How does health insurance work? 

How do I choose a health insurance plan?

Almost 3 out of 4 of insured adults are worried about affording the cost of health care services (including out-of-pocket costs not covered by insurance and prescription drug costs),² so picking a health insurance plan can feel overwhelming. It can be made easier by understanding some key terms: 

• Premium: Your monthly plan cost. This is the cost of your coverage and doesn’t include the out-of-pocket cost for each service you receive — you’ll always pay at least this amount each month, regardless of how much or how little care you receive.
• Deductible: How much you must spend for covered health care services before your health plan starts to pay for anything beyond no-cost preventive care. After you reach your deductible, you’ll typically just pay a copay or coinsurance.
• Copay: A flat fee you pay for specific services covered under your health care plan. Copays may apply whether or not you’ve met your deductible.
• Coinsurance: A percentage of the cost that you’re responsible for paying when you receive a specific service. For example, a 20% coinsurance for a $100 procedure means you pay $20. Coinsurance may apply whether or not you’ve met your deductible. People often confuse coinsurance with copays, but they’re different. Your plan may have copays or coinsurance — or it may have both. 
• Out-of-pocket maximum: The most out-of-pocket costs you’ll have to spend for most covered services within a year. After you reach this amount, your health plan pays 100% for most covered services. You’re only responsible for paying your monthly premium and, depending on your plan, copays or coinsurance.

Understanding these terms and your total health care costs will help you pick the best health insurance plan for you while saving money.
 

What are the types of health insurance?

The most common types of health plans are HMO and PPO. Learn the difference between HMO and PPO plans to figure out which choice is right for you. Beyond that, getting to know the 4 coverage levels — also called metal tiers — within those plan types will help you understand:

• What’s covered
• What you’re responsible for paying
• What’s the best fit for your health care needs

It’s important to know that the metal tiers are only based on how you and your health plan split costs — they have nothing to do with the quality of care you’ll receive.

Health insurance plan types — the 4 metal tiers

Bronze:  Lowest monthly premium | Highest deductible | Highest out-of-pocket costs for care 

A good choice for healthy people who rarely see the doctor and want a low-cost way to protect themselves in case they occasionally get injured or sick.

Once you’ve met your deductible, this health plan pays for 60% of your care and you pay 40% of your care. 

Silver: Moderate monthly premium | Moderate deductible | Moderate out-of-pocket costs for care

A good choice for generally healthy people willing to pay a little more each month to have fewer out-of-pocket expenses before your health plan starts covering the cost of care. 

Once you’ve met your deductible, this health plan pays for 70% of your care and you pay 30% of your care. 

Gold: Higher monthly premium | Lower deductible | Lower out-of-pocket costs for care 
A good choice for people with dependents and who use health care services regularly throughout the year.

Once you’ve met your deductible, this health plan pays for 80% of your care and you pay 20% of your care. 

Platinum: Highest monthly premium | Lowest deductible | Lowest out-of-pocket costs for care 

A good choice for people with known health issues who have frequent specialty care needs, tests, and prescriptions.

Once you’ve met your deductible, this health plan pays for 90% of your care and you pay 10% of your care.   
 

What else comes with health insurance?

Now you’re ready to choose a health insurance plan

Learn more about choosing a health plan

Learn more about Kaiser Permanente