Health insurers are fighting back against the Affordable Care Act (ACA), which has failed to pay over $12 billion in subsidies after forcing insurers to cover Americans with pre-existing conditions.
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Private Health Insurance
- What Is Private Health Insurance?
- Pros And Cons Of Private Health Insurance
- How Much Does Private Health Insurance Cost?
- When Can You Buy Private Health Insurance?
- What’s The Best Private Health Insurance?
- Who Should Consider Private Health Insurance
- Applying For Private Health Insurance
What Is Private Health Insurance?
Private health insurance refers to health insurance marketed and operated by private health insurance companies. Private plans operate outside the scope of the federal government, unlike public health insurance plans like Medicaid and Medicare.
Is Obamacare Considered Private Health Insurance?
Yes and no. Obamacare is a little more complex because it is operated by either the federal or state government, and subsidies are available to those who qualify, along with federally managed programs like Medicaid and Medicare. However, if you are not eligible for government-subsidized coverage, you can purchase private health insurance plans through the marketplace. However, marketplace health insurance plans tend to be expensive if you earn too much money.
How Private Health Insurance Works
With private health insurance companies you have to apply for coverage, and go through an underwriting process. The underwriting process determines how much of a liability you will be for the company, and will determine if you will be accepted or declined for coverage, and also determine what your cost for coverage will be.
Once you are approved for coverage, you will have to pay a monthly fee known as a premium. Your premium is what allows you to maintain coverage, if you miss a payment, or fail to pay in full, you can be dropped from your health insurance plan.
Your premium doesn’t cover everything right off the bat, with the exception of a few medical services. Usually, preventive care, wellness checkups, and some approved medical procedures will be included in your premium, but most medical services will require you to pay out-of-pocket.
Most health insurance plans will require you to meet a deductible before beginning to cover your medical bills. Plans will often include other out-of-pocket expenses as well, such as copays and coinsurance, which are out-of-pocket costs you may still have to pay even after your deductible has been met.
Example Of How Private Health Insurance Plans Work
Here’s how a real-world example would work. You find a health insurance plan that fits your needs and budget, so you enroll. You choose a plan that has a $300 monthly premium, and $2,500 annual deductible. On top of that, you have $25 copays each time you schedule a doctor’s appointment.
Just a few weeks after your health insurance kicks in you come down with the flu, and spend a few nights in the hospital being pumped full of fluids and medicine. You leave feeling refreshed and rested, ready to take on the day.
A couple weeks go by and you receive a letter in the mail from your medical provider. You look at the bill and see that the total cost of your hospital stay came out to $15,000. However, because you have a low deductible plan, you will only pay for your deductible and your coverage will take care of the rest. So while your bill may be $15,000, you will only end up paying your deductible which comes out to $2,500.
Once you make your deductible payment, your health insurance will cover all of your medical costs until your deductible resets, which is usually once a year. You will still be on the hook for your copay and will have to pay a $25 fee for your next doctor’s appointment.
Pros And Cons Of Private Health Insurance
Private health insurance plans have their advantages and disadvantages. For a comprehensive overview of the pros and cons of private health insurance plans, you can learn more here. However, here’s a brief overview of what to consider before signing up with a private health insurance company.
Pros Of Private Health Insurance
- You will have more freedom when choosing medical providers, including your ability to choose your own doctor.
- There are often shorter waiting times when you have private health insurance.
- You will have access to higher quality facilities.
Cons Of Private Health Insurance
- Private health insurance plans can be more expensive.
- You do not have the ability to qualify for subsidies through the health insurance marketplace.
- Plans may not meet federal requirements and can cause you to pay a tax penalty.
How Much Does Private Health Insurance Cost?
The average cost of private health insurance in 2016 was nearly $400 for a monthly premium. These private plans came with about a $4,300 deductible as well. After getting through the initial shock of the sticker price, it is worth noting that these numbers may be well below what you would pay through the health insurance marketplace in your area if you don’t qualify for subsidies.
How Much Is The Cheapest Private Health Insurance?
The cheapest private health insurance plans would be catastrophic plans or short-term plans. Catastrophic coverage is only available to those under 30 years old, and are typically high deductible plans. Definitely not recommended if you have a medical history.
Short-term health insurance plans are cheap but aren’t always recommended. Short-term coverage is really designed for people who are between jobs or coverage and is often referred to as temporary health insurance. While short-term plans may be the cheapest private health insurance option available, you definitely want to read up on them to see if it’s the right option for you.
What Are The Alternatives To Private Coverage?
There are a few alternatives to private health insurance and even some alternatives to health insurance that can save you money which you can read more about here. The most popular alternatives are going to be public health insurance options. These typically include:
- Some marketplace plans
- Children’s Health Insurance Program (CHIP)
Is It Possible To Get Free Private Health Insurance?
No, private health insurance companies do not offer free health coverage for members. While private health insurance companies may be backed by the federal government, they aren’t funded by taxpayer dollars since they are privately owned companies. Therefore, they don’t have free health coverage options, but they may offer subsidized coverage through the marketplace. Learn more about federally funded health insurance programs here.
When Can You Buy Private Health Insurance?
Private health insurance plans can be purchased at any point during the year. Since they are not government sponsored or subsidized plans, they aren’t limited to the Open Enrollment or Special Enrollment Periods like health insurance plans purchased through the marketplace.
