Health Insurance Explained.
Health insurance is a financial protection system that helps cover the cost of medical care, including doctor visits, hospital stays, surgeries, prescription drugs, mental health services, maternity care, and preventive services like annual checkups, vaccines, and screenings. You pay a monthly premium to maintain coverage, and when you receive care, you may also pay part of the cost through a deductible (the amount you pay before insurance starts covering services), copayments (a fixed fee for certain services), or coinsurance (a percentage of the total bill). After you reach your plan’s out-of-pocket maximum, the insurance company typically covers 100% of covered services for the rest of the policy year.
Health insurance is important because medical care can be extremely expensive. A single emergency room visit, hospital stay, or major surgery can cost thousands—or even tens of thousands—of dollars. Insurance reduces these costs to a more manageable amount and protects you from financial hardship due to unexpected illness or injury. It also gives you access to negotiated rates with doctors and hospitals, which are usually lower than what uninsured patients pay. In addition, most plans emphasize preventive care, helping detect and treat health issues early before they become more serious and costly. Overall, health insurance supports both your physical well-being and your financial stability by ensuring access to necessary medical services while limiting your financial risk.
Paying a monthly premium when you don’t use many services might seem pointless. But health insurance isn’t just about routine visits; it’s mainly about protecting you from unexpected, extremely high costs. Accidents and illnesses don’t give warnings. A broken bone, appendicitis, a car accident, or a sudden diagnosis like cancer can lead to bills that cost thousands—or even hundreds of thousands—of dollars. Most people can’t easily afford that out of pocket. Health insurance works like a safety net: you pay smaller, predictable amounts to protect yourself from a huge financial hit that could cause long-term debt.
It’s not just for emergencies. Insurance often covers preventive care like annual checkups, vaccines, and screenings, which can catch problems early before they become serious and expensive. In that way, it can actually save money and protect your long-term health. So while it may seem unnecessary when you’re healthy, health insurance is really about risk protection, access to care, and peace of mind. You hope you won’t need it—but if you do, you’ll be glad you have it.
What is it?
Why do you need it?
Is it a waste of money?
What are the different types?
Medicare Health Products
Understanding the Mystery of Medicare
Medicare comes in two parts through Social Security: Part A and Part B. Part A is most often automatic and if you are are collecting social security prior to 65, Part B most often be automatic, too. I tell my clients that if they haven't received any paperwork from Social Security 3 months before their 65th birthday it's a good idea to call and check to make sure Medicare has been triggered for them.
Medicare Part A is hospital insurance that pays a portion of inpatient hospital stays, skilled nursing facility care, hospice and some home health care. It is typically premium free for those 65+ who have paid
Medicare taxes for at least 10 years, or those with qualifying disabilities. Medicare Part A alone will not cover all of your hospital expenses. Inpatient services have a deductible of $1,736.00 per benefit period in 2026 and coinsurance that varies depending on how many days you are hospitalized. Benefit periods start when you are admitted to the hospital or the skilled nursing facility, and end when you have been out for 60 consecutive days. This means if you have been out of the hospital for 61 days and are re-admitted, you will need to pay that deductible again. This can be very costly if you do not have other protections in place (Medicare supplement plan or a Medicare Advantage plan). Part A does not cover long-term or custodial care.
Medicare Part B is a premium based component of Original Medicare that covers medically necessary services such as doctors visits, outpatient care, durable medical equipment, diagnostics and preventative services among others. The premium in 2026 for B is $202.90 a month and there is a one-time calendar year deductible of $283.00. Once that deductible is met, Part B will pay for 80% of covered services and you are responsible for the remaining 20%. There is no cap on how much you might pay out of pocket over the course of the year if you do not have another plan in place to supplement B. Part B is optional and if you are still employed, you might not need to enroll until you retire (check with your HR and Social Security to confirm). However, if you decide you simply do not want Part B, you will most likely face a lifetime late enrollment penalty.
Medicare Supplement
Often called Medi-Gap, a Medicare Supplement plan works with your Medicare Part A and Part B to pay for your services. This is a very important benefit to take advantage of when you first become eligible. There is a seven-month initial enrollment period, which begins 3 months before you turn 65 and ends 3 months after you turn 65. This is one of the few times that you can pick the plan of your choosing and you cannot be denied or put through Medical Underwriting.
Did you know?
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If you decide you don't want to enroll and just stick with A and B, your out-of-pocket expenses are unlimited. You will be fully responsible for your Part A per incident deductible, your Part B deductible and the 20% that Medicare Part B does not cover.
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If you wait to enroll, you might be denied in the state of California if you cannot pass medical underwriting and are outside your 7 month window.
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If you are still working and your employer sponsored insurance is as good or better than Medicare's standard, you might not need a supplement until you retire. Check with Medicare to confirm!
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COBRA coverage does not usually qualify as creditable coverage.
