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Health Insurance 101

Everything you need to know about health insurance basics, from understanding key terms to choosing the right plan for your needs.

How Health Insurance Works

Health insurance is a contract between you and an insurance company. You pay a monthly premium, and in return, the insurance company helps pay for your medical expenses when you need care.

Protection

Insurance protects you from high medical costs by sharing the risk among many people.

Coverage

Most plans cover preventive care, doctor visits, hospital stays, prescriptions, and emergency care.

Key Insurance Terms Explained

Your monthly payment for health insurance coverage. You pay this even if you don't use any medical services.

Example: $300/month for a Silver plan

The amount you pay for covered services before your insurance starts to pay.

Example: With a $2,000 deductible, you pay the first $2,000 of covered services yourself.

Note: Preventive care is usually covered before you meet your deductible.

A fixed amount you pay for a covered service, usually at the time of service.

Examples:

  • $25 for a doctor visit
  • $10 for generic prescriptions
  • $250 for emergency room visits

Your share of costs for a covered service, calculated as a percentage.

Example: If your coinsurance is 20%, you pay 20% of the cost and insurance pays 80%.

If the service costs $1,000, you pay $200 and insurance pays $800.

The most you'll pay for covered services in a year. After you reach this amount, insurance pays 100%.

Example: With a $7,000 out-of-pocket maximum, once you've paid $7,000 in deductibles, copays, and coinsurance, your insurance covers everything else for the rest of the year.

Note: Premiums don't count toward your out-of-pocket maximum.

Understanding Metal Tiers

Covered California plans are organized into metal tiers based on how you and your insurance company share costs:

Tier Insurance Pays You Pay Best For
Bronze 60% 40% Lowest monthly premium, highest costs when you need care
Silver 70% 30% Moderate premiums and costs; eligible for extra savings
Enhanced Silver* 73-94% 6-27% Lower-income households; best value with cost-sharing reductions
Gold 80% 20% Higher premium, lower costs when you need care
Platinum 90% 10% Highest premium, lowest costs when you need care

Download Plan Comparisons:

Types of Health Plans

HMO (Health Maintenance Organization)

  • Must choose a primary care doctor
  • Need referrals to see specialists
  • Lower premiums
  • No out-of-network coverage (except emergencies)

Best for: Lower costs, don't mind referrals

PPO (Preferred Provider Organization)

  • No primary care doctor required
  • See specialists without referrals
  • Higher premiums
  • Out-of-network coverage available

Best for: Flexibility, see any doctor

EPO (Exclusive Provider Organization)

  • No primary care doctor required
  • No referrals for specialists
  • Moderate premiums
  • No out-of-network coverage

Best for: Balance of cost and flexibility

HSA-Compatible Plans

  • High deductible health plan
  • Paired with Health Savings Account
  • Tax advantages
  • Lower premiums

Best for: Healthy individuals, tax savings

How to Choose the Right Plan

Ask Yourself These Questions:

  1. What's your budget? Consider both monthly premiums and potential out-of-pocket costs.
  2. How often do you need care? Frequent care = lower deductible plan. Rare care = higher deductible plan.
  3. Do you have preferred doctors? Check if they're in-network.
  4. Do you take medications? Check the plan's drug formulary.
  5. Do you travel often? Consider plans with broader networks.

If You're Generally Healthy

Consider:

  • Bronze or Silver plans
  • HSA-compatible plans for tax savings
  • Focus on lower premiums

If You Have Ongoing Health Needs

Consider:

  • Gold or Platinum plans
  • Lower deductibles and copays
  • Check provider networks carefully

Using Your Health Insurance

1

Get Your Insurance Card

Keep it with you. It has important information like your member ID and group number.

2

Find In-Network Providers

Use your insurance company's website or call to find doctors in your network.

3

Schedule Preventive Care

Annual checkups, vaccinations, and screenings are usually free!

4

Understand Your Bills

Review Explanation of Benefits (EOB) statements. Don't pay bills until insurance has processed them.

Ready to Find Your Perfect Plan?

Now that you understand the basics, let us help you find the right coverage for your needs and budget.

Get Your Free Quote