---
title: "Health Insurance: What It Pays and What You Owe | Riskado"
description: "Health insurance pays some or all of your covered medical costs in exchange for a premium. See how the deductible, coinsurance and out-of-pocket maximum add up."
url: "https://riskado.com/insurance-terms/health-insurance/"
lang: "en"
published: "2026-06-23"
modified: "2026-10-01"
image: "https://riskado.com/og/default.jpg"
alternates:
  es: "https://riskado.com/es/terminos-de-seguros/seguro-medico.md"
---

# Health insurance

[Life and Health](https://riskado.com/life-and-health-insurance/) · Updated Oct 1, 2026

A contract in which an insurer pays some or all of your covered health care costs in exchange for a premium. You can still owe a deductible, copayments, coinsurance, noncovered charges or out-of-network costs. Your policy or plan documents, network rules and state and federal law decide what the insurer actually pays.

Also called: medical insurance, health coverage, health plan, healthcare insurance

[Health insurance guides](https://riskado.com/health-insurance/)

Health insurance splits the cost of your care between you and the plan, and the split changes over the year. Early on, you pay most covered costs yourself until you meet the [deductible](https://riskado.com/insurance-terms/deductible/); then you share costs through copays or coinsurance; once you reach the out-of-pocket maximum, the plan pays the rest of covered in-network care for that year. The [premium](https://riskado.com/insurance-terms/premium/) is a separate bill you pay every month whether or not you use care. Which doctors you see, and whether a service is covered at all, decide how much of that structure applies.

## How the cost sharing adds up, with real numbers

Take a plan with a $1,500 deductible, 20% coinsurance, a $5,000 out-of-pocket maximum and $125 office visits, the example used on [HealthCare.gov's page on total health care costs (opens in a new tab)](https://www.healthcare.gov/choose-a-plan/your-total-costs/). The figures are an example, not an average or a promise about any plan.

One plan year: $1,500 deductible, 20% coinsurance, $5,000 out-of-pocket maximum

Hover or tap a row to highlight it.

| Stage | $125 covered visit: you pay | Plan pays |
| --- | --- | --- |
| Before the deductible is met | $125 | $0 |
| After the deductible ($125 × 20% and × 80%) | $25 | $100 |
| After you have paid $5,000 in qualifying cost sharing | $0 | 100% of covered in-network care |

Add it up and someone who has met the $1,500 deductible and then has one more visit has paid $1,525 ($1,500 + $25) toward care, not counting premiums. The out-of-pocket maximum does not include premiums, noncovered services, out-of-network costs or balance-billed amounts, according to the [HealthCare.gov out-of-pocket maximum definition (opens in a new tab)](https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/), so those can still be owed after you reach the limit.

## Plan features and what each changes

A plan's premium and what it pays come from the mix of these settings, along with its network, drug formulary, area and the law that governs it:

- Premium. The monthly amount for [coverage](https://riskado.com/insurance-terms/coverage/). A higher premium often comes with lower cost sharing, but the trade is plan by plan.
- Deductible. What you pay for covered services before the plan generally starts paying; [HealthCare.gov's deductible example (opens in a new tab)](https://www.healthcare.gov/glossary/deductible/) uses $2,000.
- [Copay](https://riskado.com/insurance-terms/copay/) and [coinsurance](https://riskado.com/insurance-terms/coinsurance/). A copay is a fixed charge, such as $30 for a visit; coinsurance is a percentage of the allowed amount, such as 20%.
- [Out-of-pocket maximum](https://riskado.com/insurance-terms/out-of-pocket-maximum/). For 2026 Marketplace plans, the federal maximum is $10,600 for an individual and $21,200 for a family.
- Metal levels. Bronze, Silver, Gold and Platinum Marketplace plans are designed to pay about 60%, 70%, 80% and 90% of covered costs for a standard population. Higher levels generally mean higher premiums and lower cost sharing.
- Network type. HMOs generally cover only network providers except emergencies and may require referrals; PPOs pay less for network care but can cover out-of-network care at extra cost; EPOs cover network care only except emergencies; POS plans use network pricing and may require specialist referrals, according to [HealthCare.gov's plan types page (opens in a new tab)](https://www.healthcare.gov/choose-a-plan/plan-types/).
- Essential health benefits. Non-grandfathered individual and small-group plans must cover ten federal benefit categories, with the detailed scope set by each state's benchmark plan, according to [CMS (opens in a new tab)](https://www.cms.gov/marketplace/resources/data/essential-health-benefits).
- [Fully insured](https://riskado.com/insurance-terms/self-insured-plan/) or self-funded. In a fully [insured](https://riskado.com/insurance-terms/policyholder/) plan the [insurer](https://riskado.com/insurance-terms/insurer/) carries the claims risk; in a self-funded employer plan the employer funds claims, and the plan is generally regulated federally under ERISA rather than by the state.

