Glossary for Navigating U.S. Healthcare
Editor’s Note: People who take insulin require consistently affordable and predictable sources of insulin at all times. If you or a loved one struggle to afford or access insulin, click here.
The U.S. healthcare system is exceedingly complex and can be incredibly difficult to navigate, whether you’re living with type 1 diabetes or are caring for someone who does.
This glossary (below) clarifies many elements of navigating healthcare with type 1 diabetes. For more help choosing the best health insurance, consult the Health Insurance Guide. Visit Beyond Type 1’s Type 1 Diabetes + Health Insurance portal for more insurance resources.
U.S. Healthcare Glossary
Affordable Care Act (ACA) – This was the comprehensive healthcare reform law enacted in 2010. Millions of people living with diabetes rely on the ACA for health insurance. The American Diabetes Association (ADA) explains that the ACA “made it illegal for insurers to deny coverage or charge higher premiums to individuals with preexisting conditions, like diabetes.” This paved the way for millions of Americans to gain health insurance coverage “free from discrimination based on health status.”
Biosimilar insulin – Insulin that is highly similar to an existing FDA-approved biologic insulin. In other words, the generic form of insulin. Biosimilars refer to the non-brand-name versions of biologic medications, i.e., medicine created from living materials, like a vaccine.) Biosimilar insulin may replace existing insulin taken by a person with diabetes if it meets additional requirements, including producing the same clinical result as the product on which it is based in any given patient. In some cases, biosimilar insulins may be less expensive than current insulins on the market. Because of new FDA regulation pathways, the biosimilar market is changing rapidly. Ask your doctor what may be available to you.
Children’s Health Insurance Program (CHIP) – CHIP is an insurance program that provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance. In some states, CHIP covers pregnant women. Each state offers CHIP coverage and works closely with its state Medicaid program. You can apply at any time.
COBRA – If you leave a job for any reason, you can extend the employer’s health insurance coverage beyond your employment through federal law, the Consolidated Omnibus Budget Reconciliation Act (COBRA). However, you will pay 100% of the health insurance premiums, including the portion your employer previously covered, plus an administrative fee. Learn more about the steps to obtain COBRA coverage if you are fired or leave your job here.
Coinsurance – The percentage of healthcare service you pay after you’ve met your deductible, separate from a copay. For example, your health insurance plan may require a coinsurance payment on certain specialty healthcare costs, like an MRI. In this case, even if you have already hit your annual deductible, you may still be responsible for a 20% coinsurance payment, i.e., 20% of the total billed cost of the MRI, instead of a straight copayment fee.
Copay/Copayment – Your copay is the fixed amount you pay for a covered healthcare service or product after you’ve met your deductible. For example, you may have a $25-$50 copay to see your endocrinologist or another specialist or a $10-60 copay for your insulin every month. If you have not yet met your deductible, you may be responsible for part or all of the cost of medication (like insulin) or supplies (like insulin pump infusion sets) until you do.
Copay cards – Offered by medication manufacturers, copay cards reduce the out-of-pocket cost you pay at the pharmacy. Copay cards exist for most types of insulin. When using a copay card, your health insurance pays for some of the cost, and the drug manufacturer pays another portion. The drug manufacturer may cover more of the cost if you do not have health insurance or your insurance does not cover your prescription. Unfortunately, copay cards are typically unavailable for those insured through Medicaid or Medicare. To determine what copay cards may be available to you, click here or search online for “your medication name + copay card.” For example, if you were using Humalog, you would search “Humalog + copay card.”
Deductible – In a health insurance plan, the deductible is paid out-of-pocket by the policyholder before insurance coverage kicks in. Plans with higher deductibles typically have lower premiums (your monthly payment for coverage) and vice versa. Most health insurance plans cover preventive services at no cost to the policyholder, bypassing the deductible. For some health insurance plans, costs associated with everything other than preventative services go toward your deductible. Other plans exempt some services from the deductible, usually requiring copayments, such as doctor visits. Some plans count all out-of-pocket costs toward the deductible. In contrast, other plans have a separate deductible just for prescriptions or specialty procedures, like an MRI.
DME (durable medical equipment) – DME describes multi-use medical equipment such as walkers, wheelchairs, oxygen tanks, etc. Most health insurance also classifies insulin pump supplies and some continuous glucose monitors (CGM) supplies as DME. This changes the percentage of the equipment cost covered by your health insurance. Some CGM companies have started negotiating with health insurance to get their supplies covered under pharmacy benefits instead, which increases the amount of cost covered by insurance. DME classifications may be why you face a high cost for non-medication supplies under your insurance.
