How does health insurance work?

Let's explore some of the basics of how health insurance works — from the reasons for having health insurance to what it covers and more.

Why do I need health insurance?

It’s a question you naturally might ask, especially if you’re generally healthy. But there are many reasons for having health insurance. First, your health matters — and health insurance is a way of helping protect your health. You may wonder how it may protect you. Here are a few ways to think about it:

  • Health insurance is designed to help prepare for unexpected moments in life, like accidents or illnesses.
  • Without health insurance, you could be faced with paying medical bills yourself, and health care can be expensive.
  • Health insurance can keep you on track with preventive care — which may be covered by insurance at 100%, in many cases. Regular doctor visits may help you stay healthier over time.

Taking care of your health needs in a timely way is important to your overall health. That’s why getting health insurance may be one of the most important choices you make.

How do I get health insurance?

No matter what your age, finding the right health insurance plan for you is incredibly important. There are many options to consider, depending on your situation. There are federal and state programs like Medicaid (if you have a lower income) or Medicare (if you’re over 65 or if you may qualify due to a disability or special situation). There’s also short term coverage, to help fill coverage gaps for a period of time. You may be able to purchase a health insurance plan from your employer. Or you may also look into buying an individual plan, like Affordable Care Act (ACA) plans.

Most health insurance plans have a special period of time, called open enrollment, when you get to start, stop or change your health plan. This period usually happens once a year and the timing will depend on the type of plan.

Qualifying life events

If you experience a life-changing event at any point throughout the year, it may be considered a qualifying life event. It may mean you qualify for a special enrollment period. Examples include getting married or divorced, having a baby, gaining a dependent, moving, losing a job or landing a new job and turning 65 years old.

How much does health insurance cost?

There are many variables that impact the cost of health insurance. These can include your age, where you live, whether or not you use tobacco, how many people are covered by the plan and the type of plan you have. Choosing the best health plan for your budget will depend on your unique circumstances.

What does health insurance cover?

Every health plan is different, so check your coverage before receiving care. Call the number on your member ID Card or sign in to your account and go to Benefits & Coverage to review what’s covered under your plan.

With a focus on health and wellness, plans may cover:

  • Preventive services (when delivered by a doctor or provider in-network)
  • Pre-existing conditions
  • Mental and behavioral health services
  • Prescription drugs
  • Some medical devices (like breast pumps)
  • Maternity care
  • Some costs of cancer treatment

Your health insurance coverage may range from big, unexpected events (hospital stays, emergencies) to smaller events, like routine checkups. You can look at your health plan documents to learn your exact coverage.

How does prescription drug coverage work?

It’s important to know how prescription medications are covered under your health insurance plan, especially if you have medications you take regularly. The best way to learn about your pharmacy benefits is to understand your health insurance plan’s Prescription Drug List (PDL), or formulary. You’ll also want to take a look at drug tiers, which group prescription drugs into price categories, as well as how brand, generic and biosimilar drugs are covered.