Health Insurance Basics
A health plan is an agreement that describes covered services, member costs, provider-network rules, and exclusions. You generally pay a premium to maintain coverage. When you use covered care, the plan’s deductible, copayments, coinsurance, network terms, and out-of-pocket maximum determine how costs are shared.
The Main Costs in a Health Plan
| Term | What it generally means | What to check |
|---|---|---|
| Premium | The recurring amount paid to keep coverage active. | After-subsidy price, billing date, and household total. |
| Deductible | The amount paid for certain covered services before the plan begins paying under its terms. | Separate medical and drug deductibles and services covered before the deductible. |
| Copayment | A fixed charge for a covered service or prescription. | Whether it applies before or after the deductible. |
| Coinsurance | A percentage of the allowed cost paid by the member. | Which services use coinsurance and whether they are in network. |
| Out-of-pocket maximum | A yearly cap on member spending for covered in-network services under the plan’s rules. | What counts toward the limit and any separate family limits. |
Provider Networks and Covered Drugs
Plans contract with doctors, hospitals, pharmacies, and other providers. The network can affect access and cost. Before enrolling, search the directory for each preferred provider, then confirm participation directly. Review the plan’s formulary for prescriptions, including tier, prior-authorization, quantity-limit, and step-therapy rules.
Common network types
- HMO: Usually emphasizes network care and may require primary-care coordination or referrals.
- PPO: Generally provides more flexibility to use out-of-network providers at a higher cost.
- EPO: Generally covers non-emergency services only in network but may not require referrals.
- POS: Uses a network and generally requires referrals for specialist care.
Enrollment and Eligibility
Coverage sources include employer plans, the individual Marketplace, Medicaid, Medicare, and other programs. Marketplace enrollment generally occurs during Open Enrollment or a Special Enrollment Period triggered by an eligible life event. Eligibility, documentation, deadlines, and effective dates should be verified using the current official source for the applicant’s location and circumstances.
How to Compare Health Insurance Plans
- List preferred doctors, facilities, and prescriptions.
- Estimate likely low, medium, or high use of care.
- Compare premium plus expected cost sharing.
- Review network, referral, prior-authorization, and formulary rules.
- Check the Summary of Benefits and Coverage and official plan documents.
- Verify eligibility for Marketplace savings or public programs.
Explore health insurance by state or read the PPO vs. HMO comparison.
Frequently Asked Questions
What is a health insurance premium?
A premium is the amount paid to keep health coverage active, usually billed monthly.
What is a deductible?
A deductible is the amount a member pays for certain covered services before the plan begins paying according to its terms.
Why should I check a provider network?
Network rules affect which doctors, hospitals, and pharmacies are covered and how much a member may pay.
Official Sources
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