Health insurance can be both complex and confusing, with a lot of jargon that can bamboozle even the most financially-savvy consumers. But understanding health insurance is essential for anyone committed to looking after their health.

In this guide, we will break down everything you need to know about health insurance coverage.

What is Health Insurance?

Health insurance is a contract that provides financial protection against medical treatment expenses.

When you purchase a health insurance policy, you are essentially taking out financial protection to cover you in case you fall ill or need medical treatment.

Types of Health Insurance

There are various types of health insurance coverage available, each with its own advantages and disadvantages. Here’s a closer look at some of the most common types of health insurance.

1. Employer-provided Health Insurance

Employer-provided health insurance is group health insurance coverage that employers offer to their employees as part of their employee benefits package.

Typically, an employer pays for some or all of the premiums for health insurance coverage for their employees. This type of health insurance coverage is often relatively affordable compared to other types of health insurance.

2. Individual Health Insurance

Individual health insurance is a type of health insurance policy you buy on your own directly from a health insurance company.

If your employer doesn’t provide health insurance coverage, or you don’t qualify for group health insurance, then individual health insurance may be a good option for you. Individual health insurance policies can be purchased through the Affordable Care Act (ACA) marketplace or directly from an insurance company.

3. Family Health Insurance

Family health insurance covers your entire family, including your spouse and children. This type of policy provides financial protection against medical expenses in case anyone in your family falls ill or needs medical treatment.

4. Short-term Health Insurance

Short-term health insurance is designed to provide temporary health insurance coverage for people who need it for a brief period, typically between one and 12 months.

Short-term health insurance is often more affordable compared to other types of health insurance, but it doesn’t provide as much comprehensive coverage.

Understanding Health Insurance Coverage

Health insurance coverage can be complex and confusing, with a lot of jargon to navigate. Here’s a closer look at some of the most important things you need to know about health insurance coverage.

1. What is a Premium?

A premium is the amount of money you pay for your health insurance coverage each month. Your premium will be determined based on your age, health status, and other factors.

2. What is a Deductible?

A deductible is the amount of money you have to pay out-of-pocket before your health insurance coverage kicks in.

If you have a $2,000 deductible, you will be responsible for paying the first $2,000 of your medical expenses before your health insurance coverage starts paying for your medical expenses.

3. What is a Copay?

A copay is a fixed amount of money you have to pay for a particular medical service. For example, if your health insurance policy has a $20 copay for a doctor’s appointment, you will have to pay $20 each time you visit the doctor.

4. What is Coinsurance?

Coinsurance is the percentage of the cost of a medical service that you are responsible for paying out-of-pocket.

For example, if your health insurance policy has a coinsurance rate of 20% for hospitalization, you will be responsible for paying 20% of the cost of your hospitalization.

5. What is an Out-of-Pocket Maximum?

An out-of-pocket maximum is the highest amount of money you will have to pay out-of-pocket for medical expenses during a particular period, typically one year.

Once you reach your out-of-pocket maximum, your health insurance coverage will pay for all of your medical expenses for the rest of the year.

What Does Health Insurance Cover?

Health insurance coverage can vary depending on the policy you choose. However, here are some of the most common medical services that are covered by health insurance.