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How does health insurance work?
Kiaser Family Foundation explains health insurance in English.
Kiaser Family Foundation explains health insurance in Spanish.
Health insurance helps pay for the cost of medical care by reducing the amount you personally pay when you have medical needs. The amount you pay depends on your specific health insurance plan. Plans vary by how much they cost each month, how much they cover and where you can go for care.
As part of the Affordable Care Act (ACA), all health insurance plans are required to cover these 10 healthcare services:
Ambulatory patient services (outpatient services)
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services, including behavioral health treatment
Prescription drugs
Rehabilitative and habilitative services (those that help patients acquire, maintain, or improve skills necessary for daily functioning) and devices
Laboratory services
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care
Health insurance terms to know:
Co-insurance
Health insurance coinsurance explained in English.
Health insurance coinsurance explained in Spanish.
The percentage of a health care bill you have to pay. This starts after you have met your deductible.
EXAMPLE:
You have a plan with 20% co-insurance, so you pay 20% of a covered healthcare service and your health insurance will pay the remaining 80%.
$10,000 (broken leg) -$8,000 (80% coinsurance) = $2000 you pay
Copayment (aka Co-pay)
Health insurance copay explained in English.
Health insurance copay explained in Spanish.
A set amount you have to pay for a health care service. You pay just to get in, like a movie ticket.
EXAMPLE:
Doctor visit = $10
ER visit = $300
Urgent care visit = $75
Prescription = $5
Deductible
Health insurance deductible explained in English.
Health insurance deductible explained in Spanish.
The amount you have to spend on health care bills before your health insurance begins to pay.
EXAMPLE:
Before deductible - You haven’t had any medical bills this year and you go to the doctor. You have NOT met your annual deductible.
$100 visit - $0 (no coinsurance) = you pay $100
After deductible - You get sick and spend $1500 in medical bills. Your yearly deductible is $1500, so you have met your annual deductible. You go to the doctor again.
$100 visit - $80 (80% coinsurance) = you pay $20
Network providers
Health insurance networks explained in English.
Health insurance networks explained in Spanish.
Hospitals and doctors your health insurance has a contract with. You will pay less to go here and some health insurance plans won’t cover services outside your network. Make sure to check with your healthcare provider because networks can change!
EXAMPLE:
You go to a doctor who is in-network. Your plan’s normal coverage rates apply to the bill: $10 copay and 20% coinsurance for any covered services during the visit.
$10 copay + $20 lab work (after coinsurance and billed later) = $30 total visit
Out-of-pocket maximum
Health insurance out-of-pocket max explained in English.
Health insurance out-of-pocket max explained in Spanish.
The most you have to pay in health care costs for one year. If you reach this amount, your plan health insurance pays 100% as long as it’s a service covered by your plan.
Includes: deductible, coinsurance, copayments
Doesn’t include: monthly premiums or services not covered by your plan.
EXAMPLE:
You keep getting sick during the year and spend $3,500 in medical bills. Your out-of-pocket maximum is $3,500 so you reached your out-of-pocket maximum. Later in the year, you break your leg.
$10,000 (broken leg) – $10,000 (100% coinsurance) = $0 you pay
Premium
The amount you pay every month just to have health insurance - like car insurance or your monthly cell phone bill.
Does not include medical bills, copays and does not add into your yearly deductible
EXAMPLE:
Every month you pay Coventry $100 to have health insurance.
If you stop paying your monthly premium, your health insurance will be canceled and you will be responsible for 100% of your medical bills. Plus, you won’t be able to sign-up for health insurance again until the next enrollment period.