Understanding Your Health Insurance

Health insurance can be confusing and frustrating, but knowing the basics, such as common terms and how to find member assistance, will help you to get the most out of your policy and coverage.

Types of Health Insurance Coverage

Health insurance is meant to provide you and your family with protection from catastrophic health care costs. No matter which type of policy you have, it is very important to understand your coverage and how it works.

  • Individual plan
  • Employer-sponsored
  • Marketplace
  • Medicaid
  • CHIP

Private Health Insurance Coverage

There are many types of private health insurance coverage, which you might get through your employer, the marketplace, or an individual plan. Common types of plans include:
  • HMO (Health Maintenance Organization)
  • PPO (Preferred Provider Organization)
  • ACO (Accountable Care Organization)
  • HDHP (High Deductible Health Plan)
  • Limited Benefit Medical Plan
Sometimes, a plan may be combined with an:
  • HSA (Health Savings Account) or
  • HRA (Health Reimbursement Account).
To understand your policy it is a good idea to have the written policy to read for yourself. The written policy (which may look different than a website or yearly packet) explains what benefits are covered and are not covered, the insurance company's obligations, your obligations, and how to appeal if a claim is denied. Your policy’s Summary page is likely to be online. You can also ask your job’s Human Resources department to print it out for you.
Most people are not experts on medical coverage, but with an understanding of the basics, you will be able to ask the right questions. Start by identifying your coverage, which will depend on what type of plan you have. It is wise to understand your benefits before seeing a provider.

Some Terms to Understand

Health Maintenance Organization (HMO)
Under this type of plan, you must use hospitals affiliated with and providers employed by the HMO. Also, in some cases you must get a referral from your primary care doctor to see a specialist. Your total cost (after meeting your deductible) for each doctor's visit is usually limited to a co-payment and your doctor usually submits paperwork to the HMO for you. HMOs typically offer coverage for preventive care services.

Preferred Provider Organization (PPO)
This type of plan has a wider network of providers from which you may choose and there is usually a co-payment for each visit (after meeting your deductible). You may have the option to see out-of-network providers, but you will have to pay more than if you see a network provider. You may not need a referral from your primary care doctor to see a specialist if they are in-network. A PPO typically provides coverage for preventive care.

Point of Service Plan
This type of plan is the most flexible of all. It has provisions similar to the HMO, PPO, and Fee-for-Service plans. Much like an HMO, the lowest out-of-pocket costs come if you use specific participating providers. The next lowest out-of-pocket costs come from using listed providers, similar to a PPO. The highest out-of-pocket costs come from using providers that are not affiliated with the plan at all. The name says it all—the point (or place) where you receive the service influences your out-of-pocket cost.

Fee-for-Service Plan
Under a traditional Fee-for-Service (or indemnity) plan, you can go to any provider you choose and you don't have to get a referral to see specialists. However, these plans are often more expensive than other plans. Fee-for-Service plans usually pay only for medical costs related to illness and accident and not for preventive care. Unlike other types of plans, you may be required to pay for services up front and then submit the bill to the insurer for reimbursement.

Exclusive Provider Organization (EPO)
This plan generally operates like an HMO, but the providers are not employees of the EPO. An insurance company generally manages an EPO while an HMO is a business unto itself. For most insurance policies, you will have to pay 100% of your costs up to a pre-determined amount (or “deductible”) before the plan will pay any claims. Even after the deductible has been met, you may still have to pay a portion of the costs, often 20%, with the insurance company paying the remaining 80% until your “out of pocket maximum” has been met.

Health Accounts

Health Savings Account (HSA)
An HSA is an account that allows you to save money on a tax-free basis to pay for current health costs before your insurance deductible kicks in. It allows you to contribute to this account from your paycheck before taxes to save for future qualified medical costs. In order to have an HSA, you must be covered by a High Deductible Health Plan (HDHP). The advantages of having an HSA are that you earn interest on your savings. Similar to a retirement plan, unspent savings roll over to the next year, and both employees and employers can contribute to this account, which can stay with you if you change employers.

Health Reimbursement Arrangement (HRA)
An HRA is similar to an HSA in that they both allow you to pay for current health costs and save for future qualified costs on a tax-free basis. An HRA earns interest over time, and employers have the option to allow you to roll over unspent funds to the next year. However, unlike the HSA, only the employer can contribute to this account, not the employee, and it does not stay with you if you change employers. You should use your HSA or HRA to pay for all qualified services until you have reached the amount of the deductible or out-of-pocket maximum. Most HSA/HRA accounts have a checkbook or debit card that you use to pay for health costs. If you have health insurance through your employer, refer to your benefits plan summary or contact your employer's Human Resources department for details. If you purchase your own insurance, contact your insurance company for a summary of benefits.

