Looking for a new health insurance plan? In your search, you will find two main types of plans: private and public. this page explores the differences between the two and will help you decide which is a better option for you.
Regardless of the type of health insurance plan you intend to purchase, make sure the health insurance company you choose to work with has a streamlined, member-centric, digital-centric approach. The right company will put your physical well-being and wellness first, while also making it easy to manage your insurance plan online, making sure you get the care you deserve, whenever you need it. this article will discuss:
- private health insurance
- public health insurance
- factors to consider when choosing public or private health insurance policies
private health insurance
Private health insurance refers to a plan that is purchased without government assistance. the majority of Americans – 66.5%, according to the 2020 census – use private health insurance. people who don’t qualify for public health care programs will need to find a private plan if they want coverage.
Private health insurance is generally the more expensive of the two options, but there are still plenty of affordable private companies and plans to choose from.
There are two main types of private health insurance plans: those offered through your workplace and individual plans purchased in the marketplace. The Marketplace is a government-run health insurance enrollment and purchase service that can be accessed by visiting healthcare.gov.
employer-sponsored health insurance plans
Due to the employer mandate in the Affordable Care Act (ACA), employers with more than 50 full-time employees must offer health insurance plans to their full-time employees. if they don’t, they must pay a fine.
Although smaller companies are not technically required to offer health insurance plans to their employees, many still do to remain competitive with larger companies.
Getting medical care through your workplace has its advantages:
- health care costs are generally lower because group health care plans are generally less expensive than their individual plan counterparts
- your employer often pays a significant portion of your premiums monthly health insurance
- due to employer mandate, employers must also extend coverage options to their dependents under the age of 26, and many employers choose to offer coverage to spouses of full-time employees as well
As you can see, employer-sponsored health insurance plans have many advantages and are often the first choice for those who have access to them and are not eligible for public health plans. However, certain employers, particularly small businesses, sometimes offer limited options to choose from, such as when they only offer High Deductible Health Plans (HDHPs). If you use health care services frequently and your employer-sponsored insurance options have high deductibles and/or copays, you may be better off looking at individual plans.
individual health insurance plans
Individual and family health insurance plans are offered through the marketplace at healthcare.gov. Please note that although healthcare.gov is a government website, individual or family plans purchased through the healthcare.gov marketplace are not necessarily public plans.
Individual plans are ideal for people who don’t have access to employer-sponsored plans or those who want to greatly customize their health insurance coverage. individual plans may also be attractive to people who take certain prescription drugs that are not covered by workplace plans. Individual plans are generally more expensive than workplace plans because there is no employer involved in individual plans and therefore no employer contribution.
public health insurance
Public health insurance refers to plans that are purchased through a government program. according to the 2020 census, 34.8% of Americans were covered by public health insurance.
Thanks to government subsidies, public health insurance is often less expensive than private health insurance. however, public health insurance is often more restrictive than private health insurance regarding the types of services covered and how often you can use them.
There are three main public health insurance plans to choose from: Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). Whether or not you qualify for one of these programs depends on certain criteria about you and your lifestyle.
Medicare is a government-sponsored health insurance program for people age 65 and older and some younger people with certain disabilities and illnesses. In 2020, more than 60 million Americans were covered by Medicare.
Because of its low rates, Medicare is a good option for many people looking to cut costs. however, medicare plans may have limitations on the health care providers and services you can access. They can also have high out-of-pocket costs in certain situations, like if you have to go to the hospital.
Medicaid is a government-sponsored health insurance program that focuses on helping low-income people afford coverage. You may be eligible for Medicaid if your income is below 138% of the federal poverty level. In 2020, more than 80 million Americans were covered through Medicaid or the Children’s Health Insurance Program (CHIP), with 10 million new Americans enrolled in services between February 2020 and January 2021.
Like Medicare plans, Medicaid plans are often much cheaper for beneficiaries than private health insurance plans. And, like Medicare plans, Medicaid plans have the potential to be more limiting in certain areas than private health insurance plans.
children’s health insurance program (chip)
Children’s Health Insurance Program (CHIP) is similar to Medicaid with one difference in the expected enrollees. Medicaid is for low-income people; chip is for people who earn too much to be eligible for medicaid, but too little to pay for a traditional private health insurance plan. If a family is chip-eligible, children in that family can receive significantly reduced rates on plans that cover pediatric services and more.
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The chip is highly recommended for any family that is eligible to receive benefits through it. Click here for more information on the chip and eligibility requirements.
factors to consider when choosing public or private health insurance policies
By considering the following four aspects of yourself and your lifestyle, you can easily determine which type of health insurance plan is right for you.
Income is the most important determining factor when deciding between health insurance plans. Generally, people with higher incomes will need to purchase a private health plan. People with higher incomes can also afford to buy more comprehensive health insurance plans if higher premiums and/or deductibles aren’t an issue.
People with lower incomes may be limited in the scope of coverage they can receive under a private health insurance plan. If eligible, low-income individuals can apply for Medicaid or CHP for potentially reduced rates on many basic health care services.
age and health status
Generally, people over the age of 65 are eligible for Medicare. many seniors who are eligible for the program will find it to be a good fit for their needs. however, if you are a person who uses health care services significantly more than the average person, possibly as a result of aging, a private plan with more extensive customization options may be better for you, especially if you are eligible for a workplace health insurance plan.
the number of people insured
People who need coverage just for themselves generally have more flexibility than families. for example, the costs of obtaining coverage through the marketplace are significantly higher for families than for individuals because the lack of employer contribution is felt by many people.
any pre-existing medical conditions
Because of the ACA, you cannot be discriminated against by health insurance companies because of pre-existing conditions. however, some pre-existing conditions may cause you to make frequent use of certain medical services. so if you have a pre-existing condition, it’s wise to shop around for the best, most affordable plan that meets the particular needs you know you’ll have.
Private health insurance plans are typically more expensive, but potentially more comprehensive and customizable. Public health insurance plans are less expensive due to assistance from the federal government, but may be less comprehensive than you’d like due to certain limitations or restrictions.
The right choice for you will depend on certain criteria that surround you and your lifestyle. To ensure you get the best health care coverage for you at the lowest possible price, be sure to do your due diligence and explore all of your options before making your final decision.
Beyond the cost and scope of services, be sure to select a health insurance company that takes a digital-first, customer-centric approach to its services. making sure the process is hassle-free means you can get the care you need without spending extra time managing your plan.