How Health Insurance Works in the United States
Learn how health insurance works, including premiums, deductibles, copayments, coinsurance, out-of-pocket maximums, and provider networks.
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How Health Insurance Works in the United States
Health insurance helps cover eligible healthcare expenses according to the terms of a specific plan. Understanding the main cost-sharing terms can make it easier to compare plans.
Premium
A premium is the amount paid to maintain health insurance coverage. Depending on the plan, premiums may be paid monthly or through another payment arrangement.
Deductible
A deductible is the amount you may have to pay for covered services before the insurance plan begins paying according to its terms.
Copayment
A copayment, or copay, is a fixed amount you may pay for a covered healthcare service.
Coinsurance
Coinsurance is generally the percentage of the cost of a covered service that you pay after meeting applicable deductible requirements.
Out-of-Pocket Maximum
An out-of-pocket maximum limits how much you pay for covered services during a plan year, subject to the plan's rules and applicable regulations.
Provider Networks
Many health plans use networks of doctors, hospitals, and other healthcare providers. Using providers inside or outside the network can affect your costs depending on the plan.
How to Compare Health Plans
When comparing plans, consider premiums, deductibles, copayments, coinsurance, out-of-pocket limits, provider networks, covered services, and prescription coverage.
Final Thoughts
Health insurance policies can be complex. Review the plan documents carefully and verify coverage before receiving expensive medical services.
This article is for educational purposes and is not medical, financial, or insurance advice.
