Health insurance in the United States is a complex system that helps pay for medical expenses. There are several different types of health insurance plans available from both private insurance companies and government programs. Having health insurance protects you from high medical costs if you get sick or injured.
How Health Insurance Works
Health insurance helps pay for health care services like doctor visits, hospital stays, prescription drugs, tests, and more. When you receive care, your health insurance provider is billed. The insurance company then pays part of the costs, and you pay a portion as well. This portion you pay is called your out-of-pocket costs.
There are check on how much you have to pay out-of-pocket each year. Once you reach your plan’s out-of-pocket maximum, your insurance will cover 100% of your eligible medical expenses for the rest of the year. The specific out-of-pocket maximum amount depends on your plan.
In addition to out-of-pocket costs, most plans require you to pay a monthly premium. This is the base fee to have insurance, whether or not you use any medical services that month. Your premium amount varies based on the plan.
When you pay for medical care, you will typically receive an Explanation of Benefits (EOB) from your health insurance company. This shows the total charges, what the insurance paid, and your remaining responsibility.
Types of Health Insurance Plans
There are several common types of health insurance plans in the United States:
Employer-Sponsored Health Insurance: Many people get coverage through their job or a family member’s job. Employers offer group health insurance plans at a lower cost than buying insurance yourself.
Individual and Family Plans: You can purchase health insurance directly from an insurance provider. This includes plans bought through the Affordable Care Act’s health insurance marketplaces.
Medicare: Federal health insurance program for seniors 65+ and certain younger disabled individuals. Medicare has different parts that cover hospital care (Part A), medical services (Part B), and prescription drugs (Part D).
Medicaid: Joint federal/state program that provides free or low-cost coverage for lower-income individuals and families who qualify. Eligibility varies by state.
CHIP: Provides low-cost health coverage to children in families that earn too much for Medicaid but can’t afford private insurance. Each state runs its own program.
VA Health Care: Health care program run by the U.S. Department of Veterans event for eligible veterans.
TRICARE: Health insurance for military personnel, retirees, and their families. Managed by the Defense Health Agency.
There are also different types of plans within each insurance category that cover different levels of costs. The more generous plans have higher premiums but lower out-of-pocket expenses when you need care.
Some key types of plans include:
HMO (Health Maintenance Organization): Requires you get referrals to see specialists and use in-network providers.
PPO (Preferred Provider Organization): Gives you more flexibility to see out-of-network providers, but costs are higher.
POS (Point-of-Service): Hybrid between HMO and PPO. Lower costs to use in-network providers.
HDHP (High Deductible Health Plan): Has a high deductible before coverage kicks in but lower monthly premiums. Lot paired with an HSA (Health Savings Account).
Catastrophic plans also have very high deductibles but provide protection from worst-case scenarios. They are an option for some people under 30 or with low incomes.
Private Health Insurance Companies
Private health insurance includes plans from individual insurance companies and employers. Some of the largest private health insurers in the U.S. include:
- Anthem Blue Cross Blue Shield
- Kaiser Permanente
But there are many smaller regional and local insurers as well. Employers can also choose to “self-insure,” meaning they directly pay their employees’ health costs instead of using an insurance provider.
Private insurance covers about two-thirds of Americans under 65 who have health insurance. People on private plans can use any doctor or hospital that accepts their coverage.
Private plans must provide certain essential benefits under the Affordable Care Act, including things like emergency services, maternity care, mental health services, prescription drugs, and more. They cannot deny you coverage or charge more due to pre-existing conditions.
Government Health Insurance Programs
Government Health insurance in the United States programs cover around one-third of Americans overall. They play a major role in providing coverage for seniors, people with disabilities, lower-income individuals, children, and military families.
Medicare: is the federal health insurance plan for:
People 65 and older
Some younger people with disabilities
People with end-stage renal disease (permanent kidney failure requiring dialysis or transplant)
Medicare has four parts:
Part A: Hospital coverage. Most don’t pay a premium since they or their spouse paid Medicare taxes while working.
Part B: Outpatient care coverage. Requires a monthly premium based on income.
Part C: Medicare Advantage plans run by private insurers. Provides all Part A and B good.
Part D: Prescription drug coverage. Requires a monthly premium.
Medicaid: provides coverage for millions of Americans with low incomes and limited resources. Each state has flexibility in how they design and administer their Medicaid program, so eligibility and coverage can vary significantly from state to state.
Some common groups covered by Medicaid include:
- Low-income adults and children
- Pregnant women
- People with disabilities
- Seniors needing long-term care
CHIP: gives health coverage to children whose families earn too much to qualify for Medicaid but not enough to afford private insurance. Each state runs its own program.
TRICARE: provides health benefits for active and retired military members and their families. It is run by the Defense Health Agency under the Department of Defense.
