What is Health Insurance?

Health insurance is a type of insurance coverage that helps pay for medical and surgical expenses.¹ It provides financial protection against unexpected healthcare costs.²

How Does Health Insurance Work?

When you have health insurance, you pay a monthly premium to an insurance company.³ In return, the insurance company agrees⁴ to cover a portion of your medical expenses.⁵

Key Terms to Know:

• Premium: The monthly or annual fee you pay to the insurance company.⁶
• Deductible: The amount you pay out-of-pocket before your insurance coverage begins.⁷
• Co-pay: A fixed amount you pay for a specific medical service, like a doctor’s visit or prescription.⁸
• Coinsurance: A percentage of the cost of a medical service that you pay, after meeting your deductible.⁹
• Out-of-Pocket Maximum: The most you’ll pay for covered services in a year.¹⁰

Types of Health Insurance Plans:

1. Health Maintenance Organization (HMO):
   • Typically lower premiums but more restrictive network of providers.¹¹
   • Requires a primary care physician (PCP) referral for specialist care.¹²
2. Preferred Provider Organization (PPO):
   • More flexibility in choosing healthcare providers.¹³
   • Higher premiums than HMOs, but often lower out-of-pocket costs.
3. Point-of-Service (POS):
   • Combines elements of HMOs and PPOs.¹⁴
   • Requires a PCP referral for specialist care, but you can choose out-of-network providers at a higher cost.
4. High-Deductible Health Plan (HDHP):
   • Lower monthly premiums but higher deductibles.¹⁵
   • Often paired with a Health Savings Account (HSA) to save for future medical expenses.¹⁶

Factors Affecting Health Insurance Costs:

• Age: Older individuals generally pay higher premiums.¹⁷
• Location: Geographic location can influence costs.¹⁸
• Family Size: Larger families may have higher premiums.
• Tobacco Use: Smokers typically pay higher premiums.¹⁹
• Choice of Plan: Different plans have varying costs and coverage.²⁰

Tips for Choosing a Health Insurance Plan:

• Assess Your Needs: Consider your health conditions, family size, and budget.
• Compare Plans: Use online tools to compare costs, coverage, and provider networks.
• Understand Your Coverage: Read the plan’s details carefully to understand your benefits and limitations.
• Ask Questions: Don’t hesitate to ask your insurance agent or broker any questions you may have.

By understanding health insurance and making informed choices, you can protect yourself and your family from unexpected medical expenses.