If you find yourself in a position where choosing the right health insurance plan is proving itself to be a daunting task, don’t worry! You’re not alone. Health insurance is an entirely different animal than most other types of insurance.
Choosing a private or public health insurance plan all comes down to your needs and qualifications. Depending on your location, age, and circumstances, you may qualify for public health insurance.
If not, there are affordable private health insurance options available that will suit your needs. The key difference between private vs public health insurance is the qualification factor. Private health insurance does not bear income restrictions for a potential insured, whereas public health insurance does due to its increased affordability.
Key Terms & Phrases to Know
Health insurance is a unique concept, and its coverages vary depending on the plan.
Many key terms and phrases are used in the world of health insurance that may seem confusing. Understanding these terms will allow you to have a better grasp of the differences in coverages and supplemental funds provided with different health insurance plans.
So, take some time to familiarize yourself with these terms before you read on.
Health Insurance - Insurance against loss through illness or injury of the insured. Insurance provides compensation for medical expenses.
Deductible - The amount you will pay before your insurance carrier will pay for eligible expenses.
Coinsurance - After your deductible is met, this is the percentage of costs you will pay for covered services.
Copayment - A predetermined rate you will pay every time you see a primary care or specialist physician.
Premium - A monthly, quarterly, or yearly payment that must be paid by the insured in order to maintain coverage.
COBRA - The Consolidated Omnibus Budget Reconciliation Act of 1985, which was passed to allow individuals to remain enrolled in an employer’s group plan after voluntarily or involuntarily losing eligibility for that plan. It is designed to prevent periods of no coverage while individuals are between jobs.
HIPAA - The Health Insurance Portability and Accountability Act is a federal law that determines standards for handling health information regarding personal health. The law stipulates that the individual (prospective insured) has rights to his or her confidentiality regarding protected health information. The law also stipulates that the insured should receive special enrollment opportunities if certain life or health events were to occur, and guaranteed renewability for certain health insurance coverages.
MHPA - The Mental Health Parity Act is a federal law that requires health insurance plans to provide mental health coverage at a level equal to the value of the plan’s medical coverages.
Public Health Insurance
Public health insurance is designed to provide coverage for those who cannot afford private health insurance or meet the qualifications necessary to receive health insurance coverage from the U.S. government. Public health insurance provides qualifying individuals with an extensive amount of coverage that is suitable for nearly every walk of life.
Affordable Care Act
Also known as “ObamaCare”, the Affordable Care Act (ACA) was passed in 2010 and includes provisions that stipulate how coverage extends to those who meet certain qualifications.
The Affordable Care Act is revolutionizing the workplace. This law makes health insurance more accessible to full-time employees by requiring employers with 50 or more employees to provide health insurance for 95% of their full-time staff.
Employers that fail to do so must pay a penalty to the IRS that exceeds $3,000 per employee. The law also stipulates that the government must provide tax credits to certain small businesses in order to cover specified costs of health insurance for their employees.
The ACA requires U.S. citizens to have insurance with the exception of those experiencing financial hardship or complications regarding religious beliefs. This may sound overbearing, especially to those with low income that does not qualify as financial hardship, but there are other services like Medicaid that were expanded to enhance access to health insurance and enable individuals to meet this requirement.
Medicare
Those who are 65 years of age or older, diagnosed with a disability, or experiencing End-Stage Renal Disease (permanent kidney failure) qualify for the benefits of public health insurance in the form of Medicare.
Medicare is separated into four parts: A, B, C, and D.
Medicare Parts A & B are considered Original Medicare and provide coverage for the most standard hospital and medical expenses. Medicare is regulated at both the federal and state level, so researching the coverages provided in your area is recommended!
Medicare Part A provides coverage for Hospital Insurance. The coverages for hospital insurance include the costs incurred when you are admitted to a hospital, care in a skilled nursing facility, or hospice care. Deductibles, copayments, and coinsurance are not covered. Most individuals are automatically enrolled in Medicare Part A when they reach 65 years of age.
Medicare Part B provides coverage for Medical Insurance outside the hospital. These coverages include medically necessary services, preventive services, and outpatient care. Like Medicare Part A, some individuals who have reached age 65 will be automatically enrolled in Medicare Part B.
