What's health insurance?
Health insurance can be confusing, but it's simply a contract between the person who buys health insurance (for example, an individual, employer or association) and a health insurance company. You (and/or your employer) pay a premium – a specific amount of money – for your insurance coverage. In exchange, the health insurance plan pays all or a portion of the health care service cost. While no one plans on getting sick, it happens. Having health insurance helps pay for these costs and provides protection from very expensive medical services in the event care is needed.
Things to know about health insurance
- There are many types of health insurance plans ranging in price, provider choice and coverage.
- When you receive care from a provider, you may have to pay a copayment (a flat dollar amount) or a coinsurance (a percentage of the amount) for health care services (such as an office visit, lab work or an X-ray).
- You may have to meet a deductible each year before your health plan begins paying benefits.
- In-network providers have an agreement with the health plan to participate as a health care provider for a given plan. Plan benefits are typically better when services are rendered by an in-network provider.
- Plans typically have a calendar or plan year out-of-pocket maximum, which is the most you'll pay for covered health services during the plan year.
- After you receive care, the provider will submit a claim for services. Your health plan will send payment to the provider and will send you an Explanation of Benefits, which shows how the claim was paid.
- Your provider sends you a bill that shows what your health insurance company paid and what you still owe for the care received. It’s your responsibility to pay the provider the remaining balance.
Types of medical plans
There are a number of different types of medical plans. They are similar in that they cover many of the same services. Yet, they can differ greatly in:
- How much you pay for coverage (i.e., the health insurance premium)
- The amount you pay each year before the plan pays for covered services (i.e., the deductible)
- Provider choice
Here are three common types of medical plans:
Health Maintenance Organization (HMO). Under an HMO, your health insurer gives you a list of primary care physicians (PCP) you can choose from. If the doctor you want to see is not part of the plan's network, you could see that doctor, but you may pay for the complete cost of care. Generally, your primary care provider also needs to refer you to a specialist if you want to see one.
Preferred Provider Organization (PPO) / Exclusive Provider Organization (EPO). A PPO plan provides more provider choice. You may go to any doctor you want, but visits are more affordable if you choose in-network providers. You do not need a referral to see a specialist.
High deductible plan + health savings account. Another health care option is a high-deductible health plan along with a health savings account (HSA). In exchange for having a higher deductible, you pay a lower monthly premium. After you sign up with a high-deductible plan, you're eligible to open an HSA. You'll get a debit card with your HSA. Any time you need to pay for qualified medical expenses (for instance copays, prescription drugs), use your debit card to pay for the cost of care. Any money left over in your account at the end of the year rolls over to the following year. Plus, HSAs have some tax advantages. Learn about Providence Health Plan's HSA plan and qualifying medical expenses.
Health insurance words or phrases
Like any industry, health insurance has its own terminology. Before you receive care, get to know what an insurance word or phrase means. The more you know, the more you can make the most of your benefits and your health.
View an infographic explaining common health insurance terms ›
See a glossary of health insurance definitions ›
If you want to learn more about your plan benefits, log into your myProvidence account (or create an account). If you have questions about your plan’s benefits, contact a Providence Customer Service team member at 503-574-7500 or 800-878-4445 (TTY: 711).