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Consumer Guide to Understanding Health Insurance

We all know that good health is important. We also know medical care for an illness or injury can cost more than most of us can afford on our own. Fortunately, you can get health care coverage to help manage these costs. In fact, if you live in Massachusetts and you are age 18 or over you must have health insurance.

Many of the requirements discussed in this guide do not apply if your employer "self-funds" its health benefits plan. This “Self-fund” means that the employer pays your health claims from its own funds and does not pay premiums to an insurance company.  The employer decides the plan coverage, including employee eligibility, covered benefits and exclusions, employee cost-sharing and policy limits.  Federal law exempts these self-funded plans from state insurance laws, so these plans do not need to include state mandated benefits. You can ask your employer if your health plan is self-funded.

Table of Contents

Glossary of Health Care Terms

There are many special terms that are unique to health care and health insurance. Please review our glossary of terms that explain many of the terms that are used.

Additional Resources

Health Care Services

What are Health Care Services?

Health care can mean any service, supply, equipment or prescription that you get to help you stay healthy. It includes preventive care (like your yearly check-up), care for an illness or injury, a hospital stay, surgery, visits to a doctor's office, lab tests and X-rays, and even prescription drugs.

You may make use of some other types of services to help take care of your health, like buying over-the-counter medicine or keeping track of your own blood pressure. In this guide, though, "health care" means only those treatments that you get from a trained and licensed health care practitioner, like your doctor or nurse practitioner.

Who Provides Health Care Services?

Health care services include many services provided by different kinds of trained and licensed providers. These services can be in places like a hospital, a doctor's office or a health clinic. Under Massachusetts law, all hospitals must be licensed by the state. Other health care providers must be licensed by the state Board of Registration in Medicine or a related board. Your health plan may cover many of these providers, but remember that you may pay the costs if the provider is not in your health plan's network.

The link below "Finding Health Care Providers" tells you about types of health care providers and the agency that you may contact to learn more about a provider.

How Much Does Health Care Cost?

Depending on the health care you need and the treatment you have, your costs could be high. In general, the more services you get, and the more intensive the treatment, the more it will cost.

Massachusetts does not set the prices for health care services. Different providers may charge different amounts for a similar service. Many insurance companies negotiate the rates they pay to providers. If you are insured, you get the benefit of those negotiated rates. If you don't have insurance, you may have to pay a higher rate.

Inpatient care is the most expensive kind of care. Inpatient care is when you are admitted to a hospital. Although most stays are short and some stays cost much less than the average, many can last a long time and cost more than this average.

The average cost for some other types of care were:

  • Urgent-care facilities - $225 per visit average
  • Emergency rooms - $800-$1000 per visit average
  • Primary care doctor office visit - $80 - $100 per visit average 

These are average costs and depend on the level of care you get, the number of times you get care and the type of doctor or provider you see. These costs also reflect the rates that the insurance company might pay. If you don't have a health plan, the cost of the services might be even higher than these averages.

Additional Resources

Do I Have to Have Health Insurance?

Yes. Massachusetts has something called an "individual mandate." Under this law, if you live in Massachusetts and are age 18 or older you must have health insurance.

To meet the rules, you will need a health plan that meets these "minimum creditable coverage" standards:

  • Covers prescription drugs (may have deductible of up to $250 per individual/$500 per family
  • Covers regular doctor visits and check-ups before any deductible
  • Caps the annual deductible at $2,000 for an individual or $4,000 for a family
  • If you have a deductible or co-insurance on core services, caps out-of-pocket spending for health services at $5,000 for an individual or $10,000 for a family each year
  • Does not cap total benefits for a sickness or for each year; and,
  • Does not cap spending for a day in the hospital.

If your religion does not allow you to heave health insurance, you can file a sworn statement with your Massachusetts income tax return.

Additional Resources

How Do I Get Coverage under a Health Plan?

Employment-Based Coverage

Employers that buy health insurance must allow every eligible full-time employee to join any health plan that the employer offers. If the employer pays for a part of the premium, the insurance company must make sure that the employer does not pay more of the premium for higher paid employees than it does for other employees. If you do get your plan through your employer or union, they will choose the plans that they offer to you and they will buy the plan from the company. You can then choose the health plan that is best for you from the choices offered by your employer or union.

