Common terms to help you better understand your benefits

Allowed charges

The amount our network providers have agreed to accept as full payment for covered healthcare services and supplies.

Allowed amount

The maximum amount Premera pays for a covered service.


A request for a reversal of a claims decision.

Average wholesale price

Commonly referred to as AWP. The standardized cost of a drug charged to a pharmacy provider by a large group of pharmaceutical wholesale suppliers.

Balance billing

A healthcare provider out of your plan network can set a higher cost for a service than professionals who are in your plan's network. Charging this extra amount is called "balance billing."

Benefit booklet

Brochure provided to members that gives a complete explanation of benefits and related information.

Brand-name prescription drug

A patented prescription drug that is produced by a single manufacturer.

Calendar-year deductible

Your deductible is the amount you'll pay in a single year for covered services before your health plan begins to pay for a percentage of your care. Calendar-year deductibles begin on January 1 and end on December 31.


A request from a provider to a healthcare company for payment of amount due for services rendered.


Your share of the costs after you pay for your deductible. (For example, if your plan pays 85 percent, you must pay the remaining 15 percent.)

Coordination of benefits (COB)

If you have other health plan coverage, Premera works with the other plan so that both plans may share a part of the costs.


A set fee you pay for services, prescriptions, or durable medical equipment. For prescriptions, the set fee may vary depending on which drug benefit level the drug is in.

Cost sharing

The part of healthcare costs that a member pays, such as deductibles, coinsurance, and copay. It does not include monthly health plan bills, amounts balance billed by healthcare providers who are out of your plan network, or the cost of services not included in your plan. Also see Copay, Coinsurance, and Deductible.


The type of benefits, services, supplies, and accommodations provided through a health plan contract. Covered services are still subject to cost shares.

Covered services

Medically necessary medical and hospital services, supplies, and accommodations for which a member is eligible under the terms of the applicable subscriber agreement.


The set amount you spend on medical services, supplies, and prescriptions each year before your benefit plan begins paying part of the cost for services.


An individual who relies on a member for support or obtains health coverage through a spouse, parent, or legal guardian.

Diagnostic services

When your doctor is trying to diagnose you with a medical condition, they are providing you with diagnostic services- such as blood, urine, and other screening tests.

Direct-to-consumer advertising

Advertising of drugs or medical services directly to a consumer, such as prescription drug ads on TV or in a magazine.

Eligibility date

The defined date a member becomes eligible for benefits under an existing contract.

Eligible expenses

Type and amount of expenses that qualify for benefits on your health plan.


Specific circumstances or conditions listed in the health plan contract for which the plan will not provide benefit payments.

External reviewer

A documented order from a provider for a member to see a specialist or receive specific medical service(s).

Exclusion period

Enrollment timeframe when certain conditions are limited or excluded from your coverage. Often referred to as a waiting period.

Explanation of benefits (EOB)

The statement sent to members by their health plan that lists services provided, amounts billed, and payments.

Family deductible

A deductible satisfied by combined expenses of all covered family members. With an aggregate deductible, there is one deductible for the subscriber and their family that must be met before benefits are paid for anyone in the family. With an embedded deductible, the deductible is met when a single family member’s deductible has been met or once the family deductible is met—whichever comes first.

Family stop loss

The maximum out-of-pocket payment made by all covered family members during the benefit period. This helps protect a family from catastrophic healthcare expenses.

First-dollar coverage

Covered benefits that are not subject to a deductible.

Flexible spending accounts (FSA)

An FSA is a tax-advantaged, employer-owned healthcare spending account that members can use to pay for eligible expenses. FSA funds must be used in the plan year; any funds not used go to the employer. Premera offers two types of flexible spending accounts: a health FSA and a dependent care FSA.

Food and Drug Administration (FDA)

U.S. federal agency with wide-ranging responsibilities, including ensuring that human drugs, biological products, and medical devices are safe and effective. The FDA also ensures that these products are represented to the public accurately, honestly, and informatively.


A list of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given managed population. Also called a preferred drug list, formularies are used by providers in prescribing medications. A formulary may exclude certain drugs from coverage. It may indicate drug levels that can help you determine your cost.

Generic drug

A drug that is chemically equivalent to a brand-name drug for which the patent has expired. A generic is typically less expensive and sold under a common or generic name for that drug (for example, Valium is the brand name for a tranquilizer, which is also available under its generic name of diazepam). Some plans now include both preferred and non-preferred generics. If your plan includes both preferred and non-preferred generics, preferred generics are the least expensive option.


The process where current members are allowed to keep their existing benefits, while new policies apply to new members.

Healthcare provider

Medical professionals, such as doctors, nurses, and massage therapists, who treat patients.

Health Insurance Portability & Accountability Act (HIPAA)

Commonly referred to as HIPAA. A federal law that outlines the requirements that employer-sponsored group insurance plans, insurance companies, and managed-care organizations must satisfy to provide health insurance coverage in the individual and group healthcare markets.

Health maintenance organization (HMO)

Commonly called an HMO plan, it's a type of health plan that contracts with local primary care providers to coordinate your care to help keep your costs down. Primary care providers may also treat health-related issues or common illnesses.