VA Health Care: is for veterans and doesn’t require a premium. But veterans must enroll and meet certain conditions related to income, disabilities, injuries during service, and more to qualify.
Having Health insurance in the United States, whether through a private plan or government program, is key to accessing the medical care you need while minimizing financial risk. It’s important to understand the options available as health care needs and coverage change throughout different life stages.
Choosing a Health Insurance Plan
Choosing a health insurance plan that meets your needs depends on several factors:
Cost: Consider the monthly premiums, deductibles, copays, and maximum out-of-pocket costs. Make positive your budget can handle the expenses.
Covered services: Look at what services are covered and costs like office visits, hospital stays, urgent care, lab work, and medications. Also check if your providers are in-network.
Plan type: Consider the tradeoffs with things like HMOs vs PPOs and narrow vs broad networks. Look for a plan that outfit your preferences.
Health risks: If you have chronic conditions or upcoming procedures, choose a plan that covers your needs at the lowest cost.
Subsidies: You may qualify for subsidies to reduce monthly premiums and out-of-pocket costs if buying insurance through an ACA marketplace.
Changing needs: Your medical needs may change over time. Review your coverage during open enrollment periods and life changes.
Comparing all the costs and coverage details side-by-side can help decide which plan provides the best fit based on your situation. It’s also key to verify your specific doctors, medications, and services will be covered before committing to a plan.
Enrolling in Health Insurance
The way you get covered depends on what type of health insurance you choose.
Employer-sponsored plans: Enroll during your open enrollment period, or within 30 days of becoming eligible if you’re a new employee. Coverage typically starts after a waiting period.
Individual health plans: Shop for plans during the annual open enrollment period, which usually runs from November to December, for coverage starting January 1st. You may also qualify for special enrollment outside that timeframe after certain life events like losing your job, moving, getting married, having a baby, etc.
Medicare: You are automatically enrolled in Medicare Parts A and B when you turn 65 if you are already receiving Social Security benefits. Otherwise, you need to manually sign up. You can enroll in Part C and Part D plans during Medicare open enrollment each year.
Medicaid and CHIP: You must apply and submit documentation to determine if you meet the eligibility requirements in your state. You can enroll some time of year.
VA Health Care: Enroll through the VA by completing an Application for Health Benefits and providing information to determine your eligibility as a veteran.
Make sure to enroll during the appropriate windows to avoid delays in getting your coverage started. Work with your insurer or local health care exchange if you have any questions about the application process. Having continuous health coverage can help prevent gaps in care.
Paying for Health Insurance
How you pay for health insurance depends on your plan type:
Premiums: A monthly amount you pay to maintain coverage. Premium costs vary based on the level of coverage, your location, your age, number of family members covered, and other factors.
Deductibles: The amount you pay out-of-pocket ahead insurance kicks in. Many plans have deductibles ranging from $1,000-$8,000+.
Co-pays: A fixed amount you pay for certain services after meeting your deductible, like a $20 copay for primary doctor visits.
Co-insurance: Your share of costs after the deductible, often 20%. So you pay 20% while insurance covers 80%.
Out-of-pocket max: The limit on your total deductible and co-insurance costs for the year. After hitting this amount, insurance covers 100%.
Tax penalties:If you can afford insurance but choose to go without, you may have to pay a fee known as the individual mandate penalty when you file your taxes. Some exceptions apply.
For employer plans, your portion of premiums are deducted pre-tax from your paychecks. If you buy insurance yourself, you pay the full premium costs each month to your insurer. Some people qualify for subsidies through the ACA marketplaces to make premiums more affordable.
Options If You Can’t Afford Insurance
If you are uninsured and don’t get health insurance through your employer or a government program, there are some options that can help:
ACA subsidies: Based on income, subsidies reduce your monthly premiums and out-of-pocket costs on plans from the health insurance marketplace.
Medicaid: Requirements vary by state, but you may qualify for free or low-cost coverage from Medicaid based on your income, household size, assets, and other factors.
CHIP: Provides affordable health coverage for qualifying children up to age 19. Available in all states.
Community health clinics: Offer health services on a sliding fee scale based on your ability to pay.
Hospital charity care: Non-profit hospitals provide free or discounted care if you meet income requirements and apply.
Negotiating medical bills: You may be able to negotiate lower pricing for any care you have to pay for out-of-pocket without insurance.
Short-term health plans: Basic temporary plans that can give some catastrophic protection while between other coverage. Limitations apply so read the fine print.
Having continuous health insurance you can afford is the best way to protect yourself from unexpected medical costs. But if you are currently uninsured, the options above may help reduce your health care burden.
Health insurance in the United States helps safeguard you and your family from the high costs of health care. Understanding all the options available can help you find an affordable plan that provides the level of coverage you need.