Quick answer: health insurance shares your medical costs with an insurer in exchange for a monthly premium. You pay the deductible first, then copays or coinsurance, until you hit the plan’s out-of-pocket maximum; after that the plan pays 100% of covered in-network care for the rest of the year. Most people get coverage through an employer, the ACA Marketplace, Medicaid or CHIP, or Medicare. For 2027 Marketplace plans, open enrollment on HealthCare.gov runs November 1, 2026 to January 15, 2027, and you must enroll by December 15 for coverage that starts January 1.
Health insurance is one of the largest bills most households pay, and one of the most confusing. The same plan can look cheap or expensive depending on whether you read the premium, the deductible or the out-of-pocket limit. Network rules, drug lists and paperwork add another layer.
In this guide
- How Health Insurance Works: Premium, Deductible, Copay, Coinsurance and Out-of-Pocket Max
- Plan Types: HMO, PPO, EPO, POS and HDHP
- Where to Get Coverage: Employer, Marketplace, Medicaid, COBRA and Medicare
- ACA Metal Tiers and How to Compare Plans
- Premium Tax Credits and Cost-Sharing Reductions
- HSA and FSA Basics
- In-Network, Out-of-Network and Surprise Billing Protections
- How to Use Your Plan: EOBs, Prior Authorization and Appeals
- Coverage Gaps: Job Changes, Life Events and Short-Term Plans
- Open Enrollment Calendar and a Decision Checklist
- Frequently Asked Questions
- Related Guides and Sources
This guide pulls the pieces together in one place: the cost terms, the plan types, where coverage comes from, how Marketplace savings work now that the enhanced subsidies have expired, how health savings and flexible spending accounts fit in, the protections you have against surprise bills and denials, and a checklist for open enrollment. Each section links to a deeper article where we have one.
Facts and figures come from HealthCare.gov, CMS, the IRS, the U.S. Department of Labor and KFF, checked October 2026. Plan rules vary by insurer and state, and 2027 Marketplace prices and savings amounts are published on HealthCare.gov starting November 1, 2026. This is general information, not insurance, tax or legal advice.
How Health Insurance Works: Premium, Deductible, Copay, Coinsurance and Out-of-Pocket Max
Five terms decide what a plan costs you. Learn them once and every plan document gets easier to read.
The five cost terms
- Premium. The amount you pay every month to keep the plan, whether or not you use care.
- Deductible. What you pay for covered services each year before the plan starts sharing costs. Many plans cover some services, such as preventive care, before the deductible.
- Copay. A flat amount for a service, such as $30 for a primary care visit.
- Coinsurance. Your percentage share of a covered service after the deductible, such as 20% of the allowed amount.
- Out-of-pocket maximum. The most you pay in a plan year for covered in-network care. Deductibles, copays and coinsurance count toward it; premiums do not.
Our dedicated explainer on deductibles, copays, coinsurance and the out-of-pocket maximum walks through worked examples.
Federal limits on out-of-pocket costs
The Affordable Care Act (ACA) caps the out-of-pocket maximum for most plans. According to CMS guidance published January 29, 2026, the limit is $10,600 for self-only coverage and $21,200 for family coverage in 2026, rising to $12,000 and $24,000 in 2027. Individual plans can set lower limits, and many do.
Preventive care
Under the ACA, most plans must cover a set of preventive services, such as many screenings and vaccines, without charging a copay or coinsurance when you use an in-network provider. HealthCare.gov lists the covered services for adults, women and children.
A simple way to compare total cost
Add a year of premiums to the out-of-pocket maximum. That sum is your worst-case annual cost for covered in-network care. Then estimate a “normal year” using the copays for the visits and prescriptions you expect. A plan with a low premium and a high deductible wins in a healthy year; a plan with a higher premium and lower cost-sharing often wins in a year with surgery, a pregnancy or a chronic condition.
Plan Types: HMO, PPO, EPO, POS and HDHP
Plan type describes network rules: which doctors you can see, whether you need referrals and whether anything is covered out of network.
| Plan type | Network | Referrals to specialists | Out-of-network coverage (non-emergency) |
|---|---|---|---|
| HMO (health maintenance organization) | Must use network; usually choose a primary care doctor | Usually required | Generally none |
| PPO (preferred provider organization) | Network plus out-of-network option | Usually not required | Yes, at higher cost |
| EPO (exclusive provider organization) | Must use network | Usually not required | Generally none |
| POS (point of service) | Network with primary care doctor | Usually required | Yes, at higher cost, often with referral |
| HDHP (high-deductible health plan) | Can be any of the above | Depends on network type | Depends on network type |
Which type fits whom
HMOs and EPOs tend to have lower premiums in exchange for tighter networks, which works well if your doctors are in network and you rarely travel. PPOs cost more but suit people who want to see specialists without referrals or need out-of-network access. An HDHP is defined by its deductible rather than its network, and it is the plan type that lets you open a health savings account.
