Suppose your employer does not provide health insurance as part of its employee benefits program. You may want to consider buying your own health insurance from a private health insurance company in such a situation.
A premium is the amount of money paid to an insurance provider for coverage by a person or a business. You can commonly pay premiums for health insurance on a monthly basis. Employers who provide an employer-sponsored health insurance plan often pay a portion of the premiums. If you need to insure yourself, you will have to pay the entire premium amount.
It is normal to concern about the expense of purchasing private insurance in the US. However, depending on the level of coverage you want, you have a variety of options and prices to choose from.
When you buy your own insurance, the process is more difficult than just choosing a company plan and having the monthly payments deducted from your paycheck every month.
Key Facts
- Health insurance is mandatory for the majority of Americans who cannot afford to pay medical bills out of pocket or with government assistance
- Your health insurance premium is calculated using a combination of your co-pay, co-insurance, deductible, and maximum out-of-pocket expenses
- The current healthcare system does not provide equal access to healthcare services for all Americans
- While other countries have universal health care, the Affordable Care Act only incorporates some aspects of this system
What is private insurance in the US?
Private insurance in the US is a health insurance coverage provided by a private entity rather than the state or federal government. Insurance brokers and companies are both included in this category.
You have several options for enrolling in private insurance in the US, including:
- Licensed agents, such as eHealth
- Health insurance provided by an employer (such as a group health plan)
- Federal or state marketplace plans
Some private insurance in the US offers benefits that meet the ACA’s basic essential coverage requirements. Other plans may provide additional benefits, like short-term or catastrophic coverage. These plans, such as short-term plans and catastrophic coverage, may not count as private health insurance choices and may offer different benefits. But they may not count as a qualifying health plan under the Affordable Care Act.
Until 2018, you could have had to pay a tax penalty if you had a non-qualifying coverage plan. That penalty is no longer valid since about 2019.
How does private insurance in the US work?
If you are ill or injured during the policy’s term, it will pay for private medical care, tests, and surgery. It is typically designed for acute diseases that are curable and short-term.
You usually pay a monthly fee for your health insurance, which is known as the premium. If you require treatment that your insurance covers while the policy is active, it may payout.
It is designed to give treatment in addition to the NHS service. Appointments with your doctor, for example, would still be made through the NHS. However, with medical insurance, you may be able to:
- Receive treatment sooner
- The ability to choose where you receive treatment
- A private room
- A broader range of treatment options
How Much Does Private Insurance in the US Cost?
Many people are afraid of purchasing their own insurance rather than enrolling in an employer-sponsored plan. But some studies have shown that it can wind up being more affordable than employer-sponsored plans.
According to a survey conducted by the Kaiser Family Foundation, the average monthly premium for an employer-sponsored insurance plan for individual coverage in 2019 was $603. The cost of family coverage was $1,725.00.
And the average cost of individual health insurance if purchased separately from an employer-sponsored plan was $440. A family’s average monthly premium was $1,168.
Moreover, if you choose to purchase insurance via the Health Insurance Marketplace, you may be qualified for a Cost-Sharing Reduction Subsidy and Advanced Premium Tax Credits. These can decrease the amount you pay for premiums, as well as your deductible and any co-payments or co-insurance you must pay.
Situations in Which You Might Need Private Insurance in the US
Certain situations increase the chances that you may need to purchase private insurance in the US:
1. 26-year-old or older young adult
Young individuals can be covered as dependents under their parents’ health insurance coverage until they reach the age of 26 under the rules of the Affordable Care Act (ACA) of 2010. After that, they must get their own insurance coverage.
2. Unemployed
If you lose your work, you may be able to keep your health insurance coverage via your employer’s plan for a limited time through a program known as the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows qualifying employees and their families to keep their health insurance coverage at their own expense.
You can extend COBRA coverage for up to 36 months (under certain circumstances). But the cost of enrolling in COBRA is very high. This is due to the fact that the formerly employed person pays the whole expense of the insurance. Employers often pay a percentage of their workers’ healthcare premiums.
As part of the American Rescue Plan, the government would reimburse COBRA costs in full if a taxpayer loses his or her job as a result of COVID-19. This subsidy will be in effect from April 1, 2021, through September 30, 2021. The subsidy will be paid in advance and will be tax-free.
3. A Part-Time Worker
Part-time jobs rarely provide health insurance. A part-time job is any position that needs employees to work fewer hours than their company considers full-time, or 40 hours a week. If you work part-time, you must usually obtain your own health insurance.
4. Self-Employed
A self-employed individual may be a freelancer or the owner of a business. Some self-employed individuals can get health insurance through their spouse’s plan. They must provide their own health insurance if they do not have it.
5. A Business Owner Who Has Employees
If you start a business and hire workers, you may be required to provide them with health insurance. Even though it is not required, you may choose to provide health insurance in order to be a competitive company able to attract qualified job seekers. In this situation, you must purchase a company health insurance plan.
6. If You Retire (or If Your Spouse/Parent Retires)
You will most likely no longer be eligible for employer-sponsored health insurance after you retire. If you are under the age of 65 and are not disabled, you must purchase individual private health insurance until you reach the age of 65 and can apply for Medicare. Many retirees choose to purchase Medicare with private Medigap or Medicare Advantage insurance to ensure more comprehensive coverage. Some retirees may also choose to replace their