FDA (Federal Drug Administration) – The FDA, also referred to as the USFDA, is a U.S. federal agency tasked with overseeing many regulations ranging from food safety to tobacco products to pharmaceutical drugs and more. Part of their responsibility is to ensure the safety of medicines and medical devices, including insulin pumps, insulin, health apps that make health recommendations, etc. When we say a device or medication is going through FDA approval, it refers to this process.
FSA (flexible spending account) – A tax-free savings account arranged through your employer where a chosen amount is deducted from your paycheck and placed into your FSA, which can be used for qualified out-of-pocket medical expenses. You can decide how much you put toward your FSA up to the limit determined by your employer. The benefit of an FSA is that it is a designated savings account that is not subject to tax, saving you a bit of money in the long term. However, it is important to be precise with your budget planning. Unused funds are restricted—depending on your employer, you can either only roll over a set amount to the following year or you have 2.5 months into the new year to spend the money. You cannot withdraw money from your FSA for other uses, nor can you spend your FSA money on non-medical items. Please note: childcare FSAs and health savings accounts (HSAs) also have different rules of use.
Formulary (i.e., prescription formulary) – A list of prescription drugs covered by your health insurance or prescription drug plan, also called a drug list. Health insurance companies tend to change their covered prescription drugs yearly based on negotiations with Pharmacy Benefit Managers (PBMs) and drug manufacturers. This is why you may hear that your insulin is no longer “covered on the formulary.” Your doctor may be able to provide a Letter of Medical Necessity to override the formulary listing coverage. You can access your plan’s formulary by calling your insurance provider or logging into their patient portals.
Generic insulin – Generic insulins are called biosimilars. (Refer to “biosimilar insulin” listed above.)
Healthcare exchange – Also known as the Health Insurance Marketplace, this service helps people shop for and enroll in health insurance. The U.S. federal government operates HealthCare.gov for most states, but some run their own marketplaces. If your state has its own marketplace, you will be directed to it when you enter your ZIP code on HealthCare.gov. You can apply for individual or family coverage by providing income and household information. You can also use HealthCare.gov to see if you qualify to apply for Medicaid or CHIP.
HSA (health savings account) – Like FSAs, HSAs can be used to purchase qualifying out-of-pocket medical expenses. HSAs are different than FSAs. An HSA is a tax-free savings account arranged through your employer or a selected healthcare plan from HealthCare.gov. A chosen amount is deducted from your paycheck and placed into your HSA for qualified out-of-pocket medical expenses. HSAs are only available to those enrolled in High Deductible Health Plans (HDHPs). You can choose how much you put toward your HSA up to the federal limit, which is updated yearly. The benefit of an HSA is that it is a designated saving account not subject to tax, saving you a bit of money in the long term. Unlike an FSA, there is no time limit for using your funds. You cannot withdraw money from your HSA for other uses or spend your HSA money on non-medical items.
HDHP (high deductible health plan) – A plan with a higher deductible than a traditional insurance plan, with the minimum limit determined by the IRS. The IRS currently defines a HDHP as any health plan with a deductible of at least $1,400 for an individual or $2,800 for a family. The monthly premium is usually lower, but you pay more health care costs before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes. Some HDHPs have separate prescription drug coverage for those with chronic health needs, helping to minimize the impact of the high deductible at the start of the year.
HMO (health maintenance organization) – A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO (in-network). HMOs often provide integrated care and focus on prevention and wellness. It generally won’t cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage.
Insulin manufacturers – Refers to the companies who manufacture insulin. Currently, three primary insulin manufacturers market and distribute insulin in the U.S., sometimes called “the Big 3”: Eli Lilly, Novo Nordisk, and Sanofi. These three companies create almost 90% of insulin worldwide. Other companies include MannKind, which makes Afrezza inhalable insulin, and Civica, which aims to bring $30 insulin to the market in 2024. Multiple manufacturers market insulin outside the U.S.
Insurance policyholder – The person or group whose name the insurance policy is held under—typically, yourself, your spouse, or a parent.
Letter of medical necessity – If you have been denied insurance coverage of a needed item or medication, your healthcare provider may be able to submit a Letter of Medical Necessity to your health insurance company to dispute the decision. In the letter, they will outline why the item or medication they prescribed is medically necessary. This legal document is based on your healthcare provider’s professional medical judgment.
Medicaid – A federal insurance program that provides free or low-cost health coverage to some low-income people, families and children, pregnant women, the elderly, and people with disabilities. Medicaid benefits and program names vary somewhat between states. Many states have expanded their Medicaid programs to cover all people below certain income levels. Whether you qualify for Medicaid coverage depends partly on whether your state has expanded its program. You can apply anytime on Healthcare.gov. If you are eligible, your coverage can begin immediately, any time of year.