Check the directory, then call
Provider directories can be out of date. Before choosing a plan, call your key doctors and ask whether they are in network for that exact plan name for the coming year.
Where to Get Coverage: Employer, Marketplace, Medicaid, COBRA and Medicare
Your main options depend on your job, income, age and household.
Employer coverage
Most working-age Americans get insurance through their own job or a family member’s. Employers usually pay part of the premium, and you pay your share from your paycheck before taxes. If you start a new job, ask when coverage begins; our article on when health insurance starts at a new job explains waiting periods.
The ACA Marketplace
Individuals and families without affordable job-based coverage can buy plans through HealthCare.gov or their state’s own Marketplace. Plans sold there must cover essential health benefits and cannot deny you or charge more because of a pre-existing condition. Income-based savings are available to many enrollees (see below).
Medicaid and CHIP
Medicaid provides free or low-cost coverage to many people with low incomes, and the Children’s Health Insurance Program (CHIP) covers children, and in some states pregnant women, in families that earn too much for Medicaid. HealthCare.gov notes that you can apply for Medicaid or CHIP at any time of year. Eligibility rules vary by state.
COBRA
If you lose a job with group coverage, federal COBRA rules generally let you keep the same plan for a limited time, typically up to 18 months, by paying the full premium plus up to a 2% administrative fee, according to the U.S. Department of Labor. Losing job-based coverage also opens a 60-day Special Enrollment Period on the Marketplace, so compare both. Our guide on how health insurance works when switching jobs covers the timing, and our article on how long health insurance lasts after termination explains when employer coverage usually ends.
Medicare
At 65, or earlier with certain disabilities, most people move to Medicare, which has its own enrollment rules and penalties. Our Medicare guide covers eligibility, costs and plan choices.
Young adults
Under the ACA, plans that cover dependents must allow children to stay on a parent’s plan until age 26, whether or not they live at home, are married or are students.
ACA Metal Tiers and How to Compare Plans
Marketplace plans are grouped into metal levels that describe how costs are split between you and the plan, not the quality of care.
| Metal tier | Plan’s average share of costs | Your average share | Typical pattern |
|---|---|---|---|
| Bronze | About 60% | About 40% | Lowest premiums, highest deductibles |
| Silver | About 70% | About 30% | Moderate premiums; the only tier with cost-sharing reductions |
| Gold | About 80% | About 20% | Higher premiums, lower deductibles |
| Platinum | About 90% | About 10% | Highest premiums, lowest cost-sharing; not offered everywhere |
HealthCare.gov describes these percentages as averages for a standard population, so your own share depends on the care you use. Catastrophic plans, with very high deductibles, are available to people under 30 and to some others who qualify for a hardship exemption.
How to compare Marketplace plans
- Enter your expected income and household so the site shows prices after any savings.
- Filter by the doctors and drugs you need.
- Compare the deductible and out-of-pocket maximum, not just the premium.
- Look at the plan type (HMO, PPO, EPO) and the network size.
- Check quality ratings, which HealthCare.gov displays for many plans.
Premium Tax Credits and Cost-Sharing Reductions
Marketplace savings come in two forms. Both are based on your expected household income for the year you want coverage, not last year’s income.
Premium tax credits
A premium tax credit lowers your monthly premium. You can take it in advance, paid directly to your insurer, or claim it when you file taxes. Enhanced credits that began in 2021 expired at the end of 2025 and were not renewed by Congress, according to KFF’s FAQ updated in January 2026. Under the rules now in effect, households generally need income between 100% and 400% of the federal poverty level to qualify, and people in states that expanded Medicaid with income up to 138% of the poverty level are usually directed to Medicaid instead. Households above 400% of the poverty level generally receive no premium tax credit.
HealthCare.gov says it will post 2027 income levels and savings on November 1, 2026. Until then, its estimator uses 2026 amounts.
Reconciling at tax time
When you file, the IRS compares the advance credit paid on your behalf with the credit you qualify for based on actual income. KFF notes that changes taking effect for 2026 coverage require most enrollees to repay the full amount of any excess advance credit. Report income changes to the Marketplace during the year to avoid a large bill.
