Health insurance is a type of financial protection that helps pay for medical costs. It is important because unexpected illnesses or accidents can be very expensive. Without health insurance, you would have to pay these costs out-of-pocket. Health insurance is generally less than the cost of going uninsured. The way health insurance works is simple: a group of people pays a fixed amount every month (whether they need medical care that month or not), and the insurer agrees to pay for some or all of their medical expenses in exchange. This spreads the risk of paying for high medical costs among a large group, making it more affordable for everyone involved.

Individuals and families can get health coverage through their jobs, trade unions, religious organizations, or the government. People can also buy their own health insurance, either through the marketplace or directly from a private insurer. The health marketplace is where you can find information and apply for financial assistance to help you pay for a private plan or a Medicaid or CHIP plan through the government.

When shopping for health insurance, you should consider premiums, deductibles, and out-of-pocket maximums. You should also look at which medical services and prescription drugs the plan covers, and how much you will have to pay for each service or drug if you choose that option. The best plan for you will depend on your anticipated needs and your budget.

A health plan’s deductible is the amount you must spend out-of-pocket each year before your health insurance starts to pay. You may also have to pay copayments, which are a set dollar amount for each medical service or drug you receive. These amounts vary by plan.

Many plans offer a range of options, such as preferred provider networks and tiered cost levels. Preferred provider networks are groups of doctors, pharmacies, and other providers that have agreed to provide services at a lower cost than the average for their area. Tiered cost levels are based on how much you use the services and how well they are rated by your health plan.

You can also shop for a plan that offers coinsurance, which is a percentage of the cost of a covered service after you have met your deductible. This type of plan can be helpful if you anticipate needing a lot of medical care or taking multiple prescription medications.

You can compare plans and costs online, over the phone, or in person at your local health insurance marketplace or agency. You can also apply for financial assistance to help pay for a private health insurance plan through the marketplace or for a Medicaid or CHIP plan through your state. You can usually apply for financial help during open enrollment, which is November 1 through December 15. You can also apply at other times if you have a life change that makes you eligible. For example, you can apply for financial assistance when you get married, have a baby, lose your job, or move to a new address.