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Health Insurance Basics

Learn about the fundamentals of individual and family health insurance. Review the following questions to answer your basic health insurance questions, view frequently asked questions (FAQ), or call one of our Independence Blue Cross representatives.

What Is Health Insurance?

Health insurance is designed to protect you and your family from the costs associated with medical services you may need when you’re sick or injured. Similar to auto insurance, you choose a health plan and agree to pay a specific rate, or premium, each month. Your health insurer then agrees to pay a portion of your covered health care costs. Payments made by your insurer are typically based on discounts that health insurers negotiate with doctors or hospitals.

Get the Basics of Health Insurance in Just Over a Minute

Why Is Health Insurance Important and Why Do I Need It?

No one plans to get sick or hurt. But illnesses and injuries can happen at any time. In some cases, they can be devastating to your health and leave you with overwhelming medical bills. Health insurance limits your risk of paying for very expensive illnesses and injuries by covering medical care and other services, such as hospitalization and surgery.

Health insurance also helps you protect your health and well-being, primarily through coverage of preventive care services.

In addition to protecting you and your family from high cost and unexpected illnesses, health insurance is required by law. Learn more about the Affordable Care Act and how it affects you and your family.

Learn Three Big Reasons Why Health Insurance Should Matter to You

How Do Health Insurance Payments Work?

You choose a health insurance plan based on the cost of the plan and the services and benefits it covers. For most health plans, you will pay a fixed amount each month, known as a premium. In addition to your premium, you may also pay each time you receive care from a doctor or hospital, have a prescription filled, or receive medical care. These payments are often called cost-sharing, or out-of-pocket costs, and come in the following types:

Deductible

A deductible is the amount you pay each year before your health plan starts paying for covered services. For example, if your plan has a $1,000 deductible, you will need to pay the first $1,000 of the costs for the health care services you receive. Once you have paid this amount, your insurance will begin to pay a portion or all of your health care costs, depending on the health plan.

Copay

A copay is the flat fee you pay when you see a doctor or receive other covered services. For example, $20 to see a doctor.

Coinsurance

Coinsurance is the percentage you pay for some covered services. If your coinsurance is 20 percent, your health insurance company will pay 80 percent of the cost of covered services; you will pay the remaining 20 percent (your costs are usually based on a discounted amount negotiated by your insurance company).

Out-of-pocket maximum

An out-of-pocket maximum is the most you will have to pay for your health care expenses during a plan period (usually a year) for covered services received from providers that participate in the plan’s network. No matter what, you will not pay more than this amount each year. Any care for covered services you get after you meet your out-of-pocket maximum will be covered 100 percent by Independence Blue Cross.

You can use our plan shopping tool to find out which health plan is best for you based off of your budget, health needs, and preferred payment method.