there’s a lot of news in the media today about medicare, medicare advantage, federal or state marketplaces for buying health insurance, and government subsidies to lower the cost of health insurance for many Americans. And the news volume increases significantly in the fall of each year when Medicare and the individual health insurance offered in the Marketplace (alternately called the “exchange”) have their respective annual enrollment periods.
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It is perfectly understandable if you ask yourself questions like “what is private health insurance?” or “what is the difference between private and public insurance?” or “what do I have (or should I have) private health coverage or public health insurance?” Let’s take a closer look at health insurance so you can make informed decisions about your health insurance options. then you can move forward with confidence to choose a plan that meets your needs.
public vs private health insurance
In 2021, private health insurance coverage continued to be more prevalent than public coverage, at 66% and 35.7%, respectively, according to the u.s. census office.
what is public insurance?
Public health insurance is sponsored by the government. The federal government, the state government, or a combination of the federal and state governments administers these health insurance programs. Public health insurance programs are largely funded by taxpayer dollars held in trusts that are used to pay for eligible medical expenses or the cost of prescription drugs. Public health insurance is available to some US citizens and legal permanent aliens. In addition to military and Native American Indian health insurance, the three most common public health insurance options include:
- medicare, a federal insurance program available to people age 65 and older, younger people with disabilities, and people with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant).
- Medicaid, a state public health assistance program for low-income people and their families. People enrolled in Medicaid pay significantly reduced amounts (for example, a $2 copay) when receiving care from providers who participate in Medicaid.
- Children’s Health Insurance Program (CHIP), a state-run insurance program that provides low-cost health coverage to children in families who make too much money to qualify for Medicaid but not enough to buy private insurance. in some states, the chip covers pregnant women.
- the private health insurance plan you choose (how comprehensive the coverage is and how much you share in the cost of covered services),
- the insurer you choose,
- the number of people covered by the plan, and
- the region in which the plan is purchased.
- if you are single or your spouse’s private group health insurance coverage is not available or affordable, and
- Recently lost your job and your employer-sponsored group health insurance, and you can’t pay your bills (Consolidated Omnibus Budget Reconciliation Act).
- cobra allows eligible former employees and their dependents the option to continue group health insurance coverage at their own expense for a period of time, generally up to 36 months. can be expensive, especially if the plan offers comprehensive coverage, including prescription, vision, and dental.
- is self-employed.
- You work part-time and are not eligible for your employer’s group health insurance.
- You will turn 26 when you will no longer be covered as a dependent on your working parent’s private health insurance plan.
- your spouse (or parent) signs up for medicare and you lose dependent coverage when the private health insurance plan ends.
you must meet specific eligibility requirements to enroll in medicare, medicaid or chip. Eligibility rules for state Medicaid and CHIP programs vary by state. That said, it is possible to qualify for and be covered under multiple programs. For example, a low-income senior may qualify for both Medicaid and Medicare. Or you may have private health insurance for yourself through an employer and enroll your children in the chip because your employer doesn’t offer affordable dependent coverage for your children and you can’t afford to buy them a private health insurance policy.
It is not uncommon for federal or state government agencies (for example, the Centers for Medicare and Medicaid Services or a state department of health) to contract with a private insurer to administer the Medicare, Medicaid or Medicare plan. chip. That can be confusing to consumers when they see the name United Healthcare or Anthem or Humana, to name a few, associated with their Medicare Advantage plan or Medicaid coverage. but if you are exploring coverage through these public health care options, the government agency will explain and determine your eligibility for coverage, and the materials you receive will explain the public health insurance program and who manages its day-to-day operations.
what is private insurance?
Private health insurance refers to health insurance plans marketed by the private health insurance industry, as opposed to government-run insurance programs. Private health insurance currently covers a little more than half of the United States. population.
who is covered by private insurance?
Private health insurance includes employer-sponsored plans, which cover about half of the American population (155 million as of 2020), reports the Kaiser Family Foundation. Another 6% (approximately 18 million as of 2020) of Americans purchase private coverage outside of the workplace in the individual/family health insurance marketplace, both on and off the marketplace/exchange.
Who regulates private insurance?