Health reimbursement account (HRA)

An HRA is an employer-sponsored, healthcare funding arrangement that members can use to help pay for coinsurance, deductibles, and other qualified medical expenses. Because Premera Blue Cross administers the HRA, our integrated claims processing ensures that funds are automatically applied to qualified medical expenses and paid at the time of the claim, so there's no need for employees to fill out forms or wait for reimbursement checks. We pay all HRA-eligible expenses on behalf of the employer at the time claims are processed. Employers then reimburse us via convenient electronic funds transfer.

Health savings account (HSA)

An HSA is an employee-owned account that works in combination with a qualified, high-deductible health plan that allows employees to save for future medical costs through tax-advantaged contributions. Each year, total contributions to an HSA (by the employer, the employee, or anyone else on behalf of the employee) may not exceed the amount of the plan deductible or the annual limit set by the IRS, whichever is less. In addition, if offered by the fund administrator, funds in an HSA may be invested by members in money market accounts, mutual funds, and other financial options.

Home health agency

A facility or program licensed, certified, or otherwise authorized according to state and federal laws to provide healthcare services in the home.


A facility or program engaged in providing palliative and supportive care of the terminally ill. They are licensed, certified, or otherwise authorized by applicable laws where services are received.

ID number

The number appearing on the member's ID card identifying the plan and the member. This number must be used on all claims and inquiries.

In network

Specific doctors, hospitals, or labs Premera contracts with to provide healthcare services. Members pay less when using in-network healthcare service.

Mail-order drugs

Maintenance medication that can be ordered and delivered through the mail by plan members at a reduced cost.

Medically necessary

The evaluation of healthcare services to determine if they are: medically appropriate and necessary to meet basic health needs; consistent with the diagnosis or condition and rendered in a cost-effective manner; and consistent with medical practice guidelines regarding type, frequency, and duration of treatment.


Participants in a health plan (subscriber/enrollee or eligible dependent) who make up the plan's enrollment and are eligible to receive covered benefits.

Monthly health plan bill

The dollar amount you pay for your health insurance every month.

Network pharmacy

A pharmacy that an insurance company has contracted with to provide pharmacy services for its members.


Medications that are not on the preferred drug list, often because they are not as clinically effective or as reasonably priced as other medications.

Out-of-network provider

Those physicians or other providers who have not signed a contract with the plan and/or they're out of the plan's service area. Members receive the highest level of benefits when they receive care “in-network.”

Out-of-pocket limit

The total payments toward eligible expenses that a member funds for themself and/or dependents (includes deductibles, copays, and coinsurance). Once this limit is reached, benefits will usually increase to 100 percent for health services received during the rest of that calendar year. Some out-of-pocket costs (for example, cosmetic surgery) are not eligible for out-of-pocket limits.

Out-of-pocket maximum

The maximum amount you pay for deductibles and coinsurance in a designated time period. Copays may also be included in the out-of-pocket maximum in many plans. Under such plans, copays would no longer be collected once the out-of-pocket maximum is satisfied.

Over-the-counter drugs

Commonly called OTC drugs. This is a retail drug product that does not require a prescription under federal or state law.

Pharmacy benefit manager

A type of managed care specialty service organization that seeks to contain the costs of prescription drugs or pharmaceuticals while promoting more efficient and safer drug use. Also known as a prescription benefit management program.

Plan covers at 100%

A benefit that covers a healthcare product or service in full.


A healthcare option that allows members to choose at the time medical services are needed whether they will go to a provider within the plan's network or seek medical care outside the network.


A requirement to obtain prior authorization, also known as preapproval, from your health plan carrier before receiving healthcare services to prove that the services are medically necessary.

Preapproval program

Some drugs are part of the Premera pharmacy prior authorization (preapproval) program. If you take medications for certain conditions, such as migraines, diabetes, high blood pressure, or asthma, you may need to meet certain requirements before your prescription is covered.

Preferred drug list

A list (also called a formulary) of approved prescription medications dispensed to members through participating pharmacies. Your plan may have what's called an open or voluntary formulary that allows coverage for both formulary (preferred) and nonformulary (nonpreferred) medications. Or, your plan may have what's called a closed, select, or mandatory formulary that limits coverage to formulary drugs only.

Preferred provider organization (PPO)

A type of plan that contracts with healthcare providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use contracted providers that belong to your plan's network.

Preventive services

Most health plans cover preventive services for your general health—like routine shots and screening tests—at no out-of-pocket cost to you when visiting in-network providers.

Primary care provider (PCP)

A licensed or certified healthcare professional that provides, coordinates, or helps patients with a range of preventive, wellness, and treatment options for health-related issues or common illnesses.


The process of sending or directing patients for treatment, aid, information, or a decision that’s related to their healthcare.

Single-source drug

A drug that is patented and produced by a single manufacturer.


A healthcare provider focused on a defined group of patients, diseases, skills, or philosophy. Examples include providers that deal exclusively with children (pediatrician), cancer (oncologist), and laboratory medicine (pathologist).

Urgent care

Treatment for medical conditions needing immediate attention but which aren’t severe or life threatening.

Virtual care

A visit with a healthcare provider by phone, text, or online video (such as Zoom).