Health insurance is a contract between you and an insurance provider that helps cover the cost of medical care. This includes doctor visits, hospital stays, prescriptions, preventive care, and sometimes even vision and dental services.

Key Health Insurance Terms You Should Know

• Premium: The amount you pay (usually monthly) to keep your insurance active.

• Deductible: The amount you must pay out of pocket each year before your insurance starts covering costs.

• Copayment (Copay): A fixed fee you pay for specific services like a $25 doctor visit.

• Coinsurance: The percentage of medical costs you share with your insurance after meeting your deductible. For example, you might pay 20% while insurance covers 80%.

• Out-of-Pocket Maximum: The most you’ll pay in a year before your insurance covers 100% of eligible costs.

• Network: A group of doctors and hospitals that have agreed to provide services at reduced rates for plan members.

Types of Health Insurance Plans

1. HMO (Health Maintenance Organization)

• Requires you to choose a Primary Care Physician (PCP).

• Referrals are needed to see specialists.

• Only covers in-network care (except emergencies).

• Lower out-of-pocket costs.

2. PPO (Preferred Provider Organization)

• More flexibility—you can see any doctor without a referral.

• Covers both in-network and out-of-network care (but out-of-network costs more).

• Higher premiums and deductibles.

3. EPO (Exclusive Provider Organization)

• Similar to PPOs but no coverage for out-of-network care (except emergencies).

• No referrals needed for specialists.

• Lower cost than PPO, less flexibility.

4. POS (Point of Service Plan)

• Hybrid of HMO and PPO.

• Requires a PCP and referrals for specialists.

• Offers partial coverage for out-of-network care.

5. HDHP (High-Deductible Health Plan)

• Lower monthly premiums, but higher deductibles.

• Often paired with an HSA (Health Savings Account) to help with out-of-pocket costs.

• Best for those who want to save on monthly payments and are generally healthy.

6. Catastrophic Health Plan

• Designed for people under 30 or those with a hardship exemption.

• Very low premiums, but extremely high deductibles.

• Covers essential health benefits after deductible is met.

• Good for worst-case scenarios, not routine care.

Essential Health Benefits (As Required by the ACA)

Most plans—especially those sold through the Affordable Care Act (ACA) Marketplace—must cover services like:

• Emergency services

• Hospitalization

• Prescription drugs

• Maternity and newborn care

• Mental health services

• Preventive care (vaccines, screenings)

• Pediatric services

Additional Coverage to Consider

• Dental and Vision Insurance: Often not included in basic health insurance plans but can be purchased separately or added as a rider.

• Dependent Coverage: Most plans allow you to cover your spouse and children under age 26.

How to Choose the Right Health Insurance Plan

Picking a health insurance plan depends on your unique situation. Ask yourself:

• How often do I visit the doctor?

• Do I need regular prescriptions?

• Do I want flexibility in choosing doctors?

• What can I afford in monthly premiums and out-of-pocket costs?

If you rarely seek medical care, an HDHP might save you money. But if you have ongoing health conditions, a plan with lower deductibles and more comprehensive coverage may be better.

Health insurance isn’t just a safety net—it’s a vital part of protecting your physical and financial well-being. By understanding the basics and comparing plan options, you can find coverage that fits your health needs and budget.

If you’re still unsure, consider speaking with a licensed health insurance agent or exploring plans on the HealthCare.gov marketplace.