The A-Z of Basic Health Insurance Terminology

Diving into the world of health insurance can be intimidating. It’s easy to get overwhelmed when you’re looking for a plan because of all of the jargon and terminology that you need to become familiar with. But knowing what everything means as you research plans will help you to determine which one is best for you and your family, and will ensure you get the best coverage at the best price. Whether this is your first time buying health insurance or not, knowing the following health insurance terminology will help you make a more informed decision.

invoice letter sticking out of an envelope
Actual charge is the dollar amount that is charged by a doctor for a particular medical service. 

Actual Charge

This is the dollar amount that is charged by a doctor or other healthcare provider for a particular medical service or treatment. 


A person that is trained in the mathematical and statistical aspects of the insurance industry. They are the ones who calculate premium rates and assist in estimating the costs and savings of your health insurance plan.

Allowed Amount

Also sometimes called an eligible expense, a payment allowance, or negotiated rates, an allowed amount is the amount that your insurance company is willing to pay for a covered healthcare service. If your provider charges more than the allowed amount, you might have to pay the difference. 

Balance Billing

This is a bill for the amount that you owe for a particular service after insurance has paid its share – in other words, the difference between the actual charge and the allowed amount. For example, if your provider charges you $200 for a service, and the allowed amount is $100, your provider will most likely bill you for the remaining $100. 


This is your share of the cost of a covered healthcare service, calculated as a percent of the allowed amount for the service. You generally have to pay the coinsurance plus any deductible that you owe. For example, if your health insurance plan’s allowed amount is $100 for an office visit and you’ve met your deductible, your coinsurance payment of 20% would be $20 for the visit.

Co-payman's hand holding a blue credit card

This is a fixed amount you pay for covered health care services, such as visits to your doctor, specialists, or any other health care professional. Your co-pay will vary depending on the type of covered healthcare service you receive: visits to a primary care physician, specialist, and the emergency room will all be priced differently.


This is the amount you have to pay each year in medical expenses before your health insurance will kick in and begin to cover the rest of the year’s medical expenses. For example, if your deductible is $2,000,  your plan will not pay anything until you have met your $2,000 deductible for covered healthcare services. 

Drug Formulary

A list of prescription medications that are selected for coverage under a health insurance plan. Prescription drugs can be included on a drug formulary based on their efficacy, safety, and cost-effectiveness. Some plans will place medications on different tiers, which will change the price of the medications. Some health insurance plans may require that patients obtain preauthorization before non-formulary drugs are covered.

Durable Medical Equipment

If you need any medical equipment, such as crutches, oxygen apparatus, wheelchairs, or even blood testing strips for diabetes, your health insurance plan will most likely cover the cost of these things up to a certain point. Generally, you will have to pay coinsurance for any durable medical equipment that you receive. 

High Deductible Health Plan (HDHP)

This type of plan has lower monthly premiums, but a high annual deductible. These plans are generally aimed at people who are healthy and do not go to the doctor often, and so do not expect to have to meet the high deductible. 

In-Network Vs Out-of-Network

netword of people with lines connecting them
Your plan will have a network of healthcare providers, if you see any doctors that are not in your network, you might have to pay out of pocket.

If a healthcare provider is in-network, that means your health insurance plan will cover services provided by them. These are very important terms to know, because if you seek services from a healthcare professional who is considered out-of-network by your plan, you might have to pay for the service completely out-of-pocket. 

Out-of-pocket Limit

This is the most that you will have to pay for medical services during a policy period, which is usually a calendar year. Your premiums and most other medical expenses paid out-of-pocket will count towards your limit, but you should be aware that some plans will not count co-payments, deductibles, or coinsurance, so it’s important to check your policy. 


The amount that you will pay for health insurance every month. Your premium does not include any other expenses. If you do not pay your premium, you will lose your health insurance coverage. 


A healthcare professional that specializes in a certain condition or area of the body. Specialists include gastrologists, dermatologists, and podiatrists, for example. Seeing a specialist will cost more than seeing your primary care physician, so your co-pays and actual charges will be higher. 

UCR (Usual, Customary, and Reasonable)

This is the amount charged for a medical service within a specific geographic area, based on what providers in the area usually charge for the same or similar medical service.

The best way to understand how health insurance works, and to find the right plan for you and your family’s specific needs, is by working with an agent who specializes in health insurance. EZ can help: we offer a wide range of health insurance plans from top-rated insurance companies in every state. And because we work with so many companies and can offer all of the plans available in your area, we can find you a plan that saves you a lot of money – even hundreds of dollars – even if you don’t qualify for a subsidy. There is no obligation, or hassle, just free quotes on all available plans in your area. To get free instant quotes, simply enter your zip code in the bar above, or to speak to a local agent, call 888-350-1890.

Does Medicare Cover Adjustable Beds?

When dealing with an illness or disability that leads to the assistance of durable medical equipment such as an adjustable bed. Questions come up, mainly how much they are, and if the costs of these beds are covered by Medicare Insurance.

black and white picture of a hospital bed
Adjustable beds will be covered under Medicare if they are deemed medically necessary.

Doctors can prescribe these beds for many conditions, such as sleep disorders, respiratory problems, restless leg syndrome, and more. If you do require an adjustable bed, then it must be deemed “medically necessary” by your doctor in order to be covered. Will it be completely covered? Well, it depends.

What Is Durable Medical Equipment (DME)?

Durable medical equipment is medical equipment that is reusable, such as crutches, wheelchairs, and adjustable beds. In order for a DME to be covered, it has to be used for medical reasons, durable, andused at home. 

If you are staying in a nursing home, that does not qualify as your home. Therefore, it will not be covered. However, a long term care facility can give you DME, because they are responsible for your health. 

Is it Medically Necessary?

Even though your doctor might determine that there is a medical purpose for DME, it does not mean it will be approved by Medicare. Once the doctor recommends it, it must be considered and reviewed by Medicare before it will pay. Not all DME is created equal. In other words, there might be a specific type of bed that is approved, while others are not. 

Adjustable beds are usually prescribed to patients to help cure, relieve, and minimize circulatory and respiratory health issues. These beds help people get in and out of bed with more comfort and ease. 

"20%" written in silver and enlarged
Medicare Part B will cover 80% of the adjustable bed expense, leaving you to pay the rest (20%).

Will Medicare Cover Adjustable Beds?

Under Medicare Part B, in the DME section, it states that they might cover adjustable beds. But there are some requirements that a person must meet first before qualifying. First, a doctor must prescribe the bed for use at home. Afterwards, the bed must be sourced by an accredited Medicare supplier. Then, Medicare Part B will cover 80% of the expense, leaving you to pay the rest (20%).

Thankfully, if you are in need of an adjustable bed in your home due to chronic pain, or certain conditions, Medicare will cover it. As long as the bed is prescribed as medically necessary, and  acquired from an accredited supplier, then you will be good to go. Make sure you contact Medicare to make sure the bed is accredited before purchasing it, because some bed suppliers will mislead patients into buying unaccredited beds.