Private health insurance is basically health insurance that is neither offered by the state nor the federal government. This type of insurance is usually offered by a private entity such as a company or broker. In addition to this, consumers could obtain a private health insurance plan through the state or federal Marketplace.
As we move along the article, we’ll explore all the types of private health insurance plans (and how these compare with public health insurance)!
How To Purchase Private Health Insurance
In contrast to the public health insurance service provided by the government, private health insurance is obtained through other means. As of now, there are three ways of obtaining private health insurance:
- The Health Insurance Marketplace
- Employer-based healthcare
- Private health insurance plan offered by an agent or broker
Some of the types of private insurance plans that you will be able to purchase can range from an HMO to an EPO. Each one of these plans has similar, yet different characteristics worth exploring later in order to understand the private system more thoroughly.
When Should You Acquire a Private Plan?
You might be asking yourself: what are the circumstances in which you should consider obtaining a private health insurance plan? Why should you bother with private insurance? Well, unfortunately, not everyone can qualify for public health insurance. In the event that you don’t, here are several situations in which you should acquire a private plan.
Individuals that are self-employed, whether it be through freelance work or a self-owned business, have the opportunity to apply for a private health insurance plan. Furthermore, if these self-employed people are married, then they also become eligible for insurance through their spouse’s plan.
In the unlikely event that you ever become unemployed, it is possible to retain your former company’s health insurance coverage through a federal assistance law called the Consolidated Omnibus Budget Reconciliation Act (COBRA). Through this program, former employees can keep their health insurance for up to 36 months after being dismissed from their previous job.
One thing to keep in mind when applying for the COBRA program is that the costs associated with enrollment can be very high. Why is this the case? Well, it’s because your former employer pays for the cost of the insurance plan.
Young-Adult Over 26
Following the passing of the Affordable Care Act (ACA), one of the main provisions in this federal health statute was that young adults could remain under their parent’s insurance plans until the age of 26. Once these individuals turn 26, they must seek out their own health insurance plan.
It is extremely rare for a part-time job to provide health insurance benefits for their employees. Most health insurance plans are provided by companies to employees that work 40 hours per week. Unfortunately, part-time employees work far below 40 hours a week and thus must enroll in their own health insurance.
Business Owner With Employees
For any individual that starts their own business and employs a multitude of employees, it is possible that insurance might have to be provided depending on the number of employees they have. Many business owners offer health coverage to their employees through a business health insurance plan, otherwise known as a group plan.
Dropped By Insurance Plan
Although the probability that an insurer drops a policyholder from their insurance plan is low, the possibility that it happens still exists. Nowadays, you can’t lose your insurance because you made a mistake in your application or be denied coverage due to a pre-existing condition.
However, you could be dropped by your insurer through allegations of insurance fraud, late payments, or loss of employment.
For any policyholders that retire, but don’t meet the eligibility requirements to enroll in Medicare, there are options to mitigate this situation. If you’re under 65, you could always purchase a private insurance plan while you wait to become eligible for Medicare. Some of the most sought out private plans often include either Medigap or Medicare Advantage plans.
Types of Private Health Insurance
Now before considering a private health insurance plan, it is worth mentioning that there are several different types of insurance plans worth viewing. Review each insurance plan carefully before purchasing the plan that works best for you.
A health maintenance organization (HMO) is a type of insurance plan that offers coverage and services through a network of providers. Through a monthly fee, policyholders obtain a wide range of services than they ever would with any other plan.
In an HMO, you are required to choose a primary care physician (PCP) that will provide general treatment alongside giving you a referral to see a specialist. Furthermore, the policyholder is restricted to providers from the HMO network. Should they seek outside treatment (with the exception of emergency medical treatment), then it is likely that they will pay for out-of-pocket costs.
A point-of-service (POS) plan offers a multitude of benefits to their policyholders depending on their preference to in-network providers (preferred providers) or out-of-network providers. The POS system combines the best qualities of an HMO and a PPO plan.
For instance, just like an HMO plan, you are required to choose a primary care physician. Like a PPO plan, you will not receive coverage for out-of-network costs. Additionally, in a POS plan, the policyholder is likely to be responsible for the plan’s deductibles, coinsurance, and copayments.
