Health Insurance

Health insurance plans can seem like they’re written in secret code.

Between trying to decipher mysterious acronyms — like HSAs, FSAs, and HDHPs — and remembering your portal password, it’s easy to feel overwhelmed.

"Many of the people we work with feel overwhelmed with the process of choosing the right health insurance plan options," says Scott Spann, a financial planner with Financial Finesse, a provider of workplace financial wellness benefits.. "The majority of Americans are anxious about rising premiums and choosing the right type of coverage." But digging into the details is well worth the effort, he adds.

As high deductible healthcare plans continue to grow in popularity, it’s important to at least take time to understand the basics. Failing to take the time to review your options can be a costly mistake.

Can’t find your decoder ring? This primer can help you get started. EdLogics members can find more in the Glossary of Terms on our Health Insurance learning page.

Common Health Insurance Terms

1. Benefit: A treatment, test, or other healthcare that health insurance helps pay for.
2. Co-payment: A fixed amount you pay for a doctor’s visit, medication, or other healthcare expense. You usually pay it when you have the visit or get the medication.
3. Deductible: The amount you have to pay in a benefit year before your insurance kicks in. If your deductible is $2,000 and your first bill of the year is $3,000, then you would pay $2,000 of the bill, and your health plan would help pay for the rest.
4. Drug formulary: A list of prescription medications a health plan helps pay for.
5. Enrollment period: Period of time when people are allowed to sign up for a health plan. For many people, enrollment periods happen every November. You might be able to sign up at other times if you have a qualifying event, like losing a job or getting divorced.
6. Health savings account (HSA): A special savings account that you put money in for healthcare costs. You don’t pay taxes on money in HSAs, so you can save money. HSAs are usually used with high-deductible health plans.
7. High-deductible health plan (HDHP): Health insurance that costs less up front (lower premiums), but you pay for more of your healthcare costs before your insurance kicks in.
8. Network: A group of doctors, hospitals, and other healthcare services that work with your health insurance. Health insurance covers more costs for healthcare in-network than out-of-network.
9. Out-of-pocket: Healthcare costs your plan won’t pay for. You are responsible for paying these costs yourself.
10. Premium: A fee you pay regularly for health insurance. Most people pay their premiums every month, but it can vary from company to company.

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A version of this article was originally published 6/28/2017.