How Insurance Works

It’s important to know about how insurance works. Take a look at the video to meet Jennifer and see an example of health insurance in action. You’ll learn about how deductibles, copays, coinsurance, out-of-pocket maximums and networks all work together. 

For example, with some plans your copay to go to a doctor or urgent care in your network could be a lot less than an emergency room. 

Youtube How Insurance Works

How Insurance Works
1:31 min.

With most plans, your out-of-pocket costs to see a network doctor for urgent care would cost less than an emergency room visit. 

That’s just one of the ways insurance plans are often designed. Here’s another using Jennifer as our example.


Jennifer has bad stomach pains and a fever, so she calls her doctor. Under her plan, she pays a $15 copay to see a doctor in her network. In most cases, her insurance covers the rest of the costs for her doctor’s visit.

Network coverage  

Uh-oh. Jennifer needs surgery. That means costs for the hospital, the surgeon, the anesthesiologist, lab tests and more. The good news is that the surgery is covered by her insurance plan, and the doctor’s preferred hospital is in her plan’s network. This means she will only pay for part of the cost of the surgery.

Let’s look at what Jennifer pays and what her insurance pays if her surgery costs are $55,000.

Insurance covers Jennifer pays
Deductible: Amount Jennifer pays before her insurance kicks in. $4,000 $0 $4,000
Coinsurance: Amount Jennifer and her insurance pay after Jennifer pays her deductible and before she reaches her annual out-of-pocket maximum. 80% / 20% 80% 20%
Out-of-pocket maximum: Amount Jennifer pays in qualifying expenses before her insurance pays the remaining charges. $6,650 $48,350 $6,650
Total bill $55,000 $48,350 $6,650

Primary Care Provider (PCP)

If you are enrolled in an Affordable Care Act plan with the Neighborhood network, every member on your plan will need to have a primary care provider, or PCP.

Your PCP will oversee your care and coordinate with other doctors such as therapists, pharmacists and specialists to ensure they are working together. There are several kinds of providers you can choose from, including a family practice doctor, pediatrician, OB/GYN or nurse practitioner.

Youtube BCBSAZ Video - Primary Care Provider

Choosing and Using Your Primary Care Provider
1:31 min.

For members, we’ve selected a PCP for you. You can change your PCP up to six times a year. Whenever you make a change, you’ll receive a new member ID card with your new primary care provider’s name on it. 

Specialist Referral

Start by talking with your primary care provider (PCP) about your health concern. If you are enrolled in an Affordable Care Act plan with the Neighborhood network, your PCP will submit a referral for you to see a specific specialist. Once you’ve confirmed that your referral was approved, you can then call the specialist to schedule an appointment.

A few points to remember:

Youtube How to Get a Specialist Referral

How to Get a Specialist Referral
1:13 min.

  • If you don’t get a referral from your PCP, your specialist visit may not be approved.
  • Even if you’re currently seeing a specialist, you will need a referral from your PCP.
  • Some care, such as a visit to an OB/GYN, chiropractor or urgent care, for example, do not require a referral. Other exceptions include behavioral health visits, pediatric vision and dental, and walk-in clinics.

Network Ins & Outs

Health plans and networks go hand in hand. Are the doctors you want to see in the network for the plan you selected? If not, what happens if you see a doctor outside the network? These are questions you should consider before seeing a doctor.

What's the difference?

Youtube Network Ins and Outs

Network Ins & Outs
1:15 min.

Network Providers

When you see doctors or go to hospitals that are part of your plan’s network, they’re called network providers. Some plans also refer to them as in-network providers. How did they become part of your network? By having a contract with your health insurer to serve the members in your plan.

Non-Network Providers

Unlike network providers, out-of-network providers, or non-contracted providers, do not have a contract with your health insurer to serve members in your plan. You may pay more if you see them. And, it’s possible their services may not be covered at all.*

More Online Tools

  • Find a Doctor – It is always a good idea to check if a doctor, hospital or other facility is a part of your plan’s network. Log on to for a list of doctors, healthcare professionals and facilities that are in your plan’s network.