COBRA - Extending Health Care Coverage After End of Employment

COBRA (The Consolidated Omnibus Budget Reconciliation Act of 1985) is a federal law that serves two purposes. First, it can extend health care coverage for 18 months past the end of employment if you have had medical coverage with your employer. Second, it can help you qualify for a private health care policy. For example, if a person stays on COBRA until it runs out, they cannot be turned down for a private health care policy because there were no gaps in coverage. The person must start the private policy within 180 days from the date their COBRA runs out.
For more information visit COBRA (United States Department of Labor).

Medicaid and CHIP (Children’s Health Insurance Plan)

Medicaid is an insurance program for people with low income that provides health coverage for children, pregnant women, many seniors, and/or people who are blind or have other disabilities. The program is jointly funded by the state and federal government. Each state runs its own Medicaid program and determines the covered benefits through a state plan. A federal agency, the Centers for Medicare and Medicaid Services (CMS), monitors the programs in each state and sets standards for how the programs are managed and financed.

CHIP is a state health insurance plan for children who are not eligible for Medicaid because their household income is too high for Medicaid, but they do not have any other health insurance. Depending on income and family size, children who are under the age of 19 may qualify. Like Medicaid, CHIP is different in each state.

  • Eligibility - Medicaid and CHIP eligibility is determined at the state level and is income-based, so each individual and family can find their state’s policy on the Medicaid.gov: State Profiles website.
  • Benefits - Because Medicaid and CHIP are both administered by states, benefits vary. However, there are minimum federal care standards to be provided to all Medicaid enrollees. All Medicaid enrollees receive the following mandatory benefits:
    • Inpatient hospital services
    • Outpatient hospital services
    • * EPSDT: Early and Periodic Screening, Diagnostic and Treatment services
    • Nursing facility services
    • Home health services
    • Physician services
    • Rural health clinic services
    • Federally qualified health center services
    • Laboratory and X-ray services
    • Family planning services
    • Nurse midwife (CNM) services
    • Certified Pediatric and Family Nurse Practitioner services
    • Freestanding birth center services (when licensed or otherwise recognized by the state)
    • Transportation to medical care
    • Tobacco cessation counseling for pregnant women

*All children under age 21 enrolled in Medicaid receive comprehensive care services titled: Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) . Those services include immunizations, sick doctor visits, regular checkups, vision and dental care, and other services deemed medically necessary by the primary care doctor. If a service is deemed medically necessary it can be covered for children under age 21 even if it is not a covered benefit in the state plan.

How to Enroll

Each state has its own means of enrolling individuals and families in Medicaid and CHIP. To enroll your child in Medicaid or CHIP, go to your state site, or go to Insure Kids Now.

Finding a Medicaid Provider

Once an individual or family is enrolled in Medicaid, it’s important to know that every provider does not accept Medicaid coverage. Finding a doctor or hospital that accepts Medicaid can sometimes be challenging, depending on your location. Most state Medicaid websites have searchable provider lists for enrollees. Another way to locate health care providers who accept Medicaid is to call the Member Services number on your Medicaid card and speak with a representative who has up-to-date lists of providers in your area.

Things to Think About No Matter Which Type of Insurance You Have

  • Does the plan allow seeking out and using specialists that you need?
  • Which hospitals can you use?
  • Does the policy cover the types of prescriptions you need?
  • Does the plan cover the specific procedures and therapies you need?
  • Does the plan limit the number of times per year that a service will be covered?
  • Does the plan cover assistive technology?
  • Does the policy cover assessment for mental health?

Making Your Policy Work for Your Special Needs

Case Managers: Nearly every insurance company should have care management available, but you must ask to be assigned a case manager. Ask to work with one insurance case manager, instead of speaking with someone different each time. This helps both the consumer and the insurance company by having one person who knows your needs and can manage your claims effectively. You can contact your insurance company by calling the 800 number found on your insurance card.

Denials: If you are denied coverage for a therapy, treatment, or an assistive device that is medically necessary, don't take "no" for an answer right away. Ask for the exact reason for the denial, then collect all documentation that explains the need for treatment and read over your insurance policy for the proper appeals process. Ask that your insurance company and health care providers supply all information related to the claim in writing. Don't hesitate to appeal decisions that are not in your favor (see Appealing Funding Denials).

