Understanding how health insurance works
Health insurance – it sounds like something you think you should have. But how does it work? How do you use it? And how do you get the most out of it?
If it sounds like a lot, don’t worry: We’re here to help with simple answers in plain language. Get the knowledge you need to confidently navigate your health insurance or find a plan that works for you.
The basics: What is health insurance?
Health insurance helps pay for your health care costs. On your own, things like doctor visits and emergency room trips can be very expensive. Health insurance makes it easier to afford the health care you need by sharing expenses between you and others, like your insurer.
Different types of health insurance cover (help pay for) different things. Some of the most common are:
- Medical insurance – Covers doctor visits, emergency room and urgent care trips, tests, X-rays, surgeries, and more
- Prescription drug coverage – Covers plan-approved medicines prescribed by your doctor or clinician. Included in most medical insurance plans.
- Dental insurance – Covers dental exams, cleanings, fillings, crowns and other oral health care
- Vision insurance – Covers care for your eyes, like exams, eyeglasses, contact lenses and more
There are several ways you can buy health insurance for you and your family, including:
- Through your employer
- Through a public health insurance marketplace or exchange, like
MNsure orHealthCare.gov - Directly from a health insurance company
- Through Medicaid (state-run programs for people with lower incomes)
- Through Medicare (a federal program for people who are at least 65 years old or have certain health conditions)
How does health insurance work?
First, you’ll typically pay a fixed monthly premium. You’ll pay this fixed amount regardless of whether you’ve used or expect to use your plan.
Your premium gives you access to your insurance plan’s:
- Coverage (benefits) – The categories of health care and medicine your plan helps pay for
- Network – The health care providers where your plan usually covers more, thanks to discounts your insurer has negotiated on your behalf
Then, when you get care, you’ll usually be responsible for some of the costs, while your plan pays the rest. This is called cost sharing. Important cost-sharing terms include:
- Deductible – How much of your covered health care costs in a plan year you must fully pay yourself, before your plan starts to help pay
- Coinsurance – A percentage of your covered health care costs you must pay after you’ve met your deductible (your plan pays the rest)
- Copay – A flat amount you must pay toward your covered health care costs (your plan pays the rest)
- Out-of-pocket maximum – The most you’ll pay for all your covered health care costs in a plan year, after which your plan pays for all eligible services and charges
Choosing the right health plan for you
The most important
- Do you think you’ll need a lot of health care? Would you rather pay less through your monthly premium, or would you rather pay less whenever you get care?
- Are your health care needs fairly predictable? Do you expect your needs to change soon?
- Do you have providers you see regularly? Are you open to changing providers depending on who’s in your network?
- Do you regularly take prescription medicines? What kind of coverage do you need for those medicines to be affordable?
The answers are different for everyone – whether you’re
It can also help to remember that you’re not committed to the same plan forever. If you find the plan you picked isn’t a good fit, you can switch plans at least once per year (open enrollment), and possibly more often if your family, job, home or other circumstances change (special enrollment).
The bottom line? Know your network, coverage and cost.
Having health insurance can protect your well-being and your wallet. To get the most out of your insurance, it’s best to always do the following whenever you need care:
Check your health insurance plan’s coverage – Knowing what’s covered under your plan helps you understand what health care costs your insurer will help pay. Often, not all services will be included in your coverage. And some plans may not cover any services (except for emergencies) at out-of-network providers.Check whether your health care provider is in your insurance plan’s network – It’s likely your plan’s network doesn’t include all health care providers. It’s also likely your insurance company has multiple networks, with some health care providers in certain networks but not others. The best way to know who’s in your specific plan’s network is to check with your insurance company. Choosing to see providers in network, andchoosing the right kind of provider for your needs, is a great way to get high quality care at a lower cost.Get a cost estimate if you can – Many health insurance companies now offer tools to help you get a sense of your expected costs when you use your plan. This can help yousave money on medical care ,save money on prescription drugs and more.
A glossary of health insurance-related words and phrases you’ll likely come across
How to get the details on your plan’s covered benefits
How to check if your care is in network (and why it matters)
How to pick the kind of health care that’s right for your need
Practical ways to help you pay less for high-quality care
Insider tips for saving on medicines at the pharmacy
Get the HealthPartners mobile app to take your plan on the go
With the HealthPartners mobile app, available for iOS and Android, we’re always by your side:
- Find in-network doctors and clinics nearby
- Always have your member ID card in your pocket
- Check your balances, claims and cost estimates anytime
