Frequently Asked Questions

Health Insurance Basics

Health insurance costs $7,470 a year for individual coverage and $21,342 for family coverage on average.1 Factors like your location, health conditions, age and gender all affect your health insurance costs—and so do the type of plan you buy and the family members you cover. The good news is, you can find ways to save money on health insurance.

Take your time and compare multiple plans. Your health insurance affects your family, finances and quality of life. That’s a big deal! You need a plan that covers the care you’re most likely to need and fits your budget.

That’s why we recommend working with an independent insurance agent. They know the industry, and since they’re local, they know the laws in your state too. They’ll compare quotes and help you understand your options—all at no extra cost to you. Want a vetted agent who’s guaranteed to put you first? Check out our network of Endorsed Local Providers (ELPs).

The biggest reason is that independent agents are health insurance experts. Even if you’re generally well-informed about health insurance, they’re likely to know more than you—after all, it’s their job.


Independent insurance agents know all sorts of helpful things—like the fact that your state may have just changed its insurance laws. Or that Company A has better customer service than Company B. They’ll also know about discounts and coverage options you may not have heard of. And since they’re independent, they can get you quotes from all the top insurance companies in your area.


The key is finding an agent you trust. We wanted agents we could trust too—that’s why we made a network of licensed, independent health insurance agents called Endorsed Local Providers (ELPs). We’ve vetted them, and we’re confident they’ll put your family’s needs first—period. Learn more about the ELPs.

You'll pick and sign up for a health plan during open enrollment. You'll also sign up any family members who will be on your plan. Then, you'll pay a monthly premium to keep your policy active.

When you get health care services, you or your doctor's office will file a claim with the insurance company. The claim lets your insurer know how much you owe for the services, and they'll negotiate with your doctor's office to lower the costs. Depending on your plan, you’ll pay most or all costs until you hit your deductible. After that, your coinsurance kicks in—when the insurance company starts helping with the bill.

If you join a spouse or parent's health plan, ask them for a copy of the policy, so you know exactly what’s covered.

Open enrollment is the time when you can sign up for new health insurance or change your existing plan. For most plans, it happens in the fall. But some plans—like Medicaid—offer open enrollment year-round. You can also enroll in new or different health insurance any time you have a qualifying life event like getting married or changing jobs.

A premium is the amount you pay each month to keep your health insurance policy active.

Your deductible is the amount you pay for health care services before your insurance company starts helping you cover some of your health care costs. Once you hit your deductible, you and your insurance company will start splitting the cost of your covered health care. (That’s called coinsurance.)

An out-of-pocket maximum is the most you’ll have to spend on health care costs in a year. If your health expenses go over this amount, then your insurance company will pay 100% of your costs for the rest of the year. (Yay!)

Types of Health Insurance

Private health insurance is any health insurance plan that doesn’t come from the government. You can buy private health insurance through your employer, directly from an insurance company or through an independent insurance agent.

We recommend working with an independent agent, like our ELPs. They can show you the most options from different insurance companies, and they’ll help you pick the one that’s best for you.

Some of the most popular private health plans are:

  • Health Maintenance Organizations (HMOs) – HMOs help healthy people stay healthy. And they only pay for doctors listed in your plan.
  • Preferred Provider Organizations (PPOs) – PPOs save you money when you go to doctors in your network. If you go outside the network, your insurance still pays some of the costs—just not as many. PPOs charge high premiums, but they can be good for people who need a lot of doctors’ visits.
  • High-Deductible Health Plans (HDHPs) – With these plans, you have to pay more out of pocket before your insurance kicks in. But you’ll pay way lower premiums. Some HDHPs also qualify you to open a Health Savings Account (HSA) where you can save money for health care costs.
  • Short-Term Health Insurance – This coverage lasts up to 12 months. It’s meant to cover the gap from the time you stop using one health plan until your next plan starts. The downside? Some states don't allow short-term health insurance.
  • Faith-Based Health Care – Religious nonprofits use these plans to share health care costs among plan members. Everyone pays a monthly fee, and when someone needs health care, everyone helps pay the bill.
  • Special Needs Coverage – These plans help cover the extra medical costs that come with certain chronic illnesses or disabilities. (Some government programs, like Medicare and Medicaid, also offer special needs coverage).

