Private health insurance is something a lot of Americans have strong feelings about. Since the Affordable Care Act (ACA) went into force in 2014, many have sought health insurance to cover them or face penalties from the IRS for not being covered. While many employers have stepped up to take up the slack and offer employer-sponsored health insurance, not all of them are required to do so. Smaller companies, in particular, sometimes leave health insurance to individuals. This neglect of workers’ health insurance has led to many people seeking out private health insurance. Unfortunately, the information surrounding private insurance is usually murky. This article hopes to clarify some of the areas of private health insurance so that you can make an informed decision about your coverage.
Buying Your Own Insurance
Typically, when you shop for your own insurance, you have the option of taking an individual or a family health insurance plan. Individual plans may extend to your dependents, so you may not need to pay the price of taking out a family plan. However, if your dependents are over the age of 26, they won’t be covered under your plan. In such a case, if you’d like to have your spouse or older children covered, you’ll need a family health insurance plan.
Health insurance is available through the government exchange or the private insurance marketplace. The government exchange offers open enrollment during certain times of the year. Once you apply to an insurance company during that period, they cannot deny you coverage, thanks to the provisions of the ACA. However, if you decide to apply for insurance coverage outside of these periods, you’re required to shop in the insurance marketplace. Here, private insurance companies offer plans similar to the ACA-approved programs, but usually with added benefits such as travel coverage of secure savings plans that help pay for your medical necessities. However, these plans tend to be more expensive in monthly payments than the standard ACA-approved plans. You should note that you can access these plans at any time, but the government exchange plans are limited to their enrollment window.
The Cost of Private Health Insurance
When you’re paying for a private health insurance plan, your insurer collects money from you in several different ways. These are:
- Premiums: You pay a premium every month for being part of a private health insurance plan.
- Deductibles (excess): When you enter a facility or access healthcare, you are required to meet a base value out of your own pocket. This base value is known as the deductible. Once you reach the deductible, your health insurance kicks in and starts taking up its part of the payments.
- Copays: Copayments are standard costs that come out-of-pocket when accessing healthcare. These fees are usually negotiated with the service provider by your insurance company to streamline the delivery of services to customers like you.
- Coinsurance: When you meet your deductible, your insurance provider starts covering insurance. However, they won’t cover the full cost of your services. Even the plan that offers the highest coverage level still leaves you to pay some of the bills. That extra is known as your coinsurance payment.
Coinsurance, copays, and deductibles are all out-of-pocket costs, and they count towards a value that you should take note of in your private health insurance. The maximum out-of-pocket value is the most amount of money you’ll need to spend on healthcare costs for a given year. Once you hit this cost, your health insurance provider will cover 100% of your healthcare expenses. You should be aware that premiums don’t count towards this maximum out-of-pocket cost.
The Metal-Rated Plans
The common term for ACA plans is metal-rated plans because they demonstrate a class system based on metals. Each of these plans has different coverage levels, and the payments that you make for them are separate in each case. The metal rated plans are:
- Platinum: These plans tend to offer a very high premium rate, but they make up for it with extremely low deductibles and out-of-pocket maximums.
- Gold: While the premiums in gold plans are still somewhat high, their deductibles and out-of-pocket maximums may still be substantial to some users.
- Silver: The premiums in this range are usually among the most affordable, with reasonable deductibles and larger out-of-pocket maximums than the others.
- Bronze: These plans offer low premium plans, but have large deductibles and massive out-of-pocket maximums.
Metal-rates plans are an excellent place to start understanding private health insurance, but they aren’t the only options that individuals have available to them. You can also get access to short-term insurance plans that cover you in between jobs or if you’ve just crossed 26 and aren’t covered under your parents’ insurance anymore. For individuals under 30, catastrophic insurance can serve as a temporary measure until you sort out your cash flow to meet the premium obligation for individual plans.
The Average You’ll Pay
The cost of your private health insurance will differ based on the provider, your age, and if you’re able to collect government assistance to pay for insurance. For individual plans in 2020, the average cost to the individual works out to around $456 per month, with family plans costing an average of $1,152 monthly. Managing your expenses can be done by accessing public healthcare assistance plans like Medicaid or Medicare if you’re eligible. Otherwise, you can look at government subsidies to give you tax credits to ease your insurance burden. If your provider offers you a high-deductible plan that you can partner with a health savings account (HSA), you can mitigate some of your out-of-pocket costs.
You will have many options from a lot of companies to sort through before you decide on a private healthcare insurance plan that suits your needs. My Private Health Insurance believes that consumers need the information to make the right choices. As such, our website offers a simple-to-use head-to-head comparison system allowing you to see the costs and features of insurance plans for various providers. Visit us today and take advantage of our approach to give you the best shot at getting affordable health insurance.