Deductible, copay, coinsurance — US health insurance vocabulary is hard not because the words are obscure, but because things that sit on different layers get listed side by side. Usefully, these terms have an official government dictionary.
The US Department of Labor maintains a Uniform Glossary of Coverage and Medical Terms so that every plan uses the same definitions, and insurers must provide it alongside the Summary of Benefits and Coverage (SBC).
— US Department of Labor, Employee Benefits Security Administration (EBSA), Uniform Glossary of Coverage and Medical Terms
1. Where the money goes. Four things sit on different layers — the premium (paid monthly), the deductible (what you clear before the plan starts paying), and copays and coinsurance (your share after that). Listing them side by side is what makes this confusing.
2. Where the risk is. The most-missed piece is networks and balance billing — go to a provider with no contract and you pay more even when the plan covers it, and the difference can be billed to you separately.
3. What to do. Leaving a job ends the coverage with it — COBRA is what bridges the gap (private employers with 20+ staff, among others). And these definitions do not vary by insurer: there is an official glossary, and insurers must supply it alongside the SBC.
What follows is the glossary's own wording.
Four kinds of money, on four different layers
| Term | The Uniform Glossary definition |
|---|---|
| Premium | “The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly, or yearly.” |
| Deductible | “An amount you could owe during a coverage period (usually one year) for covered health care services before your plan begins to pay.” |
| Copayment | “A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service.” |
| Coinsurance | “Your share of the costs of a covered health care service, calculated as a percentage (for example, 20%) of the allowed amount for the service.” |
| Out-of-pocket Limit | “The most you could pay during a coverage period (usually one year) for your share of the costs of covered services.” |
How to read the definitions. The deductible says “before your plan begins to pay”; the out-of-pocket limit says “the most you could pay.” Those two phrases mark the start and the end. Copays (fixed) and coinsurance (percentage) operate in between. The premium sits outside that range entirely.
The two most-missed terms — network and balance billing
| Term | The Uniform Glossary definition |
|---|---|
| Network | “The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.” |
| Out-of-network provider | “A provider who doesn't have a contract with your plan to provide services. If your plan covers out-of-network services, you'll usually pay more.” |
| Balance Billing | “When a provider bills you for the balance remaining on the bill that your plan doesn't cover. This amount is the difference between the actual billed amount and the allowed amount.” |
| Preauthorization | “A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary.” |
| Preventive Care | “Routine health care, including screenings, check-ups, and patient counseling, to prevent or discover illness, disease, or other health problems.” |
Balance billing is the classic route to a shock medical bill. When what the provider charges and what the plan treats as the allowed amount differ, the gap lands on you — and whether that gap counts toward your out-of-pocket limit is a separate question.
Reread the preauthorization definition. It is “a decision by your health insurer or plan that… is medically necessary.” The fact that your doctor's judgment and the insurer's can diverge is written into the definition itself.
Put the leak and the silence side by side.
When you leave a job — COBRA
US coverage is attached to employment, so leaving a job usually ends it. COBRA is the bridge.
| Item | What the Department of Labor says |
|---|---|
| What it is | “A federal law that allows workers and their families to temporarily keep their health coverage in certain situations, such as job loss, a reduction in hours, or other job and life transitions” |
| Which employers | Private-sector employers with 20 or more employees, plus state and local governments (federal and church plans excluded) |
| Qualifying events | Job loss (except gross misconduct), reduction in hours, death, divorce or legal separation, loss of dependent status, Medicare entitlement |
| Duration | Termination or reduced hours → up to 18 months / other events → spouses and dependents up to 36 months |
| What you pay | “You usually pay the full premium. The total premium includes both the share you used to pay as an active employee and the amount your employer used to contribute, plus two percent.” |
| Election period | “You have 60 days to enroll… starting from when your coverage ends or when your COBRA election notice is provided” |
“The amount your employer used to contribute, plus two percent” is the line that matters. The plan is unchanged, but the felt cost jumps several-fold overnight — because the reason it seemed cheap while employed was that the employer was carrying most of it.
A reduction in hours also qualifies. People assume this is only about quitting, but cutting hours to the point of losing eligibility is on the list too. And the election period is 60 days — the decision has a clock on it.
One scheme, and the qualifying event doubles the period exactly.
Questions this raises
What's the difference between HMO and PPO?
Neither acronym is defined in the Uniform Glossary. What the glossary does define is network and out-of-network provider — and “if your plan covers out-of-network services, you'll usually pay more” is closer to the practical difference. Check your plan documents for exact definitions.
Is a high deductible a bad plan?
A high deductible generally pairs with a lower premium, but no sentence stating that relationship appears in this material. What is certain is that they sit on different layers: the premium goes out monthly, the deductible only operates when you are ill. For the tax-advantaged pairing, see HSA versus FSA.
Once I hit the out-of-pocket limit, is everything free?
The definition goes as far as “the most you could pay for your share of the costs of covered services.” What counts toward it (premiums, balance billing, out-of-network costs) could not be confirmed from this material. That belongs in the plan documents.
What is the SBC?
A standardized summary of what a plan covers, which the Department of Labor requires to be provided together with the Uniform Glossary. Details such as its length and delivery timing were not verifiable here.
The vocabulary is hard because different layers of money get listed in one row. The premium sits outside the range, the deductible marks the start, the out-of-pocket limit marks the end — fix those three and everything else falls in between.
Sources
- US Department of Labor, EBSA — Uniform Glossary of Coverage and Medical Terms. Source for the verbatim definitions of premium, deductible, copayment, coinsurance, out-of-pocket limit, network, out-of-network provider, balance billing, preauthorization and preventive care.
- US Department of Labor, EBSA — Summary of Benefits and Coverage and Uniform Glossary. Source for the fact that the SBC and the glossary are provided together.
- US Department of Labor — FAQs on COBRA Continuation Health Coverage for Workers. Source for the definition of COBRA, the 20-employee threshold, the qualifying events, 18 and 36 months, “the full premium… plus two percent,” and the 60-day election period.
Where to check further
- The actual figures for your own plan (premium, deductible, out-of-pocket maximum). The Department of Labor glossary this article draws on defines terms and gives no amounts. Those numbers are printed on your plan's Summary of Benefits and Coverage (SBC), which insurers are required to provide.
- What counts toward the out-of-pocket maximum. Whether premiums, balance bills and out-of-network costs are included was not established — and that is where the real exposure sits. Check the out-of-pocket limit section of your SBC and confirm with the insurer.
- HMO, PPO, EPO and POS, plus marketplace subsidies. None appear in the uniform glossary, so this article works from the network concept instead. Plan types and subsidies live on HealthCare.gov.
Written as of July 2026. The definitions and COBRA terms come from US Department of Labor source text, and this article describes the US system. For tax-advantaged medical accounts see HSA versus FSA; for how premiums come out of pay, see the US paycheck calculator. For coverage while travelling, see the travel health kit. This is general information, not insurance or legal advice.