Preferred provider organization (PPO) plans are one of the most frequently purchased and cherished plans in the insurance marketplace. In this type of managed network, the policyholder is allowed to visit any physician within the network without the need for a referral from a PCP. In addition, if you choose to seek out-of-network services, then a portion of those costs will be covered by the insurance plan.
An exclusive provider organization (EPO) plan allows policyholders to solely utilize the doctors and medical services from this network and will not allow them to seek care outside of the network. However, as a result of this, you would be paying for a cheaper plan rate when compared to those of an HMO or PPO plan. It is worth noting that in an EPO plan, you aren’t obligated to choose a PCP nor acquire a referral in order to see a specialist.
A high-deductible health plan (HDHP) is defined as the type of plan with a high annual deductible coupled with a low monthly premium rate. The HDHP was created to help younger adults that don’t demand constant health services unless in the case of a medical emergency. Furthermore, this type of plan provides the policyholder access to a tax-advantaged Health Savings Account (HSA). In effect, insurees can use the money deposited into this account to fund medical care not covered by their HDHP.
What is Public Health Insurance?
Public health insurance is a state and federal program in which the people have partial or complete coverage of their healthcare costs paid for by the government. In the United States, the two main sources of public health insurance offered to the population are Medicare and Medicaid. In addition to these programs, the government also provides health insurance through the Children’s Health Insurance Program, which is a subset of Medicaid.
Both of these main public health programs offer their own unique benefits and coverage perks to differing demographics.
Medicare is a federally subsidized public health insurance program that provides health coverage to adults over the age of 65 and in some instances younger individuals that meet specific eligibility criteria. The Medicare health program is divided into many distinct parts that provide coverage for many healthcare situations.
This program is divided into four unique parts: Medicare Part A, Part B, Part C, and Part D. Each of these parts tackles a specific service for the general population.
Similar to Medicare, Medicaid is a state and federally subsidized public health insurance program that focuses on providing health coverage to individuals and families from a low-income background. Not only does Medicaid offer coverage for hospital stays and visits, but it also extends coverage for long-term treatment and custodial care.
Now, in contrast to Medicare, Medicaid is organized on a state level. This means that depending on state funding, Medicaid applicants can be subject to different eligibility requirements alongside varying coverage options. Nevertheless, Medicaid does have a universal requirement in order to obtain access to its services. To be eligible for this program, you must be either a U.S citizen, permanent resident, or a legal immigrant.
Children’s Health Insurance Program (CHIP)
The Children’s Health Insurance Program, otherwise known as CHIP, offers health insurance coverage to low-income families with children that are not eligible to apply for Medicaid benefits. In addition to low-income families, pregnant women are also eligible for CHIP coverage depending on the state they reside in. Through CHIP insurance coverage these families and certain individuals are able to obtain basic healthcare benefits such as:
- Doctor’s Visits
- Emergency Services
- Lab Services
- Hospital Care
- Dental/Visual Treatment
Private Vs. Public Health Insurance
When discussing which type of health insurance policy to buy, we must first consider the two main types of health insurance available to the consumer. Both public and private health insurance have their own distinctions that benefit particular demographics. Understanding how each of them works is critical towards broadening your knowledge of health insurance.
With this in mind, anyone that is considering public health insurance should note that it is the more affordable option when compared to private insurance. Not only will you rarely pay for a deductible or copayment, but you also incur lower administrative costs than in a private insurance plan.
In contrast to public health insurance, a private insurance plan tends to have a costlier price tag. However, unlike public insurance, the policies utilized in a private plan offer more flexibility and options for policyholders seeking medical treatment. As a result, given the number of plans in this sort of network, enrollees have more options to choose at the end of the day.
Ultimately, when it comes to choosing a type of health insurance, it will be dependent on the specific circumstances and needs that you require. So it is highly advised that you weigh the pros and cons of each, and verify which one will maximize the aid you need.
Choosing the Right Insurance Plan For You
Now that we have gone over the differences between private and public health insurance alongside the many different network plans, it is crucial that you utilize this information to make an informed decision. All in all, after thoroughly researching and comparing the benefits of each type of insurance plan, it’s recommended that you choose the insurance plan that will work best for you!