Large Employer Groups

Many employers (those with over 50 eligible employees) do not buy insured health plans from insurance companies. Instead they pay for health services from their own self-funded accounts. Although these employers may use insurance companies to process claims and handle other administrative tasks, the insurance companies are only Third Party Administrators. These are called "self-funded" plans. They are not considered to be insured plans and federal law exempts them from state law. To know if the state laws apply to your plan, you should ask your employer if your plan is self-funded.

Other large employers do buy insured health plans from insurance companies. These plans must follow all state insurance laws. This includes mandated benefits, eligibility rules and continuation of coverage protections. If the large group buys the health plan in Massachusetts, the plan must follow Massachusetts insurance laws. However, a large group may buy the health plan in another state as part of their national plan and they would then follow the laws of that state.

Small Employer Groups

Many employers with between 1 and 50 eligible employees include a health plan as part of the employee benefits package. In Massachusetts, sole proprietors are considered to be small employers and can buy the same small group health plans available to other small employers.

All small group plans in Massachusetts are "guaranteed issue" and "guaranteed renewable." This means that a company cannot turn down your application or refuse to renew your plan based on the amount or cost of services that you have used or may use. The company can only refuse to offer or renew a plan for certain reasons such as fraud or non-payment of premiums.

Individual Coverage

Directly from Carrier or Intermediary

You may buy a health plan directly from an insurance company. You can call a health insurance company directly to enroll in a plan designed for individuals, families and small groups. Many self-employed residents obtain health coverage this way. You can find a list of the companies that offer these plans at the Division of Insurance website.

Some companies require you to go through an intermediary. An intermediary is an entity that handles the enrollment and premium collection for the company. Insurance companies must offer the same health plans to individuals that they offer to small groups. If you are eligible for Medicare, you may buy a Medicare Supplement plan or Medicare Advantage plan directly from a company that offers that type of plan.

Through the Connector

If you do not work for an employer that pays at least 33% of your health plan premium, you can buy coverage from the Connector. These special plans are called Commonwealth Choice. These plans have the Connector Seal of Approval, certifying that the plans provide good value to consumers.

If your family income is less than 300% of the federal poverty level, and you meet certain qualifications, you may be able to buy a Commonwealth Care plan from the Connector. If your family income is under the federal poverty level, you may be eligible for a plan with no premium. If your family income is between 100% and 300% of the federal poverty level, you may be eligible for discounted premium.

If you are between the ages of 19 and 26, and are not eligible for subsidized coverage from your job, the Connector offers a Young Adult Benefit Plan for Massachusetts residents.

Qualified Student Health Insurance Plans (QSHIP)

If you are enrolled as a student in a Massachusetts college or university, you can buy a special health plan directly from your school. This Qualified Student Health Insurance Plan (QSHIP) is designed for students and is only available while you are an enrolled student. Keep in mind that you must have insurance if you are enrolled at least ¾ of the time in a Massachusetts college or university. This is true whether or not you consider yourself a Massachusetts resident. You are not eligible for Commonwealth Care if you are required to purchase a QSHIP or have coverage as a student.  

Keep in mind, parents and guardian may keep dependents on their health insurance plans until the dependent's 26th birthday, or 2 years after the last year the dependent was claimed as a dependent on a parent or guardian's federal income tax return - whichever comes first. This dependent care requirement does not apply to self-funded health plans or plans written outside of Massachusetts.

Government Health Benefit Plans


MassHealth is a Medicaid program paid for by state and federal taxes for eligible persons. The Division of Insurance does not oversee MassHealth programs. You will need to contact MassHealth for assistance with your MassHealth health insurance plan. 


If you are over 65, or if you have a certain type of disability, you may be eligible for Medicare. To learn more about Medicare eligibility and benefits, contact the U.S. Centers for Medicare & Medicaid Services or your local SHINE Counselor.

Other Government Health Plans

The state and federal government provide lower cost health coverage for certain people through public health programs. This includes the Indian Health Services, Peace Corps, CommonHealth, HealthyStart and other programs.

Additional Resources

Are There Different Types of Health Plans?

Most health insurance plans fall into one of three categories. In order to choose the best plan for you and your family, you should understand the difference between these major types.

Traditional Health Benefit Plans

Traditional health plans pay some of the cost of medical treatment. They may differ in the services covered and the providers offered in the network.

Medical/Indemnity Plans (Open Choice or Open Network Plans)

These plans cover services with any licensed health provider. This may be a good plan if you have family members outside the HMO's or PPP's service area, or if your providers are not in the network. These plans usually cover hospital and medical expenses for an accident or illness. They may also cover preventive care. These plans may only cover a fixed percentage of any covered cost. For example, the policy may say that the plan pays 80% of a service and you must pay the other 20%. With these plans, you are covered for any licensed health providers.

