Health Insurance 101: Understanding Your Coverage Options
- aj34932
- Apr 8
- 2 min read
Health insurance can feel like a confusing maze of terms, plans, and paperwork—but it doesn’t have to be. Whether you’re shopping for coverage for the first time or reviewing your options during open enrollment, understanding the basics can help you make confident, informed decisions.
In this guide, we’ll break down the key types of health insurance plans and explain the most important terms you need to know—no jargon, just clarity.
Types of Health Insurance Plans
Before diving into the terminology, let’s take a quick look at the most common types of health insurance plans available:
1. HMO (Health Maintenance Organization)
Requires you to choose a primary care physician (PCP)
Referrals needed to see specialists
Lower premiums and out-of-pocket costs
Limited to a specific network of doctors
2. PPO (Preferred Provider Organization)
No referrals needed to see specialists
More flexibility to see out-of-network providers
Higher premiums, but more choices
3. EPO (Exclusive Provider Organization)
Similar to a PPO but no coverage for out-of-network care (except emergencies)
Lower costs than PPOs, but less flexibility
4. HDHP (High Deductible Health Plan)
Higher deductibles, but lower monthly premiums
Often paired with a Health Savings Account (HSA)
Great for those who want lower monthly costs and are comfortable paying more out-of-pocket if needed
Key Terms You Should Know
Understanding the basic terms can make all the difference when comparing plans. Here’s what you need to know:
Premium
This is the monthly payment you make to keep your health insurance policy active—whether you use it or not.
Deductible
The amount you pay out of pocket each year before your insurance starts covering expenses. For example, if you have a $2,000 deductible, you must pay that amount in medical bills before your insurance kicks in.
Copay (Copayment)
A fixed amount you pay for a service, like $20 for a doctor’s visit or $10 for a prescription. Copays usually apply even if you haven’t met your deductible.
Coinsurance
After meeting your deductible, coinsurance is the percentage you pay for covered services. For example, with 80/20 coinsurance, your plan pays 80% and you pay 20%.
Out-of-Pocket Maximum
This is the most you’ll pay in a year for covered services, including your deductible, copays, and coinsurance. Once you hit this number, your insurance pays 100% of covered expenses for the rest of the year.
How to Choose the Right Plan for You
When choosing a plan, consider:
Your health needs – Do you visit the doctor often or just once a year?
Budget – Can you handle a higher deductible for lower premiums?
Preferred providers – Do you want to keep your current doctors?
It’s also worth looking at options for health savings accounts (HSAs) or flexible spending accounts (FSAs) to help manage out-of-pocket expenses with tax advantages.
Final Thoughts
Choosing a health insurance plan doesn’t have to be overwhelming. By understanding the basics—like premiums, deductibles, and network types—you can confidently select the coverage that best fits your health needs and budget.
Need help reviewing your options or finding the right plan?
Contact Stratton Insurance Agency today for personalized health insurance guidance. We make health insurance simple—so you can focus on what matters most: your health.