How Health Insurance Works

How Health Insurance Works

Health insurance offers a number of benefits. It covers crucial services, it's less expensive than paying on your own for care and it provides financial protection. But it often requires help to successfully understand and navigate.

Learn which health insurance we accept at UCLA Health.

Jump to: Types of health insurance | Out-of-pocket expenses

Types of Health Insurance

Health insurance pays for many (if not all) of the medical needs you may have. Each month, you make a payment to a health insurer, such as Medicare or your insurance company. Some employers chip in for this payment.

In return, your insurer covers all or some of your medical costs, as long as you follow the insurer's rules. For example, your insurer may only sign contracts with certain doctors and hospitals. You must stay in this "network" or risk having your insurer decline coverage.

Health insurers offer many different types of plans. We accept:

Government health insurance programs


  • Description: Medi-Cal is California's Medicaid program. The state and the federal government jointly fund it. It provides free or low-cost care to children and adults with limited incomes.
  • Contact: Call 800-541-5555 or visit


  • Description: This insurance program from the federal government covers people 65 and older, as well as some people with certain diseases or disabilities. Medicare includes Parts A and B (coverage for hospitals and doctors). Part D (prescription drug coverage) is optional and costs extra. You may only join during certain enrollment periods.
  • Contact: Call 800-MEDICARE (800-633-4227) or visit You may find it easier to contact an outside group for advice. For questions about your options and rights, reach the nonprofit HICAP (Health Insurance Counseling and Advocacy Program) at or 800-434-0222. Learn about prescription drug options through our partner, the consultant eHealth, at or 877-345-6677.

Health insurance through private plans

Medicare Advantage:

  • Description: These plans are similar to traditional Medicare, but approved, private companies offer them. They cover services from doctors and hospitals. They frequently cover prescription drugs as well.
  • Contact: Reach out to the individual health insurer. An overview of your options is available through our partner, the consultant eHealth, at or 877-345-6677.

HMOs (health maintenance organizations):

  • Description: For these plans, you can only see doctors and use hospitals within a set network. You must also choose a PCP, or primary care physician. To see a specialist, you first need a referral from your PCP.
  • Contact: Reach out to the individual health insurance company.

PPOs (preferred provider organizations):

  • Description: With these plans, you can see specialists without a referral from a PCP. You can see any doctor or use any hospital as long as you stay within your insurer's approved network of providers and hospitals. Your plan may allow you to receive care out-of-network but may not cover as much of it.
  • Contact: Reach out to the individual health insurance company.

POS (point of service) plans:

  • Description: These plans combine aspects of HMOs and PPOs, with a network of approved doctors and hospitals. Like an HMO, you must choose a primary care physician and secure referrals to see specialists. Like a PPO, there is often some flexibility with going out of network.
  • Contact: Reach out to the individual health insurance company.

Health Insurance and Out-of-Pocket Expenses

For many people, health insurance pays a portion of their health care costs but not all of it. These costs are known as "out-of-pocket" expenses. Learn more about how health insurance deductibles work, as well as about copays and co-insurance. (Watch video below).