There are many terms in the world of health insurance that can be hard for patients to understand. If you’re confused, you’re not alone. This guide breaks down some of the most common terms in healthcare billing.

Allowed Amount

The maximum amount on which payment is based for covered health care services.

If your provider charges more than the allowed amount, you may have to pay the difference. (See Balance Billing.)

Also known as: eligible expense, payment allowance, negotiated rate, allowable charge

Amount Claimed

See “Charged Amount”

Balance Bill

When a provider bills you for the difference between the provider’s charge and the allowed amount.

For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.

Charged Amount

The amount of money you are asked to pay a doctor or other health care provider for a benefit or service you received.

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.

You generally pay coinsurance plus any deductibles you owe. For example, if the health insurance or plan‘s allowed amount for an office visit is $100 and you’ve met your deductible, your coinsurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.

Co-pay

A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service.

The amount can vary by the type of covered health care service.

Claim

A request for a benefit (including reimbursement of a health care expense) made by you or your health care provider to your health insurer or plan for items or services you think are covered.

Deductible

The amount you could owe during a coverage period (usually one year) for health care services your health insurance or plan covers before your health insurance or plan begins to pay.

For example, if your deductible is $1000, your plan won’t pay anything until you’ve met your $1000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services.

EOB or Explanation of Benefits

A list that you get after you’ve received a medical service, drug or item.

This list tells you the full price of the service, drug or item that you received. It also tells you how much you may need to pay for it.

Out-of-Network

Relating to an out-of-network provider or health care services provided outside of your plan’s network.

Also known as: out-of-area, out-of-plan

Out-of-Pocket Maximum

The most you could pay during a coverage period (usually one year) for your share of the costs of covered services.

After you meet this limit, the plan will usually pay 100% of the allowed amount. This limit helps you plan for health care costs.

This limit never includes your premium, balance-billed charges or health care your health insurance or plan doesn’t cover.

Some health insurance or plans don’t count all of your copayments, deductibles, coinsurance payments, out-of-network payments or other expenses toward this limit.

Also known as: out-of-pocket maximum, out-of-pocket threshold.

Patient Responsibility

The amount of money the patient must pay for health care services.

Payer

The organization that pays for the costs of health care services. A payer may be a private insurance company, the government, or an employer’s self-funded plan.

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.

Provider

A physician, including an M.D. (Medical Doctor) or D.O. (Doctor of Osteopathic Medicine), other health care professional, hospital, or other health care facility licensed, certified or accredited as required by state law.

Providers can be medical, holistic health and behavioral professionals and other appropriately-trained individuals.