How Health Insurance Works

Whether you’re seeing a doctor or filling a prescription, taking care of your health can be pricey. And that’s where health insurance can help.

In exchange for paying a premium, you are shielded against the high costs of medical care by a health insurer that picks up some of the cost of your care. When you have health insurance, you may also be able to get lower-priced care than you could on your own because insurers often negotiate lower rates with in-network medical providers.

Medically Underwritten and Guaranteed Enrollment Plans

Many health insurers offer two types of plans, medically underwritten and guaranteed enrollment. Medically underwritten plans are issued and priced based on an individual’s health history. Coverage is not guaranteed.

Guaranteed enrollment plans, on the other hand, will cover anyone, regardless of health history. For this reason, they are typically more expensive, and not every insurer offers these plans.

By 2014, however, the health care reform law requires that insurers guarantee enrollment of health insurance for everyone, no matter their health history.