Medicare Part C is also known as Medicare Advantage, and it's only offered through private insurers as supplemental coverage for expensive deductibles, copayments, and coinsurance. In addition, Medicare Advantage plans may provide additional coverages not covered under original Medicare. Medicare Part C is not mandatory coverage and is only offered at the request of the insured.
Medicare Part D is a separate coverage that extends prescription drug coverage at an additional premium to original Medicare. Like Medicare Advantage, Medicare Part D coverage is not mandatory and is optional for the insured.
Medicaid
Medicaid is administered at the state level and regulated by the federal government. Qualifications for Medicaid differ from those of Medicare in that coverage is offered to most low-income individuals, families, pregnant women, the elderly, and those with disabilities. Medicaid coverage varies based on the state, but there are mandatory coverages that those who qualify (usually those with very little income) can take advantage of.
Medicaid includes coverage for:
Inpatient and outpatient hospital services
Nursing facility care
Home health care
Physician services
Lab and X-Ray services
Family planning services
Transportation to medical care
Counseling for pregnant women
Certified pediatric and nurse practitioner services
Private Health Insurance
Private health insurance extends coverage to those who are both willing and able to pay larger premiums either for individual coverage or additional coverage. Private health insurance is provided by private insurers who offer plans through employers or sell them directly to individuals through the individual market.
Take some time to familiarize yourself with the types of health insurance offered through private insurers. Check out our article comparing these plan types below in more detail.
HMOs
Health maintenance organizations provide coverage for individuals at a lower premium rate than most other health insurance plans by mandating that you use doctors and medical facilities that are in the HMO’s network. You must first receive medical care services from a primary care physician or PCP who will recommend services that are in the network as it pertains to the health issue. Lower cost, less choice.
PPOs
A preferred provider organization plan operates similarly to an HMO. Yet, PPO plans also provide some coverage for medical services that are out of network for a more expensive premium than an HMO. PPO plans also give the insured greater access and flexibility when it comes to choosing a provider whether they be in-network or out-of-network. PPO plans do not require the use of a PCP. Higher cost, more choice.
POS
A point-of-service plan is a hybrid of an HMO and PPO. The distinction lies within the extended coverage for out-of-network medical services that are not present in HMOs. However, just as with an HMO, POS plans still require the insured to report to a PCP before seeking alternative medical services.
The differences between HMOs and PPOs may seem confusing, and they can be at times. However, the key is determining whether or not you’d want to be restricted to a network (HMO) rather than having the freedom to choose which provider or doctor will be best for you (PPO/POS).
Medicare Advantage (Medicare Part C) - Age 65+
Medicare Advantage provides additional coverages from private insurers that are not included in original Medicare. Medicare Advantage also covers everything included in Medicare Parts A, B, and D in some instances. The main feature of Medicare Advantage plans is that they offer supplemental funds for deductibles, copayments, and coinsurance. Medicare Advantage plans also provide coverage for dental, hearing, vision, and physical fitness. Think of it as a combination of all four parts of Medicare at a fraction of the cost.
MediGap - Age 65+
Medicare Supplement plans (MediGap) are offered by private insurance companies to provide supplemental funds for expenses that are not covered by original Medicare. MediGap serves as an alternative to Medicare Part C and offers plans ranging from A-N. Individuals are required to pay a MediGap premium in addition to the premium of their original Medicare plan. MediGap coverage includes:
Part A coinsurance and hospital costs up to 365 days after original Medicare benefits are used up
Part B coinsurance and copayment
First 3 pints of blood
Part A hospice care coinsurance or copayment
Skilled nursing facility care coinsurance
Part A deductible
Part B deductible
Part B excess charges
Emergency foreign travel
MediGap plans vary based on your selection of plans A-N regarding the aforementioned coverages. Some MediGap plans even have a stop-loss limit or an out-of-pocket spending limit that reduces your out-of-pocket costs.
Health Insurance & The Individual
If you do not receive health insurance through your employment, it can feel overwhelming to determine which health insurance plan will be right for you. Remember, determine what your health insurance needs are and select a plan accordingly. Your newfound knowledge regarding health insurance may surprise you when it’s time to make a decision.
Rest assured that, thanks to the Affordable Care Act, it is much easier for all walks of life to have access to health insurance. You’ll be surprised how easy it is to find a plan that is right for you, as long as you know where to look, and what you’re looking for!