Cost-sharing reductions
Cost-sharing reductions lower deductibles, copays and out-of-pocket limits for lower-income enrollees, generally those with income between 100% and 250% of the poverty level. They are available only on silver plans, which is why a silver plan can be the best value for people in that range.
Employer coverage and the affordability test
If you are offered job-based coverage that meets federal affordability and minimum value standards, you generally cannot get a premium tax credit for Marketplace coverage instead. HealthCare.gov explains how to check whether a job-based offer counts as affordable, including for family members.
HSA and FSA Basics
Two tax-advantaged accounts help pay medical bills with pre-tax money. They work very differently.
Health savings accounts (HSAs)
An HSA is available only to people covered by an HSA-eligible high-deductible health plan with no disqualifying other coverage. Contributions are tax-deductible or pre-tax through payroll, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. The money is yours to keep, even if you change jobs or plans.
| HSA figures | 2026 | 2027 |
|---|---|---|
| Contribution limit, self-only | $4,400 | $4,500 |
| Contribution limit, family | $8,750 | $9,000 |
| Minimum HDHP deductible, self-only / family | $1,700 / $3,400 | $1,750 / $3,500 |
| Maximum HDHP out-of-pocket, self-only / family | $8,500 / $17,000 | $8,700 / $17,400 |
The 2027 figures come from IRS Revenue Procedure 2026-24. People 55 and older can contribute an extra $1,000 a year. Enrolling in any part of Medicare ends your ability to contribute.
Flexible spending accounts (FSAs)
A health FSA is offered through an employer. You choose an amount to set aside from each paycheck before taxes and spend it on eligible medical costs during the plan year. Unlike an HSA, an FSA generally follows a use-it-or-lose-it rule, though employers may offer a short grace period or let you carry over a limited amount. The IRS sets an annual contribution limit each year.
Which to use
If you have an HSA-eligible plan, an HSA usually offers more flexibility because unused money rolls over indefinitely. An FSA can work with any employer plan that offers it and is useful for predictable expenses such as glasses, orthodontics or regular prescriptions.
In-Network, Out-of-Network and Surprise Billing Protections
Network status changes what you pay more than almost anything else.
Allowed amounts and balance billing
Insurers negotiate allowed amounts with in-network providers, and those providers agree not to bill you for the difference. Out-of-network providers have no such agreement, and in the past many sent patients a “balance bill” for what the plan did not pay.
The No Surprises Act
Since January 1, 2022, the federal No Surprises Act has protected people in most private health plans from surprise bills in three common situations, according to CMS:
- Emergency services, including at out-of-network facilities.
- Non-emergency care from out-of-network providers at an in-network hospital or surgery center, such as an anesthesiologist or radiologist you did not choose.
- Air ambulance services from out-of-network providers.
In these cases you generally pay only your in-network cost-sharing. People who are uninsured or paying cash have the right to a good faith estimate of costs before scheduled care. CMS runs a help desk for complaints at 1-800-985-3059.
When to expect out-of-network costs
The law does not protect you if you knowingly choose an out-of-network provider for non-emergency care, outside those protected situations, or if you validly sign a consent notice waiving protections where that is allowed. Check network status before scheduled care.
How to Use Your Plan: EOBs, Prior Authorization and Appeals
Paperwork is part of using insurance. A few habits prevent most billing headaches.
Read your explanation of benefits
After a claim, your insurer sends an explanation of benefits (EOB). It is not a bill. It shows what the provider charged, the allowed amount, what the plan paid and what you may owe. Compare it with the provider’s bill before you pay, and call the insurer if they do not match.
Prior authorization
Many plans require approval before certain services, procedures or drugs. Your doctor’s office usually submits the request, but you are often responsible if it is skipped. Ask before scheduling anything major.
Appeals and external review
The ACA gives you the right to appeal a denied claim. HealthCare.gov explains that you generally have 180 days from the denial notice to file an internal appeal with your insurer, and if the insurer upholds the denial, you can ask for an external review by an independent organization. Urgent cases move faster. Keep copies of every letter and write down the date and name for every phone call.
Keep your card handy
Your insurance card holds your member ID, group number and phone numbers for customer service and nurse lines. Our short explainer on what a health insurance card is and how to read it covers each field.
Coverage Gaps: Job Changes, Life Events and Short-Term Plans
Gaps are expensive because one emergency without coverage can cost far more than a year of premiums.
