Health Insurance Glossary

Plain-English definitions of the terms that come up when you are comparing plans in California. If something here is still unclear, call us at (855) 847-7020 and we will explain it in the context of your own situation.

Actuarial value
The share of total covered medical costs a plan pays on average. It is what the metal tiers describe: Bronze pays about 60%, Silver 70%, Gold 80%, Platinum 90%. It is an average across all enrollees, not a promise about your bill.

Balance billing
When an out-of-network provider bills you for the difference between their charge and what your plan paid. California and federal law limit this in emergencies and for some out-of-network care at in-network facilities.

Cal-COBRA
California continuation coverage for employees of businesses with 2 to 19 employees. Runs up to 36 months at up to 110% of the group premium. Federal COBRA covers employers with 20 or more, up to 102%.

Coinsurance
Your share of a cost as a percentage after you meet the deductible. If coinsurance is 20%, the plan pays 80% and you pay 20% until you hit the out-of-pocket maximum.

Copay
A flat dollar amount you pay for a service, such as $50 for a specialist visit. Copays for some services may apply before you meet the deductible.

Cost-sharing reduction
Extra help that lowers your deductible, copays and out-of-pocket maximum. In California it produces the Enhanced Silver 94, 87 and 73 plans and is only available on a Silver plan.

Covered California
California’s health insurance marketplace. The only place to get a federal premium tax credit or a California state subsidy. Open enrollment runs November 1 through January 31.

Deductible
What you pay for covered services before the plan starts paying. Preventive care is covered at no cost before the deductible, and some plans cover office visits and generic drugs before it too.

DMHC
The California Department of Managed Health Care. Regulates HMOs and most Kaiser and Blue Shield products, and runs the Independent Medical Review process. Help Center 1-888-466-2219.

Essential health benefits
The ten categories every ACA plan must cover, including hospitalisation, prescription drugs, maternity and newborn care, and mental health and substance use treatment.

Formulary
A plan’s list of covered prescription drugs, organised into tiers. A drug that is not on the formulary is generally not covered, though you can request an exception.

Guaranteed issue
A situation where a carrier must sell you a policy without asking health questions. California gives Medicare Supplement buyers broader guaranteed issue rights than federal law requires.

HDHP
A high deductible health plan. If it meets IRS rules you can pair it with a Health Savings Account. For 2026 that means a deductible of at least $1,700 for self-only coverage.

HICAP
California’s Health Insurance Counseling and Advocacy Program. Free, unbiased Medicare counselling with an office in every county. 1-800-434-0222.

HMO
A plan that requires you to use its network and usually to pick a primary care doctor who coordinates referrals. Out-of-network care is generally not covered except in an emergency.

HSA
A Health Savings Account. Tax-advantaged federally, but note that California does not conform: contributions are not deductible on your state return and earnings are taxable by California each year.

Independent Medical Review
A free process run by the DMHC that lets you appeal a denial of care to an outside physician panel. Their decision is binding on the plan.

Medi-Cal
California’s Medicaid programme. It is illegal to sell a Medicare Supplement policy to someone with full Medi-Cal benefits.

Medigap
Medicare Supplement insurance. Standardized into ten lettered plans that pay some of what Original Medicare leaves you. See the California Birthday Rule for your annual right to switch.

Metal tier
Bronze, Silver, Gold and Platinum. Describes how costs are split between you and the plan, not the quality of care or the size of the network.

Network
The doctors, hospitals and pharmacies a plan has contracted with. In California networks are regional, so the same carrier can have very different networks in different counties.

Open enrollment
The annual window to buy or change coverage without a qualifying life event. Covered California runs November 1 to January 31. Medicare’s Annual Election Period runs October 15 to December 7.

Out-of-pocket maximum
The most you pay in a year for covered in-network care. After that the plan pays 100%. For 2026 the legal maximum is $10,600 for self-only coverage. Premiums do not count toward it.

PPO
A plan that lets you see out-of-network providers at a higher cost and generally does not require referrals.

Premium
What you pay each month to keep coverage, whether or not you use it. It does not count toward your deductible or out-of-pocket maximum.

Premium tax credit
A federal subsidy that lowers your monthly premium, available only through Covered California. The enhanced credits in place since 2021 expired December 31, 2025.

Prior authorization
Approval a plan requires before it will cover certain services or drugs. Getting it in advance is your responsibility as much as your doctor’s.

Qualifying life event
A change such as losing coverage, moving, marriage, or the birth or adoption of a child that opens a special enrollment period outside open enrollment.

Special enrollment period
A window, usually 60 days, to enroll after a qualifying life event.

Summary of Benefits and Coverage
A standardized plain-language summary every plan must give you, so you can compare plans on the same terms. Ask for it before you enroll.

These definitions are general explanations, not legal or contractual definitions. The terms of your own policy govern your coverage.