Prescription Drug Plan
A prescription drug plan (PDP) is insurance that helps cover the cost of medications by lowering what you pay for prescription drugs through premiums, copays, and deductibles. Plans may be standalone or included in a broader health policy. For example, Medicare Part D offers prescription coverage to eligible individuals and is used in conjunction with a Medicare Supplement plan. Most plans use a formulary (a list of covered drugs) organized into tiers, with lower-cost generics and higher-cost brand or specialty medications.
Medicare Advantage
A Medicare Advantage plan is a type of Medicare health plan offered by private insurance companies that contract with the federal government to provide your Medicare benefits. Also known as Medicare Part C, it combines the coverage of Original Medicare (Part A hospital insurance and Part B medical insurance) into one plan and often includes additional benefits such as prescription drug coverage, dental, vision, hearing, and wellness programs.
These plans typically operate through networks (like HMOs or PPOs), may require referrals for specialists, and have their own costs such as premiums, copays, deductibles, and out-of-pocket maximums.
Ancillary
Ancillary coverage refers to supplemental insurance benefits that provide protection beyond standard medical insurance. While primary health insurance typically covers major medical expenses such as hospital stays, surgeries, and physician visits, ancillary benefits help fill important gaps by covering routine, specialized, or unexpected costs that can quickly add up.
The most common types of ancillary coverage include dental insurance, vision insurance, and life insurance.
Beyond these well-known options, there is a wide range of additional ancillary benefits that many people are unaware of, such as:
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Travel Health
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Hospital Indemnity
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Final Expense
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Accidental Injury
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Accidental Death
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Cancer
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Critical Illness
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Short Term Disability
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Long Term Disability
These additional policies can significantly reduce out-of-pocket expenses, protect income during unforeseen events, and provide added financial security. By combining core medical coverage with appropriate ancillary benefits, individuals and families can create a more comprehensive protection strategy tailored to their specific needs and risk factors.
Dental
Dental insurance provides meaningful financial protection against both routine and unexpected dental expenses while encouraging preventive care that protects long-term health. Most plans cover preventive services like exams, cleanings, and X-rays at little to no cost, which helps detect cavities, gum disease, and other issues early—often before they require costly treatments such as crowns, root canals, or extractions that can run into the thousands of dollars. In addition, dental insurance typically covers a percentage of basic and major procedures, significantly reducing out-of-pocket costs when treatment is needed.
Many plans also include negotiated in-network rates, meaning members pay lower fees than uninsured patients even before insurance benefits apply. By spreading costs into predictable monthly premiums and lowering the financial burden of major procedures, dental insurance can make oral healthcare more affordable, accessible, and budget-friendly over time.
Vision
Vision insurance is important to have because it makes routine eye care more affordable and helps detect health issues early. Regular eye exams can identify not only vision changes but also underlying conditions such as glaucoma, macular degeneration, diabetes, and high blood pressure—often before symptoms appear. Vision plans typically reduce the cost of annual exams, glasses, and contact lenses, which can otherwise be expensive when paid fully out of pocket. By lowering these costs and encouraging consistent checkups, vision insurance supports both clear eyesight and overall health while helping you budget for predictable vision expenses.
Life
Life insurance is important because it provides financial protection for the people who depend on you. If you pass away unexpectedly, a life insurance policy pays a tax-free benefit to your beneficiaries, which can help cover funeral expenses, outstanding debts, mortgage payments, childcare, daily living costs, and even future needs like college tuition. Without it, loved ones may face serious financial strain during an already difficult time. Life insurance is especially critical if you have dependents, shared debts, or income that others rely on, because it replaces lost income and helps maintain financial stability and security for your family.
Individual & Family Plan Options
Enrolling in a medical plan can typically only happen once a year, during the Open Enrollment Period, which runs from November 1st-December 31st each year. The only other time you can enroll in a plan is if you experience a Qualifying Life Event (QLE): marriage, divorce, birth, adoption, loss of other insurance (non-payment does not count), moving to an area where your plan is not offered or moving into a new state. There are a few other QLE's, which can be found in the resource section by carrier. Carrier's will also
occasionally run Special Enrollment Periods (SEP), based on a state of emergency and tax penalties, but you don't want to count on an SEP if you cancel your insurance during the year, whether by choice or due to non-payment. Individual and family medical plans are meant for people under the age of 65 are are available through the Exchange or direct from the insurer.
Covered California
Covered California is a state run health insurance exchange that has the ability to reduce the premiums with health insurance carriers based on your age, your tax household income, number of people in your tax household and the zip code you live in. While it can be an overwhelming process to enroll with Covered California, choose your plan and provide all of the additional paperwork they request, I am an expert at navigating their system.
Direct Health Insurance
This is health insurance an agent helps you purchase from through the carrier. Depending on your age and the zip code you reside in, it can be very expensive. Seek out an agent to speak to to make sure you are getting the best plan for your needs. Insureds often make the mistake of purchasing the least expensive plan, only to find it doesn't cover a sick office visit, or even worse- that it isn't minimum essential coverage and they wind up with a tax penalty.