Understanding Health Insurance Basics: A Comprehensive Guide for Beginners

Aug 14, 2023 | Knowledge Sharing


Health insurance is essentially a contract between you and an insurance company that helps you manage the costs of medical care. It provides you with financial protection by covering a portion of your medical expenses, from routine check-ups to unexpected emergencies. Without health insurance, you could be faced with significant out-of-pocket costs, making access to quality healthcare difficult.



  1. Premium: This is the amount you pay regularly (monthly or annually) to maintain your health insurance coverage, regardless of whether you use medical services or not. KwaraCare uses this model as a subscription model for our enrollees. We run two premium package options: a N6,000/year plan and a N9,000/year plan.
  2. Deductible: The deductible is the amount you must pay out of your own pocket before your insurance starts covering the costs. For instance, if your deductible is N10,000 and you receive a medical bill of N25,000, you’ll need to pay the first N10,000, and the insurance will cover the rest.
  3. Co-payment (Co-pay): A fixed amount you pay for specific medical services, like doctor’s visits or prescription medications. Co-pays can vary depending on the service.
  4. Co-insurance: The percentage of medical costs you share with your insurance after you’ve met your deductible. For instance, if your co-insurance is 20%, you’ll pay 20% of the costs, and the insurance will cover the remaining 80%.
  5. Out-of-Pocket Maximum/Limit: This is the maximum amount you’ll have to pay in a year for covered medical expenses. Once you reach this limit, your insurance will cover 100% of the costs.



  1. Health Maintenance Organization (HMO): HMO plans typically require you to choose a primary care physician (PCP), and you need referrals from your PCP to see specialists. They usually have lower premiums and out-of-pocket costs but limited provider choices.
  2. Preferred Provider Organization (PPO): PPO plans offer more flexibility in choosing healthcare providers. You can see specialists without a referral, both in and out of the network, although you’ll pay less when using in-network providers.
  3. Exclusive Provider Organization (EPO): EPO plans are similar to PPOs but do not cover any out-of-network care except in emergencies.
  4. High Deductible Health Plan (HDHP): HDHPs come with higher deductibles but often have lower premiums. They’re typically paired with Health Savings Accounts (HSAs) to help you save money for medical expenses tax-free.



Consider your medical needs, financial situation, and preferences when choosing a health insurance plan. If you frequently visit specific doctors or need ongoing treatments, a plan with a broader network might be beneficial. If you’re generally healthy and want to save on premiums, a high deductible plan could work well.


In Conclusion:

Health insurance is your safety net in times of illness or injury, ensuring that you can access necessary medical care without facing crippling expenses. Understanding key terms and the types of plans available is the first step toward making informed decisions about your health coverage. Remember that each person’s situation is unique, so take the time to assess your needs and compare different plans to find the one that best fits your requirements and budget.