Although not run by the government, private health insurance is highly regulated at both the state and federal levels. regulations and laws often address what health care services individual and group health plans must cover. for example, maternity coverage and mental health parity are just two of the longstanding regulatory requirements for private employer-sponsored group health plans. In addition, most employer-sponsored private health insurance plans and consumer-purchased individual/family plans offer benefits that meet the Affordable Care Act (ACA; also known as ObamaCare) minimum essential coverage requirements. ). Other plans, such as short-term, fixed-indemnity, vision, dental, and critical illness policies, offer benefits, usually at low cost, but are not as comprehensive as ACA-compliant medical plans and do not count as coverage qualified. health plan under the aca.
How is the cost of private insurance determined?
Insurance companies set your premiums. premiums are the price (usually monthly) you pay in exchange for the coverage of the insurer’s plan. States typically set limits on how much insurance companies can raise premium rates each year. The cost of buying private health insurance, that is, the premium, varies widely. Factors that influence the cost of the premium include:
For individual buyers, age and tobacco use are also factored into the cost of coverage.
For people who get their private health insurance through an employer, employers tend to cover at least 50 percent of premium costs. These are usually pre-tax dollars, which often reduce taxes for those covered by the plan. Those who purchase their private health insurance on the marketplace/exchange may find that they are eligible for premium tax credit subsidies and other cost-sharing reductions.
When might you need to buy private health insurance?
If you are not enrolled in an employer-sponsored private health insurance plan through your job or your spouse’s employer, and you are not eligible for public health insurance, such as Medicare or Medicaid, you will need to purchase a private health insurance. you have many options. your particular circumstances may make one type of private health insurance more attractive than another. Take a look at three of the most common private health insurance options for individuals and their families.
private individual/family health insurance.
Individual health insurance may be your best option in these circumstances:
If you buy insurance through the marketplace/exchange, you may be eligible for Affordable Care Act subsidies, such as premium tax credits or cost-sharing reductions, which can substantially reduce your private health care costs. The Marketplace is an online platform that offers insurance plans to individuals, families, and small businesses. it is run by the federal government, the state government, or a partnership of both. however, keep in mind that this is private health insurance, although the market/exchange to buy subsidized or unsubsidized health insurance is run by the government. You can also buy private health insurance through an insurance agent or broker or directly from an insurance company. in these cases, however, you will not be eligible for subsidies.
catastrophic medical insurance
If you’re young and healthy, you may want to consider catastrophic insurance. A catastrophic policy is available to a limited number of people: generally adults under 30 years of age; Seniors can purchase a catastrophic plan if no other qualified health plan offered through the Marketplace in 2022 would cost less than 8.09% of their income and they qualify for a “hardship exemption.”
catastrophic insurance premiums are very cheap. while catastrophic coverage offers the same benefits as qualified health plans on the marketplace, you must meet a very high deductible ($8,700 in 2022, increasing to $9,100 in 2023) before the plan will pay for most services cutlery. the plan will pay for preventive care doctor visits (limited to 3 in the year) before you meet the plan deductible.
short-term health insurance
Short-term health insurance may be a good option if you only need coverage for a short time. for example, it can be one or the other transition form. maybe you’re between jobs. perhaps you have recently been divorced. You or your spouse may have retired and may have to wait a while before you’re eligible to enroll in Medicare. Any of these temporary circumstances could make short-term health insurance an affordable option. Short-term policies generally provide coverage for 12 months or less. some states allow short-term policies to be renewed for up to 36 months.
Under a short-term insurance plan, your spouse and other eligible dependents may also be covered at relatively low premiums. however, an important caveat of a short-term insurance plan is that in some cases, pre-existing conditions may disqualify you from coverage. Another caveat is that some states prohibit the sale of short-term insurance policies. You can learn more about short-term health insurance in our eBook.
advantages of working with ehealth
Let ehealth help you explore your private health insurance options today at no additional cost! We offer you 24/7 access to review a wide range of private insurance plans, both on and off the market/exchange, and available where you live. You can compare cost and coverage online and in the comfort of your home. But if you want expert assistance, one of our licensed insurance agents can answer your questions and help you find a policy that gives you the coverage you need at an affordable price. See what health insurance plans are available today!