Learn about Health Insurance
Explore the sections below to learn the basics of health insurance, including how it works and what to consider when comparing costs and coverage options.
Health Insurance Basics
Understanding the fundamentals of insurance is the first step to making informed decisions about your coverage.
What Is Insurance?
Insurance is a financial protection tool that helps cover the cost of unexpected events. Instead of paying the full cost of a large loss on your own, you share the risk through an insurance company.
How Does Insurance Work?
Insurance transfers financial risk from an individual to an insurance company in exchange for regular payments. In return, the insurance company agrees to help pay for covered losses outlined in the policy.
Why Does Insurance Matter?
Without insurance, you would be responsible for 100% of unexpected costs. Insurance helps make those costs more manageable and predictable, protecting both your finances and your peace of mind.
Health Insurance Costs
Health insurance costs include a fixed monthly premium and variable out-of-pocket expenses such as deductibles, copayments, and coinsurance. The total cost of a plan depends on several factors, including the type and level of coverage you choose, your age, location, family size, and tobacco use.
These costs are often connected. In general, plans with lower deductibles tend to have higher monthly premiums, while plans with higher deductibles usually have lower premiums. Choosing the right balance depends on how often you expect to use medical services and what fits comfortably within your budget.
Premium
The fixed amount paid to the insurance company for having coverage.
Deductible
The initial amount you must spend on covered healthcare costs before your plan shares the expense.
Copayment
A fixed dollar amount you pay at the time you receive a covered healthcare service even after a deductible is met.
Coinsurance
The portion of a medical bill that you pay after you've met your health insurance plan's deductible.
Out of Pocket Maximum
The absolute most you will pay for covered health insurance services in a plan year.
Calendar Year Maximum
The total dollar amount an insurance plan will pay for covered services within a plan year.
Health Insurance Coverage
Health insurance coverage varies in what is covered and how much is covered based on the plan you chose. There are two different structures to coverage:
Major Medical Coverage
Helps pay for a broad range of healthcare services, with the insurance company covering a percentage of costs after you meet your deductible and co-payment. These plans typically have no limit to what they will pay in annual benefits after meeting your out of pocket maximum. As a result, these plans tend to be more expensive.
Indemnity Plan Coverage
Pays a fixed dollar amount for specific services or events regardless of the total bill. You can typically use these plans with any doctor or hospital removing network restrictions. These plans typically have limits to what they will pay in a single calendar year. As a result, these plans tend to be more affordable.
Understanding how these coverage types work along with how costs are shared helps you choose a plan that fits both your healthcare needs and your financial comfort level!
Key Coverage Terms
Important terms to know when evaluating your health insurance coverage.
Benefit
The healthcare services or supplies that are covered under a health insurance plan. Benefits can include doctor visits, hospital stays, prescription drugs, preventive care, and more.
Claim
A formal request submitted to an insurance company asking them to pay for a covered healthcare service or supply.
Network
A group of doctors, hospitals, pharmacies, and other healthcare providers that have agreed to provide services at negotiated rates for members of a specific health insurance plan.
Carrier
The insurance company that underwrites and administers a health insurance plan. The carrier is responsible for paying claims and setting the terms of coverage.