Medical billing glossary: the terms that matter, in plain English

Medical bills and insurance statements use a vocabulary of their own. These are the terms that matter most when you are checking what you owe, in plain English.

• Accumulator: a running total your plan keeps, such as how much you have paid toward your deductible or out-of-pocket maximum. There is usually one for each person and one for the family.
• Adjudication: the insurer's processing of a claim, where it applies your plan and decides who pays what. The EOB is the record of it.
• Aggregate family deductible: a family deductible where only the family total counts. One person can pay well past the individual amount before the plan starts sharing costs.
• Allowed amount: the price your insurer's contract permits for a service. Your coinsurance is calculated from this, not from the billed amount.
• Balance billing: when a provider bills you the difference between its full charge and the allowed amount. In network providers generally can't do this, and federal law limits it in many emergency and surprise situations.
• Billed amount: the provider's full list price for a service. For in network care, it is rarely what anyone actually pays.
• Claim: the provider's request to your insurer for payment.
• Coinsurance: your share of the allowed amount as a percentage, such as 20 percent, usually after the deductible is met.
• Contractual adjustment: the discount an in network provider agreed to give, shown on the EOB. Also called the network discount or write-off. It should never end up on your bill.
• Coordination of benefits: the rules that decide which plan pays first when you are covered by more than one.
• Copay: a flat amount you pay for a service. Always check what it is charged per: per visit, per day or per stay.
• Cost sharing: your part of the cost, meaning the deductible, copays and coinsurance together.
• Deductible: the amount you pay for covered services before your plan starts sharing costs on services subject to it.
• Deductible carryover: a feature on some plans that credits spending late in one year toward the next year's deductible.
• Denial: a decision by your insurer not to pay. Every denial should come with a reason, and every reason has an appeal path.
• Embedded family deductible: a family deductible where each person also has their own individual limit. Once one person reaches it, their deductible is met even if the family total isn't.
• EOB (Explanation of Benefits): the insurer's statement of how a claim was processed. It is not a bill, but for in network care it generally shows the most you can be asked to pay.
• Formulary: your plan's list of covered drugs, grouped into tiers with different costs.
• In network: a provider with a contract with your insurer, which means it has agreed to the allowed amounts.
• Itemized bill: a bill that lists every service with its date, description, code and charge. Ask for one whenever you only get a total.
• Medical necessity denial: a denial saying the service wasn't needed. It is often a documentation problem rather than a limit on your benefits.
• Network tier: a group of in network providers with its own cost sharing. On tiered plans, the same service can cost different amounts depending on the tier.
• Not covered: an amount the plan won't pay at all. It usually doesn't count toward your deductible or out-of-pocket maximum.
• Out-of-pocket maximum: the most you pay for covered in network care in a plan year. After you reach it, the plan should pay the full allowed amount for the rest of that year.
• Place of service: where care was provided, such as a doctor's office, a hospital outpatient department or an independent lab. It can change which price in your plan applies.
• Plan year: a 12 month period that starts on your plan's renewal date, which isn't always January 1.
• Preventive care: screenings, immunizations and wellness visits that many plans cover at no charge. Whether a visit counts depends on how it was coded.
• Prior authorization: approval from your insurer before certain services. For in network care, the provider usually requests it.
• Procedure code: the standard code for a service, such as a CPT code. It is the most reliable way to confirm a bill and a claim describe the same thing.
• Remark code: a short code and note on an EOB that explains a decision. Read these, because they often say who is responsible.
• Reprocessing: when an insurer processes a claim again and issues a revised EOB. Your share can go down or up.
• Reset period: when your deductible and out-of-pocket totals go back to zero. It may not match the dates your coverage runs.
• Summary of Benefits and Coverage (SBC): a standard summary of your plan, including what you pay for common services. It is your main reference for checking bills.
• Upcoding: billing a service as more complex than the care actually provided.

Keep this page handy the next time an EOB arrives. Most of the confusion on these documents comes from a handful of words.

General information, not legal, medical or financial advice. Every plan is different, so check the details against your own plan documents.