Medicare – A federal health insurance program for people 65 and older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).
Medicare Part C (Medicare Advantage) – A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and aren’t paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage.
Medicare Part D – A program that helps pay for prescription drugs for people with Medicare who join a plan that includes Medicare prescription drug coverage. There are two ways to get Medicare prescription drug coverage: through a Medicare Prescription Drug Plan or a Medicare Advantage Plan that includes drug coverage. These plans are offered by insurance companies and other private companies approved by Medicare.
Medicare prescription drug donut hole – Most plans with Medicare prescription drug coverage (Part D) have a coverage gap (called a “donut hole”). This means that after you and your drug plan have spent a certain amount of money on covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit. Once you have spent up to the annual limit, your coverage gap ends, and your drug plan helps pay for covered drugs again.
Non-medical switching – Refers to the process by which health insurance plans change what medications are covered under their formulary, leading to a switch of what medication you are covered for under your health insurance plan even though your healthcare provider prescribed a different drug. Suppose your health insurance plan has tried to switch you to a different medication (for example, you use Humalog insulin, but your health insurance switched you to Novolog). In that case, you may be able to get your insurance to cover Humalog by providing a Letter of Medical Necessity from your healthcare provider.
Open enrollment – The yearly period, typically in October and November, when you can enroll in a health insurance plan through your employer or HealthCare.gov. You’re also eligible to enroll anytime you have a qualifying life event, like getting married, having a baby, or losing other health coverage. You can apply and enroll in Medicaid or the Children’s Health Insurance Program (CHIP) at any time of the year.
Out-of-pocket (i.e., out-of-pocket insurance costs) – Your expenses for medical care that aren’t reimbursed by insurance. Out-of-pocket costs include deductibles, coinsurance, copayments for covered services, and all costs for services that aren’t covered.
Patient assistance program – If you are having issues affording the cost of your medication, you may qualify for patient assistance programs through drug manufacturers. Click here to determine whether you may be eligible for a patient assistance program.
Prescription plan – Also known as your pharmacy benefit, your prescription plan refers to what your health insurance covers through the pharmacy. Some health insurance plans operate their own prescription plans, while others contract a separate company to manage your pharmacy benefit coverage. Drugs and medications, as expected, are covered through your prescription plan. However, some continuous glucose monitor (CGM) supplies are as well.
PBM (pharmacy benefit manager) – PBMs are third-party intermediaries who negotiate prices between pharmaceutical and insurance companies. PBMs’ stated goal is to reduce costs from pharmaceuticals for the insurance companies while improving health outcomes for the members of the insurance plans. They participate in the rebate system and take a share of the profits from prescriptions sold to members of the insurance plans. This group is often invisible to consumers and can drive up the costs of prescriptions without consumer awareness. Learn more here.
PPO (preferred provider organization) – A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You can use doctors, hospitals, and providers outside the network for additional costs. You pay less if you use providers in-network.
Preauthorization – A decision by your health insurer or plan that a healthcare service, treatment plan, prescription drug, or durable medical equipment is medically necessary. It is sometimes called prior authorization, prior approval, or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.
Pre-existing condition – A health condition, like asthma, diabetes, or cancer, you had before the date that new health coverage starts. Since the Affordable Care Act in 2010, insurance companies can’t refuse to cover treatment for your pre-existing condition or charge you more.
Premium (i.e., insurance premium) – The premium is the monthly cost paid to the health insurance provider and does not count towards your deductible. Plans with higher deductibles typically have lower premiums, and vice versa.
Price cap laws – A recent string of proposed laws across the U.S. Price cap laws refer to the concept of creating a price cap—a maximum amount a person can spend out of pocket—for a monthly supply of insulin. The intention is to create reliable, consistent pricing for insulin, usually aiming at around $100 a month maximum. However, price cap laws are restricted because they’re being proposed from state to state and usually only apply to people with health insurance. Some states are proposing price cap laws regardless of insurance coverage, capping out-of-pocket expenses for anyone needing insulin. Learn more here.
Rebate – A price concession made by a drug manufacturer to a health insurance plan or a PBM (pharmacy benefit manager) to be listed on the health insurance plan formulary. Those who favor the rebate system argue that it lowers costs for those seeking medication through their health insurance plan. However, the rebate system seems to have significantly driven up out-of-pocket costs for patients while restricting access to the medicines prescribed by their doctors. Part of the insulin pricing debate in the U.S. is heavily focused on how and why the rebate system exists and its impact on cost. Learn more here.