Health insurance is a contract between an individual and an insurance company, where the company agrees to pay for some or all of the individuals medical expenses in exchange for a monthly premium payment. Health insurance provides a safety net in case of serious injury or illness, and it helps with smaller expenses in the form of free preventive care and copays for things like office visits and prescription drugs. Health insurance is a legal entitlement to payment or reimbursement for an individuals health care costs, generally under a contract with a health insurance company, a group health plan offered in connection with employment, or a government program like Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP) .

It is important to understand that you cannot just purchase health insurance when a medical need arises. Regardless of whether you’re buying your own coverage or enrolling in a plan offered by an employer, there’s an annual open enrollment period that applies, and enrollment outside of that window is limited to special enrollment periods triggered by qualifying events.

There are several different types of health insurance in the U.S., including public coverage and private coverage. Public coverage includes government programs like Medicare, Medicaid, and CHIP, while private coverage includes employer-sponsored plans and individual plans purchased through the Health Insurance Marketplace.