How Does Health Insurance Work?
Health insurance works by sharing medical costs between you and the insurer rather than requiring you to pay the full bill on your own. When care is needed, expenses are first applied to your deductible, then split through coinsurance, until your out-of-pocket limit is reached and the plan covers additional eligible costs. Use a sample medical bill below to see how these components work together to determine what you can expect to pay versus what the health plan covers.
Coverage Simulator
See how health insurance performs
Move the slider to see how your out-of-pocket cost can be limited by your plan’s deductible, copay/coinsurance, and out-of-pocket maximum.
Medical bill amount
$57,000
$100$100,000
Plan details:
Deductible
$2,500
Coinsurance
20%
Out-of-pocket max
$7,500
Example math only. Actual costs depend on network status, covered services, copays, prior authorization, and billing rules.
You pay
$4,400
Plan pays
$7,600
Applied to deductible$2,500
Coinsurance amount$1,900
Protected by out-of-pocket max$0
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