Health insurance can be a valuable asset in helping protect your financial security by reducing the amount you pay out of pocket for health care expenses. Insurance also can play an important role in helping you access healthcare,1 which in turn, can help you maintain your health.2
In the U.S., you can have one of two types of health insurance:
Public health insurance – coverage provided through government-sponsored programs such as Medicaid, Medicare, the Children’ Health Insurance Program (CHIP), individual state health plans, and various plans for active and retired military veterans.
Private health insurance – coverage that you can purchase through an employer, union, from an insurance company, through an insurance agent or broker, or via a federal or state Affordable Care Act (ACA) plan marketplace exchange.
If you don’t receive health insurance through your employer, are unable to purchase major medical through the ACA plan exchange right now (for example, you don’t qualify for a special enrollment period), and don’t qualify for public insurance, you still have options for purchasing non-ACA qualifying health insurance like short term medical.
Short term medical policies don’t provide the same level of coverage as major medical, for example, they don’t typically cover pre-existing conditions or preventive care, but a temporary policy may be better than going without major medical insurance until you can obtain it
Learn more about short term health insurance.
Most Americans Have Health Insurance
A 2018 report published by the U.S. Census Bureau indicates that in 2017, either for part or all of the year, 67.2% of Americans had private health insurance, while 37.7% of Americans had public insurance coverage.3
Approximately 56% of Americans with health insurance received it by way of employer-sponsored coverage, while another 16% purchased their insurance on an individual basis.4
The numbers show that a much higher number of Americans have health insurance in 2017 – through both public and private coverage – than they did before the ACA took effect in 2014.
The Kaiser Family Foundation reported that in 2013 more than 44 million non-elderly Americans lacked coverage. By 2017, the number of uninsured non-elderly Americans had dropped to approximately 27.4 million.5
However, there are some concerns that uninsured rates may begin to rise in the country, now that the ACA tax penalty for not having health insurance has been eliminated.
A study of more than 3,000 Californians who had bought individual health care plans in 2017 reported that nearly 20% of respondents said they would not have purchased their coverage if there had been no tax penalty.6 The Congressional Budget Office also published a report in 2017 predicting that the repeal of the penalty could lead to 13 million fewer Americans having health insurance by 2027.7
Why Buy Private Health Insurance?
Do you think you can’t afford to buy health insurance? You’re not alone. A study by the Kaiser Family Foundation reported that in 2017, 45% of uninsured adults said they didn’t purchase health insurance because the cost of coverage was too high.8
So why buy private health insurance? Here are a few considerations:
Insurance can help protect your financial security – no one plans to become sick or injured, but life can be unpredictable. If you do require medical attention, paying for all of your costs out of your own pocket – even for routine illnesses and injuries – can be expensive. And with a catastrophic medical situation, having no health insurance can be financially challenging.
You can use your health insurance to help maintain better health – major medical insurance pays for preventive services such as flu shots and screenings to help detect illnesses or chronic conditions that you may not even realize you have. Taking steps to prevent illnesses and diseases, as well as learning about illnesses in their early stages when they are easier to treat, can keep you healthier.9
How Much Does Private Health Insurance Cost?
All private health insurance plans are designed to share medical care costs between you and the insurance company. Each month you’ll pay a fee, or premium, for your coverage. The premium amount you pay for your private health insurance depends on a number of factors:10
Subsidies or financial assistance you receive – employers often pay a portion of your total premium, and if you buy a plan through the ACA marketplace you may qualify for subsidies from the federal government.
Who’s covered under your plan — individual coverage is typically less expensive than coverage for you and your spouse, or for you and your family.
Where you live – your location affects your premium rate due to differences in provider availability, state and local rules, and the cost of living.
Your age – older people can pay premium rates up to three times higher than younger people.11
Tobacco usage – if you use tobacco, you may be charged up to 50% more than non-tobacco users.12
Consider your personal circumstances when reviewing your choices to help determine which private health insurance plan is best for you: a plan with lower monthly premiums with higher deductible, copayment and coinsurance amounts, or higher monthly premiums with lower cost-sharing features.
How to Get Private Health Insurance
You have several options for buying private health insurance, including:13
The federal or your state health insurance marketplace. The major medical insurance plans sold through the exchanges all comply with the ACA guidelines. Keep in mind that if you qualify for a federal subsidy to help reduce your insurance premium costs, you must purchase your plan through an exchange to receive the subsidy.
Directly from an insurance company. Purchasing off the exchange can provide you more plan choices. If you buy a plan that is offered on the exchange, the ACA requires that plan to be sold off the exchange for the same price. But you also can buy other insurance plans that are not available on all exchanges.
With more than 70% of the plans offered on the HealthCare.gov exchange in 2019 using “narrow networks”14 it may be easier to buy more traditional plans that offer greater provider choices, such as a Preferred Provider Organization (PPO), off the exchange and directly from an insurance company.
Contact insurers in your area to see what plans they sell in your area.
A health insurance broker or agent. Brokers represent the purchaser of the health insurance (you) and are usually able to sell you plans from various companies, while agents represent a health insurance company and sells policies only for that company. Both can help you compare plans and enroll.
Private online health insurance marketplaces. Online sellers operate like brokers and usually sell plans from various insurance companies. You can compare plans and prices online and enroll with the insurance company you choose.
Learn more about the difference between the ACA exchange and private marketplace.
It’s important to note that you can only purchase ACA-qualifying coverage during the annual open enrollment period, unless you qualify for a special enrollment period by experiencing a life event such as getting married, having a baby, changing jobs, etc.
Finding More Affordable Insurance Coverage Options
If you’ve reviewed your budget and feel you simply can’t afford to buy ACA-qualifying health insurance, you may want to consider other options that can help lower what you pay for health care.
Short Term Health Insurance
This type of insurance is designed to help you pay for unexpected medical costs, such as provider visits, hospital room and board, surgery and emergency room treatment, until you can find a more permanent insurance solution.
Short term health insurance does not qualify as ACA coverage and doesn’t cover the essential health benefits like preventive care. It is also not guaranteed issue, meaning your health is a factor and you can be denied coverage if you have a pre existing condition or other health issues.
Short term health insurance has a number of appealing features, such as:
Flexibility – Choose how long to keep your policy (within regulations). You can even select a coverage start date as soon as within 24 hours of receiving approval for coverage.
Typically lower premium rates – Short term health insurance does not provide all of the essential health benefits required by ACA-compliant plans. This usually means that premiums are significantly lower than ACA plan premiums – however, premiums will be based on the benefits you select.
Summary + Next Steps
Remember, major medical is the only private health insurance option that is ACA-compliant. It’s the type of insurance that most of us should have because it provides the best coverage.
However, if you’re interested in a non-ACA health insurance product like short term medical, you can get a quick quote to see if it’s available in your state and view plan options, including premium and deductible amounts.
Or work with a health insurance agent for support as you consider your choices.
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