Special Enrollment Periods
Outside open enrollment, you generally need a qualifying life event to enroll in Marketplace coverage. HealthCare.gov lists events such as losing other coverage, moving, getting married, having or adopting a child and certain changes in income. Most Special Enrollment Periods last 60 days. Our article on open enrollment and Special Enrollment Periods explains the rules and documents you may need.
Short-term health plans
Short-term plans are not ACA-compliant. They can deny coverage for pre-existing conditions, exclude whole categories of care and cap benefits. Federal rules limit how long they can last, and some states restrict or ban them. Read the exclusions carefully before treating one as a bridge.
Two policies at once
Having more than one health plan is legal and common, for example when spouses cover each other through their jobs. Coordination of benefits rules decide which plan pays first. Our article on having two health insurance policies explains how it works.
Open Enrollment Calendar and a Decision Checklist
Open enrollment is the main time each year to choose or change coverage.
Key dates for 2027 Marketplace coverage (HealthCare.gov)
These dates come from HealthCare.gov’s dates and deadlines page.
| Date | What happens |
|---|---|
| November 1, 2026 | Open enrollment starts; 2027 prices and savings posted |
| December 15, 2026 | Last day to enroll or change plans for coverage starting January 1 |
| January 1, 2027 | Coverage starts if you enrolled by December 15 and paid the first premium |
| January 15, 2027 | Open enrollment ends |
| February 1, 2027 | Coverage starts for enrollments December 16 to January 15 |
State-run Marketplaces can set different deadlines, so check your state’s site. Employer open enrollment usually happens in the fall too, on dates your employer sets.
Decision checklist
- Estimate your household income for 2027 and update your Marketplace application.
- List your doctors, hospitals and prescriptions.
- Compare at least three plans on premium plus out-of-pocket maximum.
- Confirm network status by calling your providers.
- Check each plan’s drug list and prior authorization rules.
- Decide whether an HSA-eligible plan makes sense for your budget.
- Enroll by December 15 for January 1 coverage and pay your first premium.
- Read your new plan’s summary of benefits and coverage and save your member card.
Free help is available from trained Marketplace assisters, called navigators, which you can find through HealthCare.gov’s local help search.
Frequently Asked Questions
What is the difference between a deductible and an out-of-pocket maximum?
The deductible is what you pay before the plan starts sharing costs. The out-of-pocket maximum is the most you pay in a year for covered in-network care, including the deductible, copays and coinsurance. After you reach it, the plan pays 100% of covered in-network costs.
When is open enrollment for 2027 health insurance?
On HealthCare.gov, open enrollment runs November 1, 2026 to January 15, 2027. Enroll by December 15 for coverage that starts January 1. State-run Marketplaces may use different dates.
Did the extra ACA subsidies end?
Yes. The enhanced premium tax credits that began in 2021 expired at the end of 2025 and have not been renewed, according to KFF. Premium tax credits still exist for many households, generally with income from 100% to 400% of the federal poverty level.
Is an HMO or a PPO better?
Neither is better for everyone. HMOs usually cost less but require you to stay in network and get referrals. PPOs cost more but let you see specialists without referrals and offer out-of-network coverage.
Can I get health insurance outside open enrollment?
Yes, if you qualify for a Special Enrollment Period after a life event such as losing coverage, moving, marriage or having a baby. Medicaid and CHIP accept applications all year.
Can I contribute to an HSA with any plan?
No. You must be covered by an HSA-eligible high-deductible health plan. For 2027, the IRS sets the limits at $4,500 for self-only coverage and $9,000 for family coverage.
Related Guides and Sources
Related guides on Pro Insurance Info:
- Deductible, copay, coinsurance and out-of-pocket maximum explained
- Health insurance open enrollment and Special Enrollment Periods explained
- More guides in this series, including plan types, metal tiers, premium tax credits, HSA vs FSA, appeals and the No Surprises Act, will be added here as they are published.
Sources:
- HealthCare.gov, When can you get health insurance? (2027 open enrollment dates), Saving money on health insurance, Special Enrollment Periods, and Appealing a health plan decision.
- CMS, Premium Adjustment Percentage and Maximum Annual Limitation on Cost Sharing for the 2027 Benefit Year (January 29, 2026).
- CMS, No Surprises Act consumer protections.
- IRS Revenue Procedure 2026-24 (2027 HSA and HDHP limits) and IRS Publication 969.
- U.S. Department of Labor, An Employee’s Guide to Health Benefits Under COBRA.
- KFF, FAQ on changes to Marketplace premium tax credits (updated January 14, 2026).