Health Maintenance Organizations-HMO(Closed Network Plans)

HMOs have a network of providers that you must use in order to be covered and not pay additional costs. If you have doctors or another provider that you use now, you should be sure they are in the network before you enroll in the HMO. Also, an HMO's network of providers are located within the HMO's "service area." If any family members you want to cover do not live in the service area, an HMO may not be a good choice for you. These plans cover hospital, medical and preventive care. You are only covered if you get your care through a network of providers, except in the case of an emergency. With most HMO plans you pay a flat dollar copayment for covered services. However, some HMO plans also have deductibles, coinsurance and benefit limits.

Preferred Provider Plans-PPP (Different Levels of Benefits from Preferred Providers)

PPPs also have a network of providers, but (unlike an HMO) will cover and pay for services for out-of-network providers. The benefits are usually greater for the network providers. If your usual providers are in the network, but you want to have the option to go to other providers, a PPP may be a good choice.These plans usually cover hospital, medical and preventive care. PPOs have a network of preferred providers, but they also cover services for out-of-network providers. The benefits covered for preferred providers are usually more than the benefits for out-of-network providers.

What is Covered in my Health Plan?

Your insurance company or your employer will give you an "evidence of coverage" certificate that tells you about your benefits. You may receive this certificate directly from the insurer, through your job, or through the internet. Not all health plans are the same, so you should read your certificate carefully. In order to get all of the coverage available to you, you should know your benefits and the procedures you must follow.


It is important that you read your policy carefully so that you know the benefits and services that are covered under your plan. You should also know what benefits and services are excluded from coverage. Massachusetts law requires that certain benefits be covered by all plans. However, all other services are only covered if they are specifically listed as a benefit in your plan certificate.

Health plans may have limits that apply when you first join the plan. Some plans have a pre-existing condition limit or a waiting period during which the enrollee is only covered for emergency treatment. According to Massachusetts law, insured plans may not have a pre-existing condition limitation of more than six-months. They also may not have a waiting period of more than four-months. Also, if you were covered by another health plan before you joined and you did not have more than 63 days between plans, the time that you were in the other plan may reduce or eliminate the pre-existing condition limit or waiting period.

Keep in mind that even when your plan covers a service, you must still pay any cost-sharing. This means that you must pay for any deductibles, coinsurance or copayments that are part of your health benefit plan.

Also, some plans pay benefits only up to the "usual and customary" charge of the provider. This means that if the plan will not pay more than what is usually charged by other providers for the same service in that area.


If you have a health plan that covers dependents, you may keep your dependents on the plan until:

  • Two years after the last year in which you (or your ex-spouse) claimed the dependent on your federal income tax return, or;
  • The dependent's 26th birthday

Newborn infants are covered on a family plan from the moment of birth. You must be sure to follow your insurance company's rules to add the newborn infant to the plan within 30 days of birth.

Continuation of Coverage

You may have the right to continue your group health plan when you no longer qualify for coverage through your employer. Some of the ways you can do this are:


You may choose to continue your group health plan under federal COBRA or state continuation of coverage laws. Depending on the reason that you no longer qualify for your former employer's health plan, you can keep that health plan temporarily after the date your coverage ends. However, you will probably need to pay as much as 102% or more of the premium.

Plant Closing

If you do not choose COBRA, or if your COBRA coverage ends, you have a state-mandated 90-day eligibility period for continued coverage in the event of a plant closing or partial plant closing, as determined by the Commissioner of the Department of Labor and Workforce Development. This provision does not apply to HMO plans.

Involuntary Layoff or Death

If you do not choose COBRA, you have a state-mandated 39-week eligibility period for continued coverage if you become ineligible for continued participation in a group plan because of involuntary layoff or death of the subscriber. Coverage is for up to thirty-nine weeks from the date of the ineligibility or until the subscriber, spouse and dependents become eligible for benefits under another group health plan, whichever comes first. However, you will probably need to pay the premium that the employer pays to the insurance company. This provision does not apply to HMO plans.

