How Health Insurance Works Overview Health Insurance is important. Health Insurance typically pays for medical services such as doctor visits, lab and x-ray services, hospital charges, prescription drugs, and more, depending on the plan you purchase. Deductibles, Coinsurance, Coinsurance Maximum These terms can be confusing. Here is how it works: When you incur medical expenses, you generally pay the deductible first. After you pay the deductible your health insurance starts paying a percentage of your medical expenses. This percentage payment is called "coinsurance." If you purchase health insurance that pays 70% of medical expenses after the deductible, you will pay 30% coinsurance. If you purchase health insurance that pays 50% of medical expenses after the deductible, you will pay 50% coinsurance. Once you pay the "coinsurance maximum" amount, your health insurance pays 100% of covered medical expenses for the remainder of the calendar year.