Ever left the doctor’s office feeling more confused by the bill than the diagnosis? You’re not alone. Medical bills are packed with unfamiliar words like copays, hidden fees, and codes that feel more like riddles than information. For many people, especially in underserved communities, this confusion can lead to delayed care, debt, or avoiding the doctor altogether.
But it doesn’t have to be this way. Understanding basic billing terms can transform the way you interact with the healthcare system. It’s not just about saving money, it’s about protecting your health and your peace of mind.
Why Health Literacy Is a Big Deal
Health literacy is more than knowing your medications. It’s about understanding how the healthcare system works, knowing your rights, and being able to make informed decisions.1 According to the CDC, nearly 9 out of 10 adults struggle to understand and use everyday health information.2
Low health literacy is linked to:
- Higher rates of emergency room visits.3
- Lower use of preventive services.3
- Poorer chronic conditions management.3
- Increased risk of medical errors.3
One key area where health literacy shows up? Medical billing.
Breaking Down the Billing Terms
Let’s demystify some of the most common (and confusing) medical billing terms:
- Copay (Copayment)
This is a fixed fee you pay for a covered service, usually at the time of care. For example, you might have a $25 copay for a primary care visit or $10 for a generic prescription. Copays do not always count toward your deductible.4 - Deductible
This is the amount you pay out-of-pocket before your insurance starts paying. If your deductible is $1,500, you’ll need to pay that amount for services (excluding copays) before insurance kicks in.4 - Coinsurance
After meeting your deductible, you may still be responsible for a percentage of the costs. For instance, if your coinsurance is 20%, and a procedure costs $1,000, you’ll owe $200 while insurance pays the rest.4 - Out-of-Pocket Maximum
This is the most you’ll pay in a year. Once you reach it, through copays, coinsurance, and deductibles, your insurance pays 100% of covered services for the rest of the year.4 - Premium
Your monthly payment just to have insurance. This is paid regardless of whether you use the plan.4 - Explanation of Benefits (EOB)
Not a bill! This document from your insurance shows what was billed, what was covered, and what you may owe. It’s important to review it to catch any errors or unexpected charges.4 - In-Network vs. Out-of-Network
In-network providers have contracts with your insurer and cost you less. Out-of-network providers may lead to much higher bills or no coverage at all.4 - Prior Authorization
Some services, like MRIs or specialty medications, require your insurance to approve them before you receive care.4
A Real-World Example: What Happens at a Check-Up?
You visit your in-network doctor and pay a $25 copay. The doctor runs blood work and refers you to a specialist.
The lab bills your insurance, your deductible hasn’t been met, so you pay the full cost.
You meet your deductible by mid-year. At your next visit, you pay 20% coinsurance on a $400 bill ($80), and your insurance covers the rest.
You hit your out-of-pocket max in October, any covered services after that are free for the rest of the year.
Avoiding Surprise Bills: Your Rights Matter
The No Surprises Act protects you from unexpected charges when receiving emergency care or seeing out-of-network providers at in-network facilities.5 But it’s still important to ask questions like:
- “Is this provider in-network?”
- “Will this service be covered?”
- “Can I see an itemized bill?”
- “Do I need prior authorization?”
Tools to Improve Your Understanding
Building your health literacy doesn’t have to feel overwhelming. There are reliable, free tools that can help you better understand your coverage, compare costs, and advocate for yourself with confidence:
Healthcare.gov
This government-run site is packed with plain-language resources that explain everything from insurance terms to how to choose the right plan. Their glossary is especially helpful when you’re unsure about words like “deductible,” “premium,” or “coinsurance.” If you’re shopping for coverage or just trying to decode your current benefits, this is a great place to start.6
MedlinePlus
Created by the National Institutes of Health (NIH), MedlinePlus offers high-quality, easy-to-understand health information on thousands of topics. Their health literacy section breaks down how to read medical documents, interpret lab results, and ask the right questions at appointments. It’s especially useful for learning how to spot credible health information online.7
ClearHealthCosts
Medical services don’t always come with price tags. This crowd-sourced tool lets you search and compare costs for healthcare services like MRIs, lab tests, or specialist visits in your area. It’s a powerful way to avoid being overcharged and to plan ahead, especially if you’re uninsured or have a high-deductible plan.8
Your Insurance Portal or App
Most insurance companies have online portals or mobile apps where you can track your claims, check what’s covered, view your Explanation of Benefits (EOB), and estimate costs for upcoming care. Taking a few minutes to explore your plan’s digital tools can help you stay informed and avoid surprises.
Knowledge = Power + Protection
Understanding your copay isn’t just about saving a few bucks, it’s about making empowered, informed choices. In communities where health outcomes already suffer due to systemic barriers, building health literacy is one of the most powerful tools we have.
So the next time you see a term you don’t understand on a bill or insurance document—ask. Look it up. Talk about it. Because health literacy isn’t just personal, it’s communal.
References
- NIH. (2025, February 25). Health Literacy. Retrieved from National Institutes of Health: https://www.nih.gov/institutes-nih/nih-office-director/office-communications-public-liaison/clear-communication/health-literacy
- CDC. (2024, October 16). Talking Points About Health Literacy. Retrieved from Centers for Disease Control and Prevention: https://www.cdc.gov/health-literacy/php/about/tell-others.html
- Center for Health Care Strategies. (2024, March ). Health Literacy Fact Sheets: What is Health Literacy. Retrieved from Center for Health Care Strategies: https://www.chcs.org/media/Health-Literacy-Fact-Sheets_2024.pdf
- CMS. (2024, November 5). Health insurance terms you should know. Retrieved from Centers for Medicare & Medicaid Services: https://www.cms.gov/medical-bill-rights/help/guides/health-insurance-terms
- DOL. (2024, March). Avoid Surprise Healthcare Expenses: How the No Surprises Act Can Protect You. Retrieved from U.S. Department of Labor: https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/publications/avoid-surprise-healthcare-expenses
- HealthCare.Gov. (2025). Welcome to the Health Insurance Marketplace. Retrieved from HealthCare.Gov: https://www.healthcare.gov/
- MedlinePlus. (2025). Welcome to MedlinePlus. Retrieved from MedlinePlus: https://medlineplus.gov/
- ClearHealthCosts. (2025). About Us. Retrieved from ClearHealthCosts: https://clearhealthcosts.com/about/