Divorced Spouses

If you do not choose COBRA, a divorced spouse must be allowed to stay on the health plan without additional premium, unless the divorce judgment has other terms. The divorced spouse can stay on the plan until the remarriage of either the subscriber or the spouse, or until a time provided by the divorce judgment, whichever is earlier. If the subscriber remarries, the former spouse has the right to stay on the health plan on a rider to the family plan or through an individual plan. Either of these options may require additional premium rates.

Other Ways to Continue Coverage

Although you may be able to continue your group coverage in one of the ways shown above, in Massachusetts, you can also join a plan from one of the companies offering individual plans or through the Connector.


Remember, your health plan does not pay for the cost of long-term care that is meant to help you to live independently.  If you would like information about long-term care plans, please see the Long-Term Care Guide.

Additional Resources

How Do I Use My Health Plan?

Once you have enrolled in a health plan, be sure you understand your plan and the cost implications of various procedures and services. For example, going to an out-of-network doctor versus in-network traditionally costs a consumer much more for the same type of service.

When you enroll you will be given a certificate or evidence of coverage. The insurance company may mail a copy to you, or it might give you access to the information on a website. If you have a health plan through your employer, the employer will have information on your plan. Read your certificate, and keep it handy to look at when you use health services. 

Know Your Benefits and Exclusions

Be sure you know exactly what your plan covers. Not all health plans cover the same services in the same way. Your certificate will list all of the services that are covered under your plan. It will also tell you if any services have limitations (such as maximum amount that the health plan will pay for durable medical equipment or physical therapy). And it should tell what services are not covered at all (such as acupuncture). Do your homework, research all the options available, and review your insurance policy before making any decisions.

How to Access Services

The plan certificate will tell you if you need to use network providers to be covered. It should tell you if you need to have the health plan authorize care before you see a provider. It should also tell you:

  • If you need to have the plan authorize care before you see a provider
  • What to do in case of an emergency
  • What to do if you are hospitalized

Remember, the health plan may not pay for your services if you do not follow the correct procedures.

Massachusetts has certain protections for you if you have a managed care plan. Your health plan is a managed care plan if it has a network of providers or if it uses any "utilization review."

HMOs (Health Maintenance Organizations), PPOs (Preferred Provider Plans), and POSs (Point-of-Service Plans) are all managed care plans that use a network of providers. In an HMO plan, non-emergency care is covered only when it is provided or arranged by a network provider. In a PPO or POS plan, the plan covers medically necessary care from any health care provider, but the plan usually pays more for services provided within the network.

How to File a Claim

When you have a medical procedure or visit, you usually pay your health care provider (doctor, hospital, therapist, etc.) a co-pay, co-insurance, and/or a deductible to cover your portion of the provider’s bill. You expect your health plan to pay the rest of the bill if you are seeing an in-network provider. To ask the health plan to pay its share, the provider will file a claim with your health plan. However, there are some cases when you might have to file a claim yourself. This could happen when you go to an out-of-network provider, when the provider does not accept your insurance, or when you are traveling. If you need to file your own health insurance claim, call the number on your insurance card, and the customer support representative can inform you how to file a claim.

You or your provider must file the claim as soon as it is possible after the procedure or service is completed. Many health plans have a time limit for how long you have to file a claim, typically within 90 days of the service.

After you file the claim, the health plan has a limited time (it varies per state) to inform you or your provider if the health plan has accepted or denied the claim. Health plans use "utilization review" to decide if a service is necessary according to their medical standards. If it decides that a service is not medically necessary, the plan may deny or reduce payments. For some health plans, this medical necessity decision is made before treatment. For other health plans, the decision is made when the company gets a bill from the provider. The company will send you an explanation of benefits that outlines the service, the amount paid, and any additional amount for which you may still be responsible.

If your insurance company decides that a service is not medically necessary, the company must tell you in writing. This letter must tell you the reasons for the decision. The insurance company must also tell you that you have the right to file a grievance with the company. If you file a grievance and the company continues to deny coverage, you may appeal the decision to the Massachusetts Office of Patient Protection.

Internal Grievance Protections

A managed care plan must allow you to file a grievance whenever it determines that a service is not medically necessary.

Your first step is to file an internal appeal (grievance).  You have up to six months (180 days) after finding out your claim was denied to file an internal appeal. If the denial is for a medical reason, ask your health care provider to contact your health plan to request reconsideration of your claim based on additional information that your provider can supply. If delay in receiving the service would create a substantial risk of serious harm, you can request that the appeal be reviewed on an expedited basis.

