A Simple Guide To Understand Your Health Plan

Aug. 13, 2026

Health insurance keeps you covered when it comes to medical expenses such as doctor visits, procedures and prescriptions. Your health is everything. 

But health insurance can be complicated. It has a language of its own. And there are rules to protect you. 

Knowing some of the basics of health care and how insurance works can help you use your health plan like a pro. 

Why Do I Need Health Insurance? 

It's important to have insurance because it protects you from unexpected high medical costs. It helps you and your family get medical care. This improves your lives and your health. Having health insurance is about prevention. It’s about being able to visit a doctor to get your health checked and, if necessary, get medication. 

How Health Insurance Works 

Your health plan helps you pay for health care costs when you need medical care. Instead of paying the full cost on your own, you and your plan share the cost. 

Think of health insurance as a safety net. You pay a monthly amount called a premium to keep your coverage active. Then, when you visit a doctor, fill a prescription or receive other services, you may pay part of the cost while your health plan pays the rest.

The important thing to remember is that health insurance helps protect you from paying the full cost of medical care on your own. By splitting costs between members and health plans, insurance can make health care more affordable and provide financial protection when unexpected health needs arise. 

When you visit an in-network doctor or use certain services, you pay less because your health plan includes discounted rates. This is true even when you haven’t met your deductible. Your costs are lower because you have health insurance. 

What you pay depends on the kind of plan you have. Knowing the basics of your particular plan can help you know what to expect. 

7 Health Insurance Terms Everyone Should Know

You may find some words you don’t know when it comes to understanding your health plan. Here are some key terms you should know. 

Open enrollment 

Every year you sign up for a new  health plan, whether you get that plan through your employer or you purchase health coverage on the Health Insurance Marketplace®. 

The time when you select a new plan is called open enrollment. This is the only time you can make changes to your health plan unless you have a qualifying event for a special enrollment period. 

If you get insurance through the Marketplace and already have a plan, you don’t have to reenroll. Keep paying your premium and you keep your current plan. But experts recommend using open enrollment to revisit your health care needs for the new year since you cannot make changes another time. 

Special enrollment period 

When you have a qualifying event, such as having a baby or getting married, you can get a special enrollment period to make changes to your health coverage. The amount of time* you have to make these changes depends on where you get your health plan. Generally, you will have 60 days to make changes. Job-based plans must provide a special enrollment period of at least 30 days. 

Premium 

Every month, you pay a premium to keep your health insurance coverage. If you get coverage through work, this will probably come out of your paycheck. If you have health insurance through HealthCare.gov, you have to pay this amount every month to keep your health insurance. 

Deductible 

A deductible is the amount you pay for covered health care services before your health insurance plan starts to pay. This amount resets at the start of the year. For example, if your deductible is $2,000, you pay the first $2,000 of covered services yourself. 

Many health plans cover certain services, such as well visits, before you have met your deductible. All Marketplace plans cover the full cost of certain preventive benefits* before you meet your deductible. 

You can check your plan details to know what might be covered before you meet your deductible. 

A few other things to know about deductibles: 

• Some plans have separate deductibles for certain things, such as prescription drugs. 
• Family plans often have both an individual and a family deductible. 
• Plans with lower monthly premiums generally have higher deductibles. 

With BlueCross BlueShield of South Carolina plans, you can keep track of your deductible with My Health Toolkit®, our member portal and mobile app. 

Copayment 

A copayment is a fixed amount you pay for covered health care services. It is also called a copay. This amount varies for different services with the same plan. You may have a copay for drugs, lab tests or doctors’ visits. 

You typically pay this amount at the time of the visit. 

Coinsurance 

Think of coinsurance* as cost sharing. Once you’ve met your deductible, you and your health plan split the cost of covered services. 

Coinsurance is the percentage of a health care bill that you pay after you’ve met your deductible. Your health plan pays the rest. 

Out-of-pocket maximum 

The out-of-pocket maximum* is the most you will pay for covered health care services during your plan year. Once you reach that limit, your health plan pays 100 percent of covered costs for the rest of the year. 

The out-of-pocket maximum protects you from very high medical bills if you have a serious illness, injury or unexpected health care needs. 

The out-of-pocket maximum does not include: 

• Your monthly premium. 
• Anything you spend on services your plan doesn’t cover. 
• Out-of-network care and services. 

Do The Math 

Take the time to understand these basics when you are signing up for a new health plan. 

Let’s say your plan has: 

• Copayments, for example $35 for doctor’s visits. 
• A $2,000 deductible.
• Coinsurance for health care services and treatments, for example 20% for lab tests.
• A $6,000 out-of-pocket maximum.

Over the year, you pay:

• A $2,000 deductible.
• $4,000 in copays and coinsurance.

You've now reached your $6,000 out-of-pocket maximum.

For the rest of the plan year:

• You pay $0 for covered services.
• Your health plan pays 100 percent of covered costs.

It is important to remember that the amount you pay depends on whether you see an in-network or out-of-network provider. 

Key Takeaways 

Understanding key health insurance terms such as premium, deductible, copay, coinsurance and out-of-pocket maximum can help you better understand your benefits, avoid unexpected costs, and get the most value from your health plan. Health insurance may seem complicated at first, but knowing these basics can make it easier to use your coverage with confidence. 

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