Health Insurance 101
[posted June 5, 2026]
What is health insurance?
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Health insurance helps you share the cost of medical care with your insurance company. You pay a monthly premium to keep your coverage active, and in return, your insurance helps cover the cost of medical care when you need it. Instead of paying the full cost of a major medical expense on your own, you share the cost based on the structure of your plan.
Your premium is the amount you pay each month to keep your insurance active, whether you use your coverage or not.
Most plans also include a deductible, which is the amount you must pay out of pocket before your insurance begins sharing costs.
Once you’ve met your deductible, you may pay coinsurance, which is your share of the cost of covered services. For example, if your plan has 20% coinsurance, you would pay 20% of the bill and your insurance would pay the remaining 80%.
Some services may also require a copay, which is a fixed amount you pay at the time of care. For example, you might pay $30 for a primary care visit.
What is a premium, deductible, copay, and coinsurance?
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What is an out-of-pocket maximum?
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Every health plan includes an out-of-pocket maximum. This is the most you’ll pay in a calendar year for covered services. Once you reach that limit, your insurance pays 100% of covered medical costs for the rest of the year. It’s an important financial safeguard and a helpful way to understand your overall risk.
What is a provider network?
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Insurance companies work with certain doctors, hospitals, and specialists to form a provider network. Seeing in-network providers usually means lower costs. Going out of network can lead to higher expenses or services that aren’t covered at all. Checking your network before scheduling care is one of the simplest ways to avoid unexpected bills.
What are the different types of health insurance plans?
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There are several common plan structures, including HMO and PPO plans. HMO plans generally keep you within a network and often require referrals to see specialists, but they tend to come with lower premiums. PPO plans offer more flexibility and usually don’t require referrals, though they often have higher premiums. The right fit depends on your medical needs, preferred doctors, and budget.
What does health insurance cover?
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All major medical plans are required to cover essential health benefits, including preventive care, doctor visits, hospital services, emergency care, prescription drugs, mental health services, and maternity care. Preventive services, such as annual physicals and certain screenings, are often covered at 100% when you use in-network providers.
When can you enroll in health insurance?
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Enrollment for individual and family health plans typically happens during Open Enrollment, which generally runs from November through mid-January. Outside of that window, you may qualify for a Special Enrollment Period if you experience a qualifying life event such as marriage, the birth of a child, loss of other coverage, or a move to a new state.
How do you choose the right plan?
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When choosing a health plan, it’s important to look beyond the monthly premium. A lower premium often means a higher deductible, so it’s important to understand what you could realistically pay out of pocket. Think about how often you use medical services, whether you take regular prescriptions, whether your preferred doctors are in network, and what level of protection you want in a worst-case scenario.
