How health insurance works

Health insurance is a contract between you and an insurance company that helps you pay medical bills in exchange for a monthly cost. Without health insurance, medical bills can be very expensive.

A major benefit of health insurance is that preventive care is often offered at no extra cost. This includes annual physical exams, vaccinations, and cancer screenings. Preventive care can help you avoid serious – and potentially costly – medical issues in the future.

In short, health insurance helps you avoid having to pay potentially high medical bills on your own, while also giving you access to preventive care that can help you stay healthy.

Not all health insurance plans are the same. What your health insurance covers depends on your policy, deductible, copays, and other factors. To find a plan that fits your needs, you'll need to know a few key parts and terms.

• Provider network: Choosing an in-network doctor will significantly lower your out-of-pocket costs because they work with your insurance to keep costs lower. In-network doctors will change based on your plan.
• Deductible: Your deductible is the amount of money you owe for services covered by your plan before your insurance pays the remaining costs.
• Out-of-pocket maximum: The most you will spend in a year for care is called your out-of-pocket maximum. Once you hit this amount, your insurance pays the rest.
• Copays and coinsurance: A copay is the upfront cost you pay when seeing a doctor. Coinsurance is the percentage of the cost you’ll pay for care covered by your insurance until your deductible is met.