Reimbursement can be issued directly to the insured or can be paid to the health care provider. There are different types of health insurance in the United States, including public and private. Public health coverage is subsidized with government funds. Both Medicare and Medicaid are examples of public health insurance and provide coverage for retired, disabled and low-income individuals. Private health insurance is not subsidized by the government and can be obtained through an employer or by an individual.

For individuals whose employer does not offer health insurance or for individuals who are unemployed, personal health insurance can be purchased. When purchasing your own health insurance or making changes to your coverage, you must do so during the annual open enrollment period or during a special enrollment period that requires a qualifying event trigger.

Most health insurance plans include a variety of out-of-pocket expenses. Copays are set fees that the insured individual must pay for services, like doctor visits and prescription medications. A deductible is an amount that must be met before the health insurance company will offer coverage or payment. Coinsurance is a percentage of healthcare costs that the insured must pay even after they have met their deductible. An out-of-pocket maximum is a limit on the amount an individual pays for covered health services in a plan year. After the limit is met, the health insurance plan will pay 100% of covered health costs for the remainder of the plan year. If you have dependents on your plan, you could have both an individual out-of-pocket maximum and a family out-of-pocket maximum. Plans with higher out-of-pocket costs typically have lower monthly premiums than those with lower out-of-pocket costs.

The majority of health insurance plans utilize managed care models, in which the insurance company manages and oversee the services and care provided, reimbursement system, provider network and rules. Health maintenance organizations (HMOs) and point-of-service plans (POS), restrict patients to a particular group of providers and facilities, called a network. Preferred-provider organizations (PPOs) allow patients to choose their physician, either inside or outside of their network. Those who obtain care out-of-network must pay a higher percentage of the cost, though the insurance company can also refuse payment entirely for out-of-network services. In addition, insurance companies can deny coverage for services that are obtained without preauthorization. Preauthorization is a prior approval from a health insurance company for a certain health care service, equipment or medication.

Health insurance can offer a safety net in the event you end up with a serious injury or illness.