Updated October 15, 2026
How do you choose a health insurance plan? Start with how much care you expect to use, then compare plans on four things: whether your doctors are in network, whether your prescriptions are covered, the total you could pay in a year (premiums plus the out-of-pocket maximum), and how much flexibility you need to see specialists. The cheapest premium is not always the cheapest plan.
Whether you’re a student buying your first plan, a family comparing employer options, or a self-employed worker shopping the Marketplace, understanding how health insurance plans work is the key to avoiding costly surprises. This guide covers the basics, the main plan types, and how to compare options for 2027.
Key Takeaways
- Health insurance shares the cost of care between you and your insurer and protects you from very high medical bills.
- The main plan types, HMO, PPO, EPO, and POS, differ in flexibility, cost, and network rules.
- Your premium, deductible, copays, coinsurance, and out-of-pocket maximum together determine what you actually pay.
- In-network care costs less, and some plans don’t cover out-of-network care at all except emergencies.
- For 2027, Marketplace out-of-pocket limits rise to $12,000 for an individual, and enhanced subsidies are no longer available. Compare plans before you renew.
What Is Health Insurance and How Does It Work?
Health insurance is a contract between you and an insurer that helps pay for your medical care. You pay a monthly premium, and your plan shares the cost of doctor visits, prescriptions, hospital care, and other covered services.
Key terms to know
- Premium: The amount you pay each month to keep your coverage.
- Deductible: The amount you pay each year for covered services before your plan starts sharing costs. Many preventive services are covered before you meet it.
- Copay: A set fee for certain services, such as $25 for a doctor visit.
- Coinsurance: The percentage of the cost you pay after meeting your deductible.
- Out-of-pocket maximum: The most you’ll pay in a year for covered in-network care. For 2027 Marketplace and most employer plans, the limit is $12,000 for an individual and $24,000 for a family (HealthCare.gov).
Our guide to copays, coinsurance, and deductibles walks through each term with examples, and our billing glossary defines the rest.
How costs are shared
Say you visit the doctor for a sinus infection, and the visit costs $100. If your plan has a $20 copay, you pay $20 and your insurer covers the rest. If the visit is subject to coinsurance instead, you pay the full cost until you meet your deductible. After that, at 20% coinsurance, you’d pay $20 and your plan would pay $80. Preventive care, like an annual checkup, is usually covered at no cost when you see an in-network provider.
Types of Health Insurance Plans
| Plan type | Referrals to see specialists | Out-of-network coverage | Typical cost |
| HMO (Health Maintenance Organization) | Usually required | Emergencies and urgent care only | Lower premiums |
| PPO (Preferred Provider Organization) | Not required | Yes, at a higher cost | Higher premiums |
| EPO (Exclusive Provider Organization) | Usually not required | Emergencies only | Often lower than a PPO |
| POS (Point of Service) | Usually required | Some, at a higher cost | Between an HMO and a PPO |
Most plans of every type require prior authorization for some services, such as imaging or surgery. For a deeper comparison, see our guides to HMO vs. PPO plans, HMOs, and PPOs.
Marketplace metal levels
Plans on HealthCare.gov and state marketplaces are grouped into metal levels based on how costs are split, not the quality of care:
- Bronze: Lowest premiums, highest costs when you get care. The plan pays about 60% of costs on average.
- Silver: Moderate premiums and costs, about 70%. If your income qualifies, silver plans can come with extra savings on deductibles and copays.
- Gold: Higher premiums, lower costs when you get care, about 80%.
- Platinum: Highest premiums, lowest costs when you get care, about 90%. Not available in every area.
- Catastrophic: Low premiums and very high deductibles, available to people under 30 or with a hardship exemption.
High-deductible health plans and HSAs
High-deductible health plans (HDHPs) have lower premiums and higher deductibles. If your plan qualifies as an HSA-eligible HDHP, you can open a Health Savings Account (HSA) and set aside pre-tax money for medical costs. HSA money rolls over every year, and withdrawals for qualified medical expenses are tax-free.
- 2027 HSA limits: $4,500 for self-only coverage and $9,000 for family coverage, plus $1,000 more if you’re 55 or older (Mercer).
- New in 2026: Bronze and catastrophic Marketplace plans now count as HSA-eligible, even if they don’t meet the usual HDHP rules (IRS Notice 2026-5).
Understanding Provider Networks
In-network providers have agreed to discounted rates with your insurer, so you pay less. Out-of-network providers can charge more, and depending on your plan type, your insurance may cover less or nothing at all.
