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How Does Health Insurance Work?

Health insurance helps pay for your medical care. People usually get health insurance through an employer, Medicare or Medicaid. The Affordable Care Act also created exchanges for people to find individual and non-group health plans. Health insurance works this way: You visit a health care provider. You may have to pay a copay when you arrive. After your health care services, the provider bills your insurance company. The insurer reviews the services and pays what it believes it owes the provider. In most health plans, the insurer reimburses the bulk of the costs. The patient pays for the rest of the costs.

Types of Health Insurance

Employer-Sponsored

Nearly half of Americans get their health insurance through an employer. This is usually more cost-effective than getting an individual plan. An employer helps pay for your coverage and will likely get a better rate than individual insurance. Employers often provide employees multiple health plan offerings that vary based on premiums, out-of-pocket costs, and provider networks. PPOs are the most common type of employer-sponsored plan, though high-deductible health plans have become a more common option in recent years.

Medicare and Medicaid

Medicare and Medicaid cover more than one-third of Americans combined. Medicare is usually based on age or disability. People 65 and over are eligible for Medicare as are people under 65 with disabilities or those with end-stage renal disease. Medicaid is income-based. Each state has its own income requirements and benefits. Both Medicare and Medicaid are usually lower cost options than employer-sponsored insurance or an individual plan.

Individual Health Insurance

About 7 percent of Americans have individual or non-group health insurance. Insures offers these plans through the Affordable Care Act marketplace and outside of the marketplace. These plans, especially those outside of the marketplace, are often more expensive than an employer-based plan. Plans within the marketplace may offer tax breaks and subsidies for lower-income Americans. Those discounts are not available in the individual market outside of the exchanges.

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How much does Health Insurance cost?

Health insurance costs vary by plan. Medicaid usually costs the least. Medicare is also more affordable than employer-sponsored health insurance. ACA plans’ costs vary depending on your income. The ACA allows subsidies and tax credits for people for lower-income people. Here is more information about average annual premium costs for different plan types:

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