Individual and Family
What Is Private Health Insurance?
Published on March 21, 2019
When it comes to insurance coverage, the options can be a little overwhelming. Understanding all of the terms and how they apply to you is an essential starting point for making an informed decision. One of the terms that you’re likely to run into when shopping for coverage is “private health insurance.”
According to the U.S. Census Bureau, the vast majority of Americans are enrolled in private health insurance, compared with those who get coverage through a government program (or “public” health insurance). Employer-based health coverage continues to be the most common source, followed by Medicaid (19%) and Medicare (17%).
Here’s an overview of private health insurance, including what it is, the options available to you, and how it may affect your bottom line.
What is private health insurance?
The term “private health insurance” simply refers to any health insurance coverage that is not offered by a state or federal government. Instead, private health insurance is offered by a private entity, such as an insurance company or broker.
There are a number of private health insurance options available. This can include:
- Federal or state marketplace plans
- Health insurance offered through an employer (such as a group health plan)
- Private health insurance plans offered by licensed brokers or agents
Some private health insurance plans have benefits that meet the minimum essential coverage requirements of the Affordable Care Act (also known as Obamacare). Other types of private health insurance options, such as short-term plans and catastrophic coverage, may offer different benefits, but may not count as a qualified health plan under the Affordable Care Act.
Please note that not all plans available outside of the government marketplace count as qualifying health coverage, and, up until 2018, you would have faced a tax penalty for not meeting the requirements of the ACA if this was the only coverage you had. However, beginning with the 2019 plan year, if you’re enrolled in a plan that doesn’t meet minimum essential coverage standards, you will no longer face a penalty.
What is public health insurance?
Now that we’ve defined private health insurance, you may be wondering how public health insurance works. Currently, there are only a few limited options for public health insurance in the US. These include:
- Medicare, a federal program for adults over the age of 65 and certain disabled individuals.
- Medicaid, a state-run public health insurance program for low-income individuals.
- The Children’s Health Insurance Program (CHIP), a subset of Medicaid, which offers subsidized low- or no-cost health insurance for children.
For people who aren’t eligible for these government programs based on income or other criteria, there are currently no other public health insurance options. Instead, people can get the coverage they need through private health insurance providers.
Where can I get private health insurance?
For those looking for private health insurance, there are a few options. If you don’t have coverage through your employer or you’re self-employed, you might get private health insurance through the federal marketplace or your state’s marketplace. Employer-sponsored plans and all marketplace plans are required to include certain essential health benefits, such as maternity care, mental health services, preventive care, and more.
ACA-compliant coverage is also available through licensed health insurance brokers like eHealth. eHealth also offers other options that may offer more flexibility for those looking for coverage over a short period or in specific situations.
Types of private insurance outside the marketplace
If you already have ACA-compliant health coverage, such as through an employer, you might be interested in exploring other insurance options outside the marketplace.
For instance, someone who is young and healthy may want a more “bare bones” insurance policy, such as catastrophic insurance. A catastrophic policy offers very limited coverage for those under 30 who qualify for a “hardship exemption” and can’t afford qualified health coverage. Catastrophic coverage covers the same essential health benefits offered through other ACA-compliant plans, as well as some preventive services for no cost. However, you’ll need to meet a very high deductible before the plan begins to cover costs. In 2019, all catastrophic plans have a deductible of $7,900.
A catastrophic plan might help with high expenses from a severe illness or accidental injury. However, it might be less helpful with routine health care, such as check ups, where you’re less unlikely to meet the yearly deductible and could wind up with high out-of-pocket expenses. This type of coverage could be a good fit if you know that your annual health-care costs will meet the deductible, or if you’re generally in good health but want coverage for a worst-case scenario.
Another type of private health insurance to consider is short-term coverage. Coverage terms depend on the state you live in. Federal laws allow short term plans to have initial terms of 364 days, with the chance to renew for up to 36 months. States are allowed to have their own laws limiting short term plans further, so make sure to check short term laws in your state if you’re considering this kind of coverage. These affordable private health insurance policies can be a good fit if you only need coverage for a short period – for example, if you’re between jobs and need insurance to bridge a coverage gap, but don’t want to pay the high premiums of a COBRA policy.
Please note that each plan has its own terms and limitations, so be sure to check the official plan documents to understand how that specific plan works. This article is only for general education.
What type of private insurance coverage is right for me?
While every person’s situation is different, here are some things to consider as you explore coverage options.
One benefit of private health insurance is that certain types of coverage may be available any time of the year, instead of only during open enrollment periods. Marketplace plans are typically only available during Open Enrollment unless you qualify for a Special Enrollment Period. If you do not have coverage and don’t qualify for a Special Enrollment Period, some types of private health insurance (such as short-term plans) may help bridge the gap in the meantime.
If you opt to get insurance through a broker, such as eHealth, costs for coverage may be different — and possibly lower — than plans offered through the marketplace. Plan types and availability may vary by location as well.
When looking for coverage, it’s important to consider all of your private health insurance options. A licensed insurance agent can help you find a policy that offers what you need at a price that makes sense for your specific circumstances. If you have questions, feel free to contact eHealth today to explore coverage choices that might fit your situation.