Health Insurance 101

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Taking care of yourself requires more than eating healthy food and exercising. You also need regular medical attention for exams and preventive care. But many people can’t access those services without affordable health insurance.

Getting a personalized plan may feel confusing or overwhelming. Use this guide to navigate the world of health insurance so you get the coverage you need for a price you can afford. You don’t have to break your budget to see your doctor and improve your well-being.

1. How Does Health Insurance Work?

What is health insurance, anyway? It’s a monthly investment you pay to stay healthy. When someone signs up for an insurance plan, they agree to pay a specific fee every month to continue their coverage. The provider will fund a certain percentage of medical bills from checkups, hospital visits, and prescription refills in return.

Health insurance is available through both federal and private avenues. Comparing your options and getting quotes guarantees that you sign up for a plan that covers what you need. The right insurance will prevent you from getting swamped with medical debt and ensure you can always afford to visit your doctor.

2. Factors That Decide How Much You Pay

Figuring out how much health insurance costs often confuses people. Providers determine their fees based on several factors. These are a few terms you’ll read about when investigating why a quote is so high or low.


The first new terminology people often encounter is “premium.” Your premium is the monthly bill you’ll pay for the duration of your insurance contract, which can be short- or long-term. If you get insurance through your employer, they’ll cover a portion of this fee.

Recent research revealed that employers pay an average of 83% of health insurance premiums for single employees and 74% for families. It’s part of how health insurance works and why it’s expensive for self-employed or unemployed individuals to pay for it.


You’ll also find different deductibles in each plan. The deductible is the total amount you’ll pay for health care services before your provider begins to pay for you. Some plans may include complete coverage for some services, like preventive care, so you can get care without worrying about where your deductible stands.


After going for a checkup, the doctor’s office will ask for a copayment before you leave. This is the partial fee you’ll pay for non-preventive care and becomes bigger or smaller depending on which plan you choose.


Coinsurance is what comes into play after you pay your full deductible. It’s a predetermined percentage that counts towards services not fully covered by your plan. If your coinsurance is 20% and you book a $50 appointment, you’ll only have to pay $10 for that appointment after completing your deductible.

Maximum Out-of-Pocket Amount

An out-of-pocket maximum is the total you have to pay for medical services for the duration of your insurance contract or a full plan year. After you’ve paid that amount, your insurance covers 100% of covered benefits, but it doesn’t include your monthly premiums or out-of-network care.

3. Why It’s Important to Have Health Insurance

When you get some expensive quotes for health insurance, you might question why it’s essential to have it. There are several reasons why everyone should have coverage, but these are some of the most important.

It Helps Protect You Financially

Even if you only see your doctor once a year, health insurance provides critical financial protection. The average person spent $4,968 on health care in 2018, but you could end up with tens of thousands of dollars in medical debt if you get into a car accident or receive a diagnosis that requires long-term care.

Finding affordable health insurance limits how much you’re responsible for and sends your bills to a major provider after a specified point.

Being Uninsured Impacts Everyone

You might be a healthy adult who rarely sees your doctor. But what about your family or loved ones? They could end up in the hospital or become responsible for your medical bills if you were to pass away after a tragic accident. Health insurance would minimize their responsibility and cover your loved ones who need expert medical care.

It Makes Preventive Care Accessible

Affordable health insurance makes preventive care accessible and saves lives. You likely won’t have to pay a dime for annual checkups and screenings.

The Office of Disease Prevention and Health Promotion (ODPHP) estimates that preventive care saves 42,000 children from dying annually, along with adults who would otherwise pass away from diabetes and cardiovascular disease.

It’s much easier to get care that saves lives when your health insurance plan fully covers it. You’ll also save money by catching diseases before they become a problem and require expensive treatments and prescriptions.

4. Types of Health Insurance

Now that you know more about why people should get health insurance, read about the different types of plans you’ll encounter while investigating your options.

What Is Health Insurance?

There are four types of health insurance categorizations that unpack more about what health insurance is and how it works. What you choose depends on your employment status and personal needs.

Health Maintenance Organizations (HMOs)

Many people sign up for a Health Maintenance Organization (HMO) plan. It covers care provided by partnered clinics or doctors within its network, which would be where you live. It doesn’t cover out-of-network services unless it deems your situation an emergency.

Exclusive Provider Organizations (EPOs)

Exclusive Provider Organization (EPO) plans are suitable for people who don’t need routine medical services and don’t travel. They’ll pay for care within their network but don’t cover services outside that network, even in an emergency. One big bonus of EPOs is that they also don’t require referrals to see specialists, making a massive difference for those who see professionals like addiction psychiatrists or allergists.

Point-of-Service (POS) Plans

If you sign up for a Point-of-Service (POS) plan, you’ll pay lower costs but have a limited selection of in-network providers. However, you’ll still receive some coverage if you see someone outside your network. The most significant difference is that you have to fill out your paperwork when that happens, which would typically be your provider’s responsibility.

Preferred Provider Organizations (PPOs)

People who travel or see multiple specialists may find a Preferred Provider Organization (PPO) plan that works for them. This type of plan comes from an organization that contracts with medical providers and forms an extensive network. You’ll get complete coverage if you seek medical attention near your home, but you’ll only have to pay a small fee if you go outside your home network and visit a partnered hospital or clinic.

How to Find an Affordable Health Insurance Plan

Taking your time is the best way to find an affordable health insurance plan. Research what’s available through federal programs, your employer, or private companies. Compare what they cover and how much you’d pay for different services or monthly bills. You’ll find something that meets your budget and includes coverage for your health concerns.


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