Health Insurance 101 - Cover Health California

How does Health Insurance work?

Health Insurance plans typically have the following 3 stages:

Stage 1	Deductible
How It Works	Is the amount of money you must pay yearly for any medical services rendered before your health insurance plan starts to pay for covered medical expenses. This stage usually applies to all non-preventive services unless stated otherwise. For example, some plans waive the deductible for the office visit benefit.
The Good News	Under the Affordable Care Act, Preventative Services (Annual Exams, Routine Vaccinations, Well Women & Well baby visits) are 100% covered (FREE) from the moment you purchase Health Insurance. Therefore, these services are not subject to the Deductible Stage.

Stage 2	Coinsurance
How It Works	Your Health Insurance plan starts paying a certain percentage of all covered medical expenses because you have met your annual deductible. You will remain in this stage until you met your annual "Out of Pocket" maximum, which can range from $2,000 -$12,000 for an individual plan.
The Good News	Your responsibility for all covered medical expenses will be 50% or less! This is where you will pay the co-pays and/or percentages listed for the plan.

Stage 3	Annual Out-Of-Pocket Maxiumum Limit
How It Works	You will no longer pay for any covered medical services once you reach this limit. This means you have reached the annual out-of-pocket limit for your plan, which is the maximum amount you will pay out of your own pocket for covered medical expenses in a calendar year.
The Good News	You are now 100% covered! This means you will not be responsible for any other covered medical expenses you may incur for the remainder of the year.

Practical Example of How Health Insurance Works:

Scenario: Imagine you had major surgery and incurred $50,000 in covered medical expenses.

Sample Health Plan	Deductible: $3,000 Coinsurance: 20% Annual Out-of-Pocket Maximum: $6,000 (includes Deductible). Some plans require this number be added to your Deductible amount, so please read the . If that was case for this plan, your Annual Out-of-Pocket Maximum would actually be $9K instead of $6K.
How It Works	You are responsible for the first $3,000 (Deductible) of covered medical services rendered. Then you are responsible for 20% of any covered medical services rendered until your costs reach a total of $6,000 (Annual Out-of-Pocket Maximum Limit). Then your Health Insurance will pay 100% of any covered medical expenses for the remainder of the calendar year.
Cost Breakdown	You pay: $6,000 Your health insurance pays: $44,000 Total Cost: $50,000