How Does Health Insurance Work?


In a typical health insurance plan, an insured person pays premiums to get guaranteed health benefits from an insurance provider. Additionally, each plan includes a network of medical facilities and providers through which covered people get the best benefits, according to Consumer Reports.

One of the first steps to getting health insurance is reviewing options and selecting a plan. Identifying the types of services covered by a particular policy and comparing the coverage to the premium costs are key to picking a plan, explains Consumer Reports. Routine care, emergency hospital care, lab testing, maternity and newborn care, rehabilitation services and prescription drugs are among the typical services covered by health insurance companies. While some people buy their own insurance protection, many employers pay for some or all of a worker's plan, notes the Internal Revenue Service.

To use coverage, the insured member normally looks through the online provider directory offered by the insurance company. When receiving services, some people have annual deductibles that must be paid for general health costs or specific treatments, states Consumer Reports. After the deductible, the insurer pays benefits. Copayments and coinsurances are other typical out-of-pocket costs. Copayments are amounts the insured person pays for routine office visits. Coinsurance is an amount paid toward the portion of a bill that remains after the deductible is paid.

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