Health insurance is a contract between a healthcare company/insurer and a consumer, where the company agrees to pay all, or some, of the insured person's healthcare costs, in return for payment of a monthly premium. It is a one-year agreement, during which the insurer will be responsible for paying specific expenses related to illness, injury, pregnancy, or preventative care.
Health insurance agreements in the U.S. generally come with exceptions to coverage includes (a) A deductible that requires the consumer to pay certain healthcare costs "out-of-pocket", up to a maximum amount before the company coverage begins; and (b) co-payments that require the consumer to pay a set share of the cost for specific services or procedures.
Health insurance pays most medical expenses, surgical expenses, and preventative care costs incurred by the insured person. The out-of-pocket costs will be lower if the premium is high and vice versa. Since 2010, the Affordable Care Act has prohibited insurance companies from denying coverage to patients with preexisting conditions and has allowed children to remain on their parents' insurance plan until they reach the age of 26. Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) are federal health insurance plans that extend coverage to older, disabled, and low-income people.