What is Health Insurance?

Collage of CareFirst BlueCross BlueShield members Health insurance is a plan most people purchase to help protect themselves from the high cost of healthcare.

Having health insurance keeps you from paying for all of the costs when you are sick or have an accident—because your plan helps pay for some of your medical costs/expenses.

The services the plan covers, and the dollar amount the plan pays, are your coverage. Coverage varies by plan. To find out what your health plan covers, be sure to check the contract.

Other Factors to Consider When Choosing a Plan

Coverage isn't the only thing to keep in mind when selecting a health plan that’s right for you. Other factors include:

  • Copayments (or copay)—a fixed dollar amount you pay when you visit a doctor or other provider for service.
  • Coinsurance—the percentage of the cost you pay after you meet your deductible.
  • Deductibles—the amount you must pay before your insurance plan begins to pay its portion.
  • Premiums—the money you pay each month for your health insurance plan. Typically, the higher your premium, the lower your deductible—and vice versa.
  • Out-of-pocket maximum—the most you'll have to pay for medical and prescription drugs in a calendar year. If you reach your out-of-pocket maximum, the plan will pay 100% of your covered medical expenses for the remainder of the year.
  • Cost of going to out-of-network providers—when you see a provider who does not accept your health insurance, they are considered "out of network,” which means you will be responsible for more out-of-pocket costs.