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Understanding Health Insurance

Most health care in the United States is paid for through health insurance.

Health insurance is for an individual or family. When covered by an insurance policy, the policy owner regularly pays a designated amount, or premium, to a health insurance company. In return, the insurer agrees to pay a pre-arranged portion of the cost when health care is needed.

Most health insurance plans have: Benefits (what the plan pays for), Networks (Healthcare professionals that provide discounted services within health plan), and Costs (These can be premiums, deductibles, co-pays and coinsurance)

While every insurance plan is different, most health plans have three main parts: benefits, networks, and costs.

While every insurance plan is different, most health plans have three main parts: benefits, networks, and costs.

  • Benefits are simply what the plan pays for such as checkups, prescriptions and medical care.
  • Networks are a group of doctors, hospitals or other health care providers who are contracted to provide discounted services within the health plan. 
  • Costs, such as premiums, deductibles, co-pays and coinsurance, affect what your family pays in health care expenses. 

An individual or family may be covered through a private or public insurance program.

Private health insurance

Private health insurance may be purchased individually or through an employer.  

Assistance programs

  • If buying insurance through the state or federal marketplaces, assistance may be available that helps lower the cost of premiums paid to the insurance company called a Premium Tax Credit. The size of your premium tax credit is based on an income scale. If you have a lower income, you will receive a larger credit to help cover the cost of the insurance. During enrollment, you can compute an estimated credit that is paid to your insurance company to lower what you pay for your monthly premium. Or, you can get all of the benefit of the premium tax credit when you file your tax return. To learn more, visit the eligibility page on the IRS website.
  • Depending on income and insurance plan, eligible cost sharing reductions (CSRs) may be available through the state or federal marketplace by reducing out-of-pocket expenses. CSRs are a program to lower the amount paid for deductibles and co-payments. To qualify for these reductions, you must be enrolled in specific plans.
  • A Health Insurance Marketplace Calculator and additional information about financial assistance may be found on the Henry J Kaiser Foundation website.

Public health insurance

Two primary types of public insurance programs cover families and children.

Learn more about cancer and health insurance

Reviewed: June 2018