Health insurance is a type of insurance whereby the insurer pays the medical costs of the insured if the insured becomes sick due to covered causes, or due to accidents. The insurer may be a private organization or a government agency. Market-based health care systems such as that in the United States rely primarily on private health insurance. A Health insurance policy is an annually renewable contract between an insurance company and an individual. With health insurance claims, the individual policy-holder pays a deductible plus co-payment (for instance, a hospital stay might require the first $1000 of fees to be paid by the policy-holder plus $100 per night stayed in hospital). Usually there is a maximum out-of-pocket payment for any single year, and there can be a lifetime maximum. Prescription drug plans are a form of insurance offered through many employer benefit plans in the U.S., where the patient pays a co-payment and the prescription drug insurance pays the rest.

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