No. An HSA is a Health Savings Account, where you can save money to pay for health expenses. You can't open an HSA unless you buy a high-deductible health plan (HDHP) first.

The short answer is, HSAs are better.

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) both let you save money for health care expenses. But even though the “F” stands for Flexible, FSAs are actually way harder to use.

You can only get an FSA from your employer’s health insurance plan . . . so you can’t get one on your own if you’re self-employed or if your workplace doesn’t offer this option. You also can’t invest with your FSA. And if you don’t spend the money you saved before the end of the year, you lose it all.

With an HSA, your savings roll over to the next year, and you can invest them to make them grow. The best part is, you can get an HSA through your employer or on your own, as long as you buy a qualified, high-deductible health plan (HDHP) first.

It depends. Private health insurance should cover the 10 essential health benefits listed in the Affordable Care Act, like emergency services, prescription drugs and newborn care.2 Some states make insurance companies cover additional services. And some companies add their own coverage benefits and limits.

It's important to understand what your plan covers. Our ELPs (Endorsed Local Providers) can walk you through your health insurance options, so you can feel confident that you’re getting the right coverage. And the best part? Working with an ELP is free!


Typically, private insurance is better because it gives you the most freedom to choose the best coverage for you. If you qualify for Medicare due to your age, health or income, that may be your most affordable option—just remember that it also comes with lots of limits.

A good, independent insurance agent can help you find a plan that gives you the best value on the coverage you need.

There are actually quite a few government health insurance plans. Some of the most common federal plans are Medicare and COBRA insurance. There are also state-run programs like Medicaid and the Children’s Health Insurance Program (CHIP).

These programs are designed to help people who truly need them and who may not be able to afford private insurance. That said, government programs come with tons of limits and rules . . . so you may not be able to choose the quality of care you get. That’s why we recommend private insurance whenever possible.

No. Obamacare isn't a health care program—it’s a nickname for a law called the Affordable Care Act (ACA). People started calling the law "Obamacare" because it was made during President Obama's administration.

The ACA set guidelines for how private health insurance companies have to cover people. Then, the federal government created the Health Insurance Marketplace, or "marketplace" for short. The marketplace is a website that you can use to shop for health insurance plans that meet ACA guidelines. The funny thing is that—even though the government runs the website—all the plans being sold on the marketplace are actually private health insurance plans.

Some state governments have made their own marketplaces too—so you can shop for private insurance plans that follow ACA and state guidelines.

The Ramsey team and Dave Ramsey himself recommend high-deductible health plans (HDHPs) whenever possible. That way, you can enjoy lower monthly premiums, and you'll qualify to open a Health Savings Account (HSA). You can use those savings to cover health expenses and even invest.

That said, if you or your family have special health care needs, you may need to go with another type of plan like a PPO or an HMO. It's smart to work with a trusted ELP, so they can help you pick a plan that meets your unique needs.

Special Cases With Your Health Insurance

There are both private and government health care options for self-employed people. Want help choosing the best one? Work with an ELP. They'll help you actually understand your health insurance options so you can pick the right coverage for you and your family.

Losing a job is hard—especially if you lost your health insurance too. The good news is you can get health insurance if you’re unemployed. You may qualify for government programs like COBRA or Medicaid, or you may be able to enroll in marketplace or short-term health insurance.

Yes and no. The federal government no longer fines people for not having health insurance (yay!). But some states still require it, so you may owe a fee if you’re uninsured.

But the real penalty for being uninsured doesn't come from the government. Sometimes the “penalty” is getting stuck with a stack of medical bills after an unexpected accident or illness. And without insurance to help, it’ll be up to you to cover the costs. That’s why finding health care coverage that works for you is so important.

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