Keep Records: Keep detailed, written records of everything related to your child's condition (see the MHP Care Notebook). This will also be very helpful for tax deductions and in all necessary stages of appeals. You have the right to submit a patient appeal for a denial of services through Medicaid or private health insurance. See also the MHP’s Working with Insurance Companies page; although written specifically for providers, it has a lot of information families will benefit from.

Advocate for your needs: Ask your employer to look at the possibility of changing the benefits in your company's plan if the current benefits exclude what you need covered.

Covered Services

Check your policy to make sure you understand what services are covered. Sometimes services that are connected to a certain diagnosis will be covered, and sometimes not. (For example, Autism Diagnosis and Treatment is not always a covered service.)

In-Network Provider

Some plans work with selected health care providers called a provider network. These providers are "in-network" and have a contract with your insurance company to accept a contracted rate for full payment of services. If you choose to get care from a provider who is not included in your plan’s network, you will likely pay a greater percentage or the full cost of the care. To find in-network providers, look at your current provider directory, call member services (on your insurance card) or go to your health insurance website and search.

Out-of-Network Provider

Out-of-network providers have not agreed to any set rate with your insurance company. However, if you need to use an out-of-network provider, you should contact your insurance plan to see if they will pay a percentage of the cost. Emergencies (with no choice of the provider) are usually covered as long as you contact them as soon as possible to explain the care.

Out-of-Pocket Costs

Out-of-pocket costs are those you must pay before your plan starts to pay. If you have met your out-of-pocket maximum, your plan will pay the rest of your costs in full. Depending on the type of plan, you may be required to pay:
  • A deductible, which is a set dollar amount you will pay before your insurance begins to pay its percentage. You pay full price to the providers until you have reached that set dollar amount. After that, you will pay only co-insurance and co-payments.
  • Co-insurance, which is your percentage after you have reached your deductible. For example, if you have 20% co-insurance, you will only pay 20% of in-network costs, and your insurance will pay the remaining 80%.
  • A co-payment, which is a fixed dollar amount you pay for covered service at each visit or purchase of prescriptions. Sometimes your co-payments will count towards your out-of-pocket maximum, depending on your plan. Also, there may be a lower co-payment for generic medications.
  • Out-of-pocket maximum is the most you will pay out-of-pocket in a benefit year for medical services. This amount includes your deductible, co-insurance, and sometimes co-payments. Once you have paid this amount, your insurance covers 100% of your in-network costs for the remainder of the benefit year.


Sometimes medications are covered under your health care plan or a prescription plan. If so, it is important to know which medications are covered and if there is a preferred list of medications covered by your policy. If so, when a provider prescribes a medication, ask them to make sure your insurance will cover it before writing the prescription. You can also ask if a generic version of the medication is available and if they can be prescribed for 90 days instead of 30, which may lower the co-payment.


Information & Support

For Parents and Patients

Health Insurance Marketplace (HealthCare.gov)
Sometimes known as the health insurance exchange, the new Health Insurance Marketplace helps uninsured people find health coverage that meets their needs and budget. Part of the Affordable Care Act.

Free, confidential tool that helps you find government benefits children/families may be eligible to receive.

Insure Kids Now
For Medicaid and CHIP (Children’s Health Insurance Program), find information on health insurance programs and dental providers in your state.

COBRA (United States Department of Labor)
The Consolidated Omnibus Budget Reconciliation Act contains provisions giving certain former employees, retirees, spouses and dependent children the right to temporary continuation of health coverage at group rates; this and linked pages explain the details of these provisions.

Medical Bills Page (Care Notebook) (PDF Document 88 KB)
A form to log medical bills including the date, provider, service performed, cost, insurance paid, amount the family owes, and more. This is part of the Care Notebook Health Coverage Section.

Services for Patients & Families Nationwide (NW)

For services not listed above, browse our Services categories or search our database.

* number of provider listings may vary by how states categorize services, whether providers are listed by organization or individual, how services are organized in the state, and other factors; Nationwide (NW) providers are generally limited to web-based services, provider locator services, and organizations that serve children from across the nation.

Authors & Reviewers

Initial publication: July 2016; last update/revision: April 2020
Current Authors and Reviewers:
Author: Tina Persels
Authoring history
2020: update: Tina PerselsA
2016: update: Gina Pola-MoneyA
2016: first version: Tina PerselsA
AAuthor; CAContributing Author; SASenior Author; RReviewer