How individual health insurance works

When is the last time you were in the hospital? If you are like most people, it has been a while. If it has not been very long, you already know the value of good health insurance. Health insurance is also one of the most confusing things most people buy, so here is how I explain it to my own clients. There are four parts to what a plan covers.

Preventive care at 100%

Your annual checkup, wellness exam, immunizations, flu shot, and routine screenings such as pap smears, mammograms, and prostate screenings are covered at no cost to you. Use these services, since they cost you nothing.

There are limits on how many of certain screenings you can get under this benefit, and some preventive services are only covered at no cost for people over a certain age or at higher risk for certain conditions. Check with me or your insurance company to confirm that what you are looking for is covered at 100%.

The other thing to know is that if your doctor finds an abnormality or a problem, the visit changes from preventive to diagnostic. At that point it will likely be subject to your copay or deductible.

Sickness and copays

Having health insurance means you can see the doctor when you are not feeling well. These visits usually come with a copay, which is a set amount you pay toward the office visit. Copays can range from $10 to $60 or more, depending on the plan.

Your copay only covers the time you spend with the doctor. Any tests ordered or services performed may cost extra and are usually subject to your deductible.

You can also skip the office entirely. Some plans and benefit packages include access to a doctor by phone or video call, who can diagnose your condition and call a prescription in to your local pharmacy without you leaving home. Those services are available for a low monthly cost and can save you some copays.

Prescription drugs

Depending on your plan, health insurance can pay all or part of the cost of expensive prescription drugs. Plenty of common maintenance prescriptions are inexpensive at major retailers anyway, so the coverage matters most when a prescription is costly.

Pharmacy discount programs such as GoodRx can sometimes beat a plan's copay on certain generics, so it is worth comparing before you pay at the counter.

Major illness or injury

If you are diagnosed with cancer or another serious illness, or you are seriously injured in an accident, your health insurance is there to keep the medical bills from wrecking you financially. It can wipe out a large part of a massive hospital bill, but it is not 100% coverage. You will still pay part of the bill yourself.

Those out-of-pocket costs come in two pieces. Your deductible is the amount you pay before the plan starts paying its share. Coinsurance is the percentage of the cost you share with the insurance company after that. Every plan also has a yearly out-of-pocket maximum, and once you reach it, the plan pays the rest of your covered costs for the year.

What about the cost of premiums?

Premiums keep climbing, and that is a big reason deductibles and out-of-pocket costs matter so much when you compare plans. If you buy through the marketplace, you may qualify for a premium tax credit that lowers your monthly payment. The credit depends on your household income, and the marketplace calculates it for you when you apply. For 2027 coverage, Oregon's marketplace is Explore Health, and I explain the change in Oregon is leaving HealthCare.gov.

Where it makes sense, I also recommend supplemental coverage to lower your total out-of-pocket cost for medical care. Those are covered on the other Learn pages.

Those are the basics. If you want help putting together a health insurance plan that fits you, I am glad to help.