How Well Do You Understand Your Health Insurance?

Premiums are the monthly payments required to maintain health insurance coverage. They do not depend on whether you used health care. If premium payments stop, your coverage ends.

Learn more: Video: Understanding Health Insurance: Premiums

A deductible is one type of “cost-sharing” feature often included in a health insurance policy. It reflects an initial amount of covered health care expenses that you must pay out of pocket. Your health plan will then begin to pay for covered health care expenses beyond that deductible amount. (Plans typically cover some services, such as certain preventive care, before meeting the deductible.) Enrollees are still responsible for other forms of cost sharing, such as copayments and coinsurance, after meeting the deductible.

Learn more:

• Policy Changes Bring Renewed Focus on High-Deductible Health Plans
• Navigating the Maze: A Look at Patient Cost-Sharing Complexities and Consumer Protections

Copayments are set dollar amounts (for example, $20 for a doctor visit). Coinsurance is a percentage of the allowed cost (for example, 20%).

Learn more:

• Navigating the Maze: A Look at Patient Cost-Sharing Complexities and Consumer Protections
• Video: Understanding Health Insurance: Out-of-Pocket Costs

You would pay $2,000. Here’s how your deductibles and copayments combine:

$1,000 deductible + $1,000 copayment (4 days at $250 per day) =
$2,000 total out-of-pocket responsibility

Learn more: Video: Understanding Health Insurance: Out-of-Pocket Costs

HSAs allow people enrolled in high deductible health plans (HDHPs) to save pre-tax money for qualified medical expenses such as deductibles, copays, and coinsurance. They generally cannot be used to pay insurance premiums. HSAs also have other tax advantages. For 2026, HSA-eligible HDHPs must have a minimum deductible of $1,700 for individual coverage or $3,400 for family coverage. HSAs are different from flexible spending accounts (FSAs) in several ways, including that they do not require enrollment in an HDHP.

Learn more: Health Policy 101: What Are the Different Types of Private Health Plans?

In general, health insurance plans are not required to cover care received from an out-of-network medical professional or facility. Except in certain situations protected by federal or state law, patients who receive care out-of-network may owe:

• Higher deductibles or coinsurance, and
• The full difference between the care provider’s charge and the insurer’s allowed amount (“balance billing”).

Learn more: FAQ: What happens if I get care from a doctor who isn’t in my plan’s network?

The No Surprises Act protects patients from unexpected higher charges (known as “surprise medical bills”) for emergency care, even if the medical professional or facility is out of network. It also protects patients in certain non-emergency situations involving out-of-network medical professionals at in-network facilities, and transportation provided by an out-of-network air ambulance in either of these situations.

Learn more:

• Navigating the Maze: A Look at Patient Cost-Sharing Complexities and Consumer Protections
• No Surprises Act Implementation: What to Expect in 2022

Prior authorization is a requirement by health insurance companies for patients to obtain approval of certain health care services or medications before the care is provided. If the insurance company does not pre-approve the care, or if the request is denied, insurance may not cover it. Half (51%) of insured adults say that in the past two years, their health insurance company has required them or their health care provider to get prior authorization before they could receive a health care service, treatment, or medication that they needed.

Learn more:

• Consumer Problems with Prior Authorization: Evidence from KFF Survey
• KFF Health Tracking Poll: Public Finds Prior Authorization Process Difficult to Manage

A drug formulary refers to the list of drugs your health plan covers. It typically classifies drugs into categories (“tiers”) that are subject to different cost-sharing. Health plans are required to make their formularies available to enrollees and typically post a link to it on their website.

Learn more:

• FAQ: How can I find out if a health plan covers the prescription drugs that I take?
• 2025 Employer Health Benefits Survey: Prescription Drug Benefits

Most insurers, employer-sponsored health plans, and hospitals are required to make certain cost information available on their websites and/or via a self-service estimator tool. However, it is unclear how many consumers are aware of these requirements or how to access the data, and gaps remain in the quality and reliability of the available data.

Learn more:

• Navigating the Maze: A Look at Patient Cost-Sharing Complexities and Consumer Protections
• Health Policy 101: What Federal Requirements Apply to Health Insurance?
• Challenges with effective price transparency analyses