fair Credit Reporting Act (FCRA): Federal legislation that regulates how consumer data is collected and shared while granting individuals the right to access and correct their credit reports.

Fair Debt Collection Practices Act (FDCPA): A federal law that regulates the practices of third-party debt collectors. It protects consumers from abusive or deceptive practices by debt collection companies and governs how they report debt.

Family Glitch: The family glitch refers to a previous gap (2013-2023) in health insurance regulations that made many families ineligible for marketplace subsidies, even when they could not afford the family coverage offered by an employer.

Federal Poverty Level (FPL): A set income measure used to determine eligibility for Medicaid, CHIP, and Marketplace tax subsidies, which remains the same across the country and is updated annually.

Individual Mandate: A provision of the ACA that originally penalized individuals who didn’t have health insurance, though the federal penalty was later reduced to $0.

No Surprises Act: A 2020 federal law that protects patients with private insurance from unexpected medical bills, particularly for emergency services and certain out-of-network charges or care provided at in-network facilities. It also provides protections for uninsured and self-pay patients.

Notice and Consent: A voluntary agreement a patient may sign to waive their No Surprises Act protections, which allows a provider to balance bill for out-of-network care.

One-Year Grace Period: A mandatory 365-day waiting period starting from the date a bill becomes delinquent, during which many medical providers and collection agencies are prohibited from adding the debt to a credit report.

Section 501(r)6: A federal IRS regulation governing nonprofit hospitals that prevents them from initiating extraordinary collection activities until they have notified the patient about financial assistance policies and waited at least 120 days after the first billing statement

Stabilize: Under EMTALA, hospitals’ ERs (EDs) that accept Medicare must treat any emergency patient until they are ready to be discharged, though the underlying condition may be unaddressed.

Statute of limitations: The maximum amount of time in which two parties involved in a dispute (in this case, a creditor or medical debt collector) can initiate legal proceedings. The statute of limitations for medical debt lawsuits varies by state.