Understanding how healthcare billing and insurance work is one of the most effective ways to take control of your medical costs. But between insurance jargon, billing codes, and benefit statements, the language of healthcare can be overwhelming. At Lane Health, we believe financial wellness starts with education. That’s why we’ve broken down the 18 most important healthcare financial terms you’re likely to come across.
Whether you're reviewing a medical bill, enrolling in a benefits plan, or looking for ways to pay for care, this guide will help you make informed decisions and avoid costly surprises.
The amount you pay for covered healthcare services before your insurance begins to pay. For example, if your plan has a $1,500 deductible, you must pay the first $1,500 of medical costs yourself before your insurance starts coverage.
A fixed amount you pay for a healthcare service, usually at the time of the visit. For instance, you might pay $30 for a primary care visit or $10 for a prescription drug.
Your share of the cost of a covered service, calculated as a percentage. For example, if your plan pays 80 percent of the bill, you pay the remaining 20 percent after meeting your deductible.
The maximum amount you are required to pay for covered services in a plan year. After reaching this limit, your health insurance covers 100 percent of covered costs this includes copayments and coinsurance.
The amount you pay each month for health insurance coverage. This is separate from what you pay out-of-pocket for care.
A statement from your insurance company that shows what services were billed, what was covered, and what you may owe. It is not a bill.
A requirement by some health insurance plans to get approval before a service, procedure, or medication will be covered.
A healthcare provider or facility that has a contract with your insurance company to provide services at reduced rates.
A provider or facility that does not have a contract with your insurance. Costs are usually higher when you use out-of-network services.
A list of prescription drugs covered by your insurance plan. Drugs are often divided into tiers with different copay levels.
A pre-tax savings account offered by employers that can be used for eligible healthcare expenses. Funds typically must be used within the plan year.
A tax-advantaged savings account available to people with high-deductible health plans. Funds roll over year to year and can be used for qualifying medical expenses. Read our post on making the most out of your HSA.
A health plan with lower premiums and higher deductibles. Often paired with an HSA to help manage out-of-pocket costs.
Medical care or procedures that do not require an overnight hospital stay, such as lab work, imaging, or physical therapy.
Medical services provided when a patient is admitted to a hospital for at least one overnight stay.
When a provider bills you for the difference between their charge and the amount your insurance pays. This typically occurs with out-of-network providers and is restricted in some cases under federal law.
A service or item that is needed for the diagnosis or treatment of a condition and meets accepted standards of medicine. Insurers use this to determine coverage eligibility.
A payment option that allows you to cover out-of-pocket healthcare expenses without using high-interest credit cards. The Healthcare Spending Card offers access to funds* with no interest repayment schedules2, no annual membership fees2, and built-in HSA integration, helping you pay for care when you need it.
Understanding these terms is a smart step toward taking control of your healthcare finances. At Lane Health, we’re here to support your healthcare journey every step of the way — starting with knowledge and continuing with practical tools like the Healthcare Spending Card.
Want to learn more about healthcare finances? Join our free Healthcare Financial Bootcamp today!
* Subject to credit line approval
1 Lane Health is a financial technology company, not a bank. The Healthcare Spending Card is issued by Lead Bank pursuant to a license from Visa USA Inc.
2 Lane Health does not charge interest on, or an annual fee for, the Healthcare Spending Card. “0% financing” pertains to repayment options that do not charge interest (0% interest) nor fees ($0 fees). Each Advance can be repaid in full, 4-month term or 12-month term (with a minimum $3 due each payment period). Transactions other than qualified hospital expenses (based on merchant category code) will be charged an origination fee of 5% and periodic finance fees. The location of the service provider is not determinative of whether a transaction is a qualified hospital expense. Rather, transactions made within or at a hospital (including but not limited to specialists, doctors, pharmacies, etcetera) are determined to be eligible by the associated MCC and not the location of the service provider in the hospital. New Advances, if eligible, can be repaid in full or over 4 installments with no origination or periodic finance fees. Late fees apply. You can review the fee table at https://lanehealth.com/hsc-lb-fees
