Whether you're an employer looking to provide coverage for your employees or an individual trying to make sense of your benefits, this world can be a very confusing place. Insurance terminology is frequently baffling, yet it's crucial to get a handle on it for both bosses and employees alike. So to help you out, we provide a comprehensive glossary below, explaining all this different jargon in words that the ordinary person can understand. Before diving into that though, let's first focus on the key thing everyone needs to understand: The difference between employer-sponsored and employee-voluntary insurance.Employer-sponsored insurance is provided by an employer to its employees as part of their benefits package. The employer typically funds a portion (or all) of the cost, making it more affordable for employees. Employer-sponsored plans often offer comprehensive coverage and may include health, dental, disability, vision, and life insurance.Employee-voluntary insurance is also offered through the workplace, but employees pay the full cost themselves — either through a payroll deduction or directly to the insurance company. Because of the economies of scale, these plans are theoretically cheaper than just buying insurance privately. Benefits offerings may include critical illness insurance, accident, cancer, or hospital indemnity insurance.Now, let's explore the other essential terms related to group insurance.Insurance glossary of terms Actuarial valueThe actuarial value of a health insurance plan is the percentage of total average costs that you are covered for. For example, if your plan has an actuarial value of 70%, on average you'll be responsible for 30% of the costs of all covered benefits. Affordable Care Act (ACA)The Patient Protection and Affordable Care Act (or Affordable Care Act or ACA) is a comprehensive healthcare reform law enacted in 2010, which aimed to make affordable health insurance available to more people. The ACA requires most US citizens to have health insurance and provides subsidies to make coverage more affordable. It also sets standards for essential health benefits and prevents insurers from denying coverage or charging higher premiums based on pre-existing conditions.Annual deductibleThe annual deductible is the amount of money you must pay out of pocket for covered medical expenses each year before your insurance starts covering these costs.Annual Maximum Out-of-Pocket (MOOP)The annual MOOP is the maximum amount policyholders must pay out of pocket for covered medical expenses in a year. Once this limit is reached, the insurance company should cover 100% of covered expenses for the rest of the year.BenefitA benefit is a general term for any service or product covered by an insurance policy. Some typical health insurance benefits include doctor's visits, hospital stays, surgical procedures and prescription drugs.Certificate of InsuranceA certificate of insurance (COI) is a document issued by an insurance company or broker that verifies the existence of an insurance policy and summarizes its key aspects and conditions. To conduct business, small business owners and contractors typically need a COI that grants protection against liability for workplace accidents or injuries.ClaimA claim is a formal request for your insurance company to pay for something your insurance covers, such as death benefits on a life insurance policy, or medical costs on a health insurance policy.CoinsuranceCoinsurance is the percentage of covered medical expenses that policyholders must pay after meeting their deductible. For example, if you have a 70% coinsurance policy and receive a medical bill, you will be responsible for 30% of it and your insurer will pay 70%.CopayA copay is a fixed amount policyholders must pay for specific covered medical services, such as doctor's visits or prescription medications. The aim of such policies is to deter people from seeking unnecessary medical care.DependentA dependent is a person covered under an employee's health insurance plan, which can include spouses, domestic partners, children and parents. Dependents are also covered under other benefits such as dental, vision and supplemental health. Employer contributionThe employer contribution is the amount an employer contributes toward the cost of employer insurance plans.Employee premiumThe employee premium is the amount employees pay toward the cost of their employer insurance plans.Essential Health Benefits (EHBs)EHBs are a set of 10 benefits required to be covered by all insurance plans, as defined by the Affordable Care Act (see above). They are ambulatory patient services (outpatient care), emergency services, hospitalization (inpatient care), maternity and newborn care, mental health and substance use disorder services (including behavioral health treatment), prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, as well as pediatric services (including oral and vision care).ExclusionsExclusions are services or payments that are not covered by an insurance policy.FormularyA formulary (or a drug list), is a list of prescription drugs covered by a health insurance plan.Group insuranceA group policy covers a specific group of people, such as employees of a company or members of an association.Guaranteed issueThis type of insurance policy does not require you to answer health questions, undergo a medical exam, or allow an insurance company to review your medical and prescription records. This makes it accessible to people with pre-existing conditions.Health Insurance MarketplaceA Health Insurance Marketplace is a service run by the US federal government that helps people, families, and small businesses to compare ACA-compliant health insurance plans for coverage and affordability. It's also known as a health insurance exchange. In-network providersIn-network providers (or network providers) are healthcare professionals (including dental and vision) and facilities that have agreements with an insurance company to offer services at reduced rates. Policyholders usually pay lower copays and coinsurance when utilizing in-network providers. A provider that isn't contracted with the plan is called an “out-of-network provider.”Lifetime maximumThe lifetime maximum is the maximum amount an insurance company will pay for covered medical expenses over the life of a policy.Medical Loss Ratio (MLR)MLR measures how much an insurance company spends on medical claims versus the premiums it collects. The remainder is the share spent on administration costs and fees, as well as profits earned. A higher MLR indicates more spending on medical claims, which can be beneficial for policyholders.Out-of-pocket costsThese costs are what policyholders must pay for covered medical expenses each year before insurance coverage kicks in. They encompass deductibles, copays, and coinsurance.Out-of-networkOut-of-network providers are healthcare professionals and facilities without agreements with an insurance company, resulting in higher copays and coinsurance for policyholders who seek their services.PremiumA premium is the amount policyholders pay (either directly or indirectly through their employer) to the insurance company for coverage.Pre-existing conditionA pre-existing condition is a medical condition that a policyholder has before enrolling in a health insurance plan. Under the ACA, insurers cannot deny coverage or charge higher premiums based on pre-existing conditions.ProviderA provider is a healthcare professional or facility that offers vision, medical and dental services.Wellness benefitsWellness benefits may cover preventive care services, including annual physical exams and immunizations. They also help promote healthy living and habits amongst employees — ultimately creating a healthier and more productive workforce. About YuLifeYuLife is an employee benefits and wellbeing app that’s reimagining the insurance industry by protecting lives, rewarding living and inspiring life. We’re on a mission to transform traditional insurance into a life-enhancing experience each employee will value and use daily. How does it work?Our award-winning app uses behavioral science and game mechanics to reward your people for living well while offering protection in case of crisis. And with our top-rated employee assistance program, your team gets access to mental, financial and social support, nutritionists, life coaches and more to help them live their best lives.Because we believe that your employees should benefit from their insurance from day one – and that wellbeing should be accessible every day, for everyone.Request a demo for your team today.