You may file the grievance by calling, writing, or faxing the grievance to the company. Make sure to include your name, claim number, and health insurance ID number. You should include any additional information, such as a letter from your provider, that will help support your claim. The company must send you a notice within fifteen days acknowledging receipt of the grievance. It must make a decision on the grievance within 30 days - unless you agree to an extension.

Keep detailed records, including bills from your provider, notices from your health plan, copies of denial letters, appeal requests, and medical information related to your case. Write down the date/time of all calls, names of people with whom you spoke, details of all conversations, and any established deadlines for expected responses or information from your insurance company.

External Review Protections

If your health plan does not change its decision following the internal appeal, an external review can be requested. An external review is performed by an external review organization contracted by the Massachusetts Office of Patient Protection. You must ask for an external appeal from the Massachusetts Office of Patient Protection within four months of receiving the decision on your internal appeal. Your internal appeal notice should provide the form to request an external review and other information about requesting an external review. The external reviewer will provide you and your health plan with written notice of its decision. If the external review results in a reversal of your health plan’s decision to deny, the company must approve benefits for the covered services.

Please note, if you are enrolled in Medicare or Medicaid, there are different rules for appeals. The Mass Division of Insurance does not have jurisdiction over Medicare Parts A, B, or D, or Medicare Advantage plans. We only have authority over Medicare Supplement (or Medigap) plans. For Medicare, call 1-800-MEDICARE to ask for information on free assistance. For Medicaid, contact MassHealth for assistance.

Additional Resources

How Much Will My Health Insurance Plan Cost?

When you choose a health plan, you need to understand the entire cost of your coverage. You will probably need to pay all or part of the premium. You may also have "cost sharing". Cost sharing means that you pay for part of the cost of a service covered by your health plan. You need to understand both the cost of the premium and the amount of any cost-sharing you may expect over the next year.  

Think about the types of services that you and your family will use and how often they will use them. If you and your family expect to mainly use preventive care services, you might be happy with a plan that has a higher deductible but will cover preventive care before the deductible. However, if anyone has a condition that will require access to lots of services, you may want to choose a plan that has no deductible, but has fixed dollar copayments for each service.

Determine the Cost

Your total premium plus cost sharing (deductible copayments, coinsurance)  will be the total cost of your health plan.


The insurance company that offers your health plan sets the premiums that you must pay for the plan. You might not pay the full premium yourself - many employers pay at least some of the premium for their employees. The insurance company sets the premiums according to different rules depending on whether the health plan is offered to a large group, a small group or an individual. Insurance companies in Massachusetts may not set premiums based on the number or cost of any services that you personally have used in the past or are expected to use in the future. However, the number and cost of services that your group or a class of groups has used may be used as a factor in setting premiums.

Cost Sharing

Most health plans in Massachusetts only cover some of the cost of care and include "cost-sharing" features. Cost-sharing means that the insurance company pays for part of the cost of a health service and you pay the rest. Some of the cost-sharing features you may have in your health benefit plan include:


A copayment is a fixed dollar amount paid by you directly to a doctor, hospital, pharmacy or other health care provider at the time that you get a service. For example, you may pay $20 toward a covered office visit and the plan pays the rest. A plan may have different copayments for different types of services. For example, the copayment for a primary care visit may be $20 and the copayment for an emergency room visit may be $100.


A deductible is a dollar amount that you must pay before the health plan starts to pay for a covered service. Some health plans may have a separate prescription drug deductible. The deductible amount does not include the premiums that you pay. For example, you may pay a $1,000 deductible toward your health care services each year before the plan pays any benefits. A health plan may have a deductible for a calendar year (from January 1 to December 31) or for a plan year (from the policy effective date to one year later.) If your plan has a deductible, be sure to know the time period.


Coinsurance is a percentage of the allowed charge that you will pay for a covered service after any copayments. For example, you may pay 20% of the cost of a covered office visit and the plan pays the rest.

Benefit Limit

Some plans have a limit on the visits or dollars allowed for a specific covered service. For example, the plan may allow only $350 for a scalp hair prosthesis (wig) and you will pay for any cost beyond the $350 limit.


Exclusions are listed services for which there is no benefit. For example, the company may exclude (not pay for) cosmetic surgery and you will pay for the entire cost of the service.

Out-of-Pocket Maximum

An out-of-pocket maximum is a cap on your cost sharing for a year. Once your cost share amounts have equaled the out-of-pocket maximum, the health plan will pay 100% of the covered services for the rest of that year.

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