Do You Have To Buy Private Health Insurance?
There is no requirement to purchase private health insurance, however, there are circumstances where it is highly recommended. For example, if you don’t have coverage, private health insurance plans can keep you protected from potentially high medical costs. Or, if you missed the Open Enrollment Period and don’t qualify for a Special Enrollment Period, private health coverage can save you from paying a tax penalty.
How Long Are You Allowed To Go Without Health Insurance?
Under the Affordable Care Act you are allowed to go without health coverage for 2 consecutive months, however, President Trump’s executive order looked to change that to 3 consecutive months. If you don’t mind paying a penalty, or qualify for an exemption, you can go without health insurance for as long as you’d like.
What’s The Best Private Health Insurance?
It’s hard to say what private health insurance is best because everyone’s situation is unique. There is no one size fits all for health insurance. So, it really depends what you are looking for since each private plan has its own benefits.
What Are The Top Rated Private Health Companies?
Again, this will really depend on what your needs are. If you are looking for extensive coverage at an affordable price, Kaiser Permanente or Blue Cross Blue Shield both have high ratings. If you are pretty healthy, you may want to opt for a cheap option like Molina which doesn’t have great feedback, but can save you money if you only go to the doctor a couple times a year.
Are Private HMO Or PPO Plans Better?
HMO and PPO plans both have their pros and cons. If you want more flexibility at a higher cost, you want to go with a PPO plan. If you want less flexibility, but the opportunity to save money, you want to go with an HMO plan.
Everyone’s situation will be different, but both HMO and PPO plans give you access to a provider network for negotiated rates. However, PPO plans don’t require you to get a referral from your primary care physician to see a specialist while HMO plans do. On the other hand, if you stay in network with your HMO plan, you may not have to pay a deductible. It’s best to sit with an agent or broker to see what option works best for you.
Will Your Doctor Accept Private Health Coverage?
Private coverage is widely accepted, so there’s a good chance your doctor will accept your plan. Most health insurance companies will provide a list of medical providers within your network, so you can always refer to your plan to determine whether or not your doctor accepts your coverage.
Comparing Private Health Insurance Plans
Comparing private health plans can be a bit of an undertaking. There are tons of private health insurance companies out there, and plans will differ depending on where you live. Your best bet is to look for customer reviews from people in your area, or talk to a licensed health insurance agent or broker. Agents and brokers typically have an in-depth understanding of coverage options in the areas they are licensed in.
Who Should Consider Private Health Insurance
Everyone should consider private health insurance. Once you get past the stigma surrounding the word private, these health coverage options can actually save you money and provide you the quality coverage you want.
If you missed Open Enrollment or don’t have coverage, you definitely want to check out private health insurance options. The last thing you want to do is get stuck with an expensive medical bill and not have coverage to help with payments.
Can You Be Denied Coverage For Private Coverage?
Yes, private health insurance companies can still deny you coverage for pre-existing conditions. While the Affordable Care Act made it illegal for health insurance companies to deny or charge more for pre-existing conditions through the marketplace, that’s not the case with private health insurance companies. Essentially, if a private company thinks you are too much of a medical liability, they can deny you coverage.
Are Private Health Insurance Plans Qualified Health Plans?
Most private plans to meet federal standards and are considered qualified health plans. However, some plans like short-term health insurance do not include minimum essential benefits and would not be considered a qualified health plan. Ask your insurance provider and they will let you know if you are signing up for a qualified health plan or not.
Do Private Health Insurance Plans Cover Pre Existing Conditions?
Some will and some won’t. You will have to check with your health insurance provider to find out if your pre existing conditions will be covered. Most private health insurance companies will cover pre-existing conditions, but it will most likely increase your monthly premiums.
Applying For Private Health Insurance
If you are doing all the shopping and research yourself, you can apply for private health insurance directly from company websites. If you are working with a health insurance agent or broker, they will take care of the entire application process for you, all you would have to do is submit your medical records, so make sure to have those handy.
Getting Private Health Insurance Quotes
It’s now easier than ever to get private health insurance quotes, and even compare all the coverage options in your area. First Quote Health makes shopping for private health insurance simple by showing you the best private health insurance quotes in your area with just the click of a button. Find out which plans fit your needs and are within your budget, and even talk to a live agent.
Will private health insurance exempt you from the tax penalty?
If your private health insurance plan meets all the federal standards that would make it a qualified health plan, then yes, private health insurance can save you from the tax penalty. If you buy private health insurance plans that do not cover the minimum essential benefits you may still have to pay a tax penalty.
Is everyone eligible for private health insurance?
If you have a pre-existing condition, you may lose your eligibility for some private health insurance plans. Although, there are private health insurance companies who will accept everyone, so there will most likely be a private health insurance option for you.
Is private health insurance always more expensive?
No, private health insurance isn’t always more expensive. In fact, if you don’t qualify for government subsidies, buying private health insurance outside the marketplace can save you money.
Where can you buy private health insurance?
Private health insurance can be purchased through the health insurance marketplace, or outside the marketplace. Unless you are enrolled in a public health insurance plan like Medicaid or Medicare, you can safely assume you are enrolling in private health insurance.