Before an appointment, check your insurer’s online directory and call the office to confirm they take your specific plan. See our step-by-step guide on how to check if a doctor is in network.
Additional Coverage to Consider
Mental health, dental, and vision
- Mental health: Marketplace and small-employer plans must cover mental health and substance use care as an essential health benefit. Federal parity law also requires most plans that offer mental health benefits to cover them on terms comparable to medical care. See our guide to mental health coverage.
- Dental and vision: Pediatric dental and vision are essential benefits for Marketplace plans. Adult dental and vision usually require a separate policy. See our guides to dental insurance and vision insurance.
Prescriptions, specialists, and therapies
Check that your medications are on the plan’s drug list (formulary) and at what tier. If you expect to use physical therapy, behavioral health, or reproductive care, confirm those services are covered and ask about visit limits or prior authorization. Our guide to prescription benefits explains drug tiers.
When You Can Enroll or Change Plans
Most people choose a plan during open enrollment. For 2027 coverage, HealthCare.gov open enrollment runs November 1, 2026, to January 15, 2027, and Medicare open enrollment runs October 15 to December 7, 2026. See our open enrollment guide for every deadline.
Outside open enrollment, you need a qualifying life event, such as losing other coverage, turning 26, getting married, having a child, or moving, to get a Special Enrollment Period.
How to Compare Plans for 2027
HealthCare.gov, your state marketplace, Medicare.gov, and employer benefits portals let you compare premiums, deductibles, and out-of-pocket limits side by side. Enter your doctors and prescriptions to see which plans cover them.
The enhanced premium tax credits that lowered Marketplace costs from 2021 through 2025 expired at the end of 2025 (KFF). If your premium rose in 2026, update your income on HealthCare.gov and compare again before renewing.
Example scenarios
These examples are hypothetical and use round numbers to show how the trade-offs work.
- Healthy young adult with few doctor visits: A bronze plan or HDHP at $200 a month with a $6,000 deductible could cost less overall if you mostly need preventive care, which is covered at no cost. Pairing it with an HSA adds tax savings.
- Parent with young children: A silver or gold plan at $450 a month with a $1,000 deductible may make sense if you expect several sick visits and urgent care trips a year.
- Person managing a chronic condition: A plan at $600 a month with a $500 deductible and low drug copays can cost less over the year if you need regular prescriptions and specialist visits.
- Frequent traveler: A PPO offers more options to see providers away from home, though out-of-network care still costs more. If you have Medicare, check the network and travel rules carefully, since most Medicare Advantage plans have local or regional networks.
Choosing a Plan That Fits Your Health and Budget
The right plan balances cost, coverage, and convenience. If you’re buying for the first time, start with the care you expect to need next year. If you’re renewing, review how your current plan worked and read any notice of changes before letting it roll over.
Frequently Asked Questions
What is the most important thing to understand about health insurance plans?
How costs are shared between you and your insurer. Your premium, deductible, copays, coinsurance, and out-of-pocket maximum all affect what you pay, so compare total yearly costs, not just the premium.
Which type of health insurance plan is best for me?
It depends on your priorities. If you want lower premiums and can stay in network, an HMO or EPO may work. If you want more flexibility to see specialists or out-of-network providers, a PPO or POS plan may be better, though they usually cost more.
What happens if I go to an out-of-network doctor?
You’ll usually pay more, and HMO and EPO plans may not cover the visit at all except in an emergency. Check your network before scheduling care.
Are preventive services covered?
Yes. Most ACA-compliant plans cover recommended preventive services, like annual checkups, screenings, and many vaccines, at no cost when you use an in-network provider.
Can I open an HSA with any health plan?
No. You need an HSA-eligible high-deductible health plan. Starting in 2026, bronze and catastrophic Marketplace plans also qualify. In 2027, you can contribute up to $4,500 for self-only coverage or $9,000 for family coverage.
When can I enroll in a new health insurance plan?
Most people enroll during open enrollment. For 2027 coverage, HealthCare.gov runs November 1, 2026, to January 15, 2027. Life events like losing coverage, getting married, or having a child can qualify you for a Special Enrollment Period.
Learn More with Patient.com
Understanding health insurance doesn’t have to be overwhelming. Patient.com offers clear breakdowns of coverage options so you can make confident, cost-effective decisions about your care, with no jargon and no guesswork.