## Where you see the term

The term covers individual, employer, small-group, large-group, Medicare, Medicaid, CHIP and student coverage. You meet it on quotes and applications, in the policy, certificate, Evidence of Coverage or Summary of Benefits and Coverage, on renewal notices that change premiums, networks or cost sharing, and on each explanation of benefits, which shows the billed amount, allowed amount, plan payment, your share and any appeal rights. Medical payments or accident benefits inside auto, homeowners or business policies are different coverages with their own triggers and limits. Life insurance is different too: it pays a death benefit to [beneficiaries](https://riskado.com/insurance-terms/beneficiary/), while health insurance pays for care while you are alive, according to the [NAIC's life insurance guide (opens in a new tab)](https://content.naic.org/consumer/life-insurance.htm).

## What Connecticut and New York add

State rules apply to fully insured plans; self-funded employer plans, Medicare and Medicaid follow federal rules, according to the [Connecticut Insurance Department's health insurance FAQs (opens in a new tab)](https://portal.ct.gov/cid/consumer-information-center/health-insurance). In Connecticut, a covered person can request external or expedited external review of an adverse determination, and the independent decision binds the health carrier and the covered person, under [Conn. Gen. Stat. § 38a-591g (opens in a new tab)](https://www.cga.ct.gov/current/pub/chap_700c.htm#sec_38a-591g). Specified individual policies must cover mental and nervous conditions without greater financial burdens than physical conditions, under [Conn. Gen. Stat. § 38a-488a (opens in a new tab)](https://www.cga.ct.gov/current/pub/chap_700c.htm#sec_38a-488a). Medical discount plans are not health insurance, because they offer provider discounts without paying claims.

In New York, qualifying individual and small-group contracts must be community rated, applicants must be accepted throughout the year subject to statutory exceptions, and coverage generally cannot be terminated because of claims experience, under [N.Y. Insurance Law § 4317 (opens in a new tab)](https://www.nysenate.gov/legislation/laws/ISC/4317). Covered contracts must also cap in-network cost sharing at the federal out-of-pocket maximum, under [N.Y. Insurance Law § 4306-h (opens in a new tab)](https://www.nysenate.gov/legislation/laws/ISC/4306-H), and insurers must provide written information on benefits, exclusions, cost sharing and providers, including to prospective members on request, under [N.Y. Insurance Law § 3217-a (opens in a new tab)](https://www.nysenate.gov/legislation/laws/ISC/3217-A).

## Questions to ask an agent or insurer

1.  Which services, prescriptions, facilities and providers are covered, and which are excluded? Covered services, the formulary and the network decide whether the plan pays.
2.  What are the premium, deductible, copays, coinsurance and out-of-pocket maximum, and which expenses count toward each? Premiums and some charges never count toward the maximum.
3.  Is this provider, hospital, pharmacy or lab in network, and do I need a referral or prior authorization? Network and referral rules change what the plan pays.
4.  What is the deadline and process for appealing a denial? Review rights and deadlines depend on the plan and state law.
5.  Is the plan fully insured or self-funded, and which regulator handles complaints? That decides whether state insurance law or federal ERISA rules apply.

## Frequently asked questions

A few more questions come up after enrolling or receiving a bill.

### Is medical insurance the same as health insurance?

The terms are commonly used interchangeably for coverage of doctors, hospitals and prescriptions. Health insurance is the broader regulatory term, and the policy wording decides what a given plan covers.

### Can a health insurance denial be appealed?

Often yes. Connecticut law provides internal grievance and external review procedures for qualifying adverse determinations, with a 120-day period to file for external review and expedited appeals available, according to the [Connecticut Insurance Department's external review page (opens in a new tab)](https://portal.ct.gov/cid/consumer-information-center/consumer-resource-library/external-review). Follow the deadlines in your plan's denial notice.

### Does health insurance pay every medical bill?

No. You can still owe premiums, deductibles, copays, coinsurance, noncovered charges, out-of-network costs and balance-billed amounts. Check whether a provider is in network before a planned service.

## Related terms