Health insurance is a contract between an insurer and an individual or group, that pays for some or all of an enrollee’s health care expenses. The type of expenses covered, and the terms and conditions of coverage, are specified in a policy document, called an Evidence of Coverage booklet for private insurance or a national [health insurance] plan document for public plans. The policy may be renewable annually or monthly, or it may be lifelong (in the case of permanent plans).

There are many different types of health insurance. Some help pay for doctor visits, tests and other treatments, while others cover long-term care or even disability. Some also provide a lump sum to support family members who need it after an illness or accident. Choosing the right type of health insurance depends on your situation and budget.

A number of states have regulated health insurance for individuals and groups since the 1970s, and model laws and regulations produced by the National Association of Insurance Commissioners (NAIC) ensure some degree of consistency across state lines. In addition, federal laws, including the Medicare program and self-insured group health plans, apply to some forms of health insurance.

All types of health insurance offer important protections for enrollees. Most health plans must provide a minimum set of essential benefits, such as hospitalization and emergency services. Most must also notify enrollees of changes to their plans or policies, and allow them a reasonable opportunity to review and appeal those changes. Some types of health insurance also provide consumer protections, such as nondiscrimination on the basis of gender and pregnancy status, and a patient advocate to assist with medical care coordination and cost containment.

Some health insurance plans require that enrollees use in-network providers for the best financial benefit. In most cases, plans that are closed networks have lower benefits for services received outside the network, compared to those that are open networks. Other plans, such as preferred provider organizations and point of service plans (POS), are a mix between closed and open networks.

Generally, all major medical health insurance plans sold in the individual and small-group markets are required to comply with the Affordable Care Act. This means that they cannot have pre-existing condition limitations or waiting periods longer than six months, and they can only be offered during annual open enrollment periods or special enrollment periods triggered by qualifying events.

In recent years, some companies have introduced health insurance plans with very high deductibles in exchange for low premiums, which are designed to encourage healthy behaviors and reduce overall spending. These plans are often referred to as catastrophic health insurance. Other plans are focused on the specific needs of families, such as coverage for a child with special needs or a young adult who has a chronic illness. These plans can be a good option for some people, but it is important to understand the terms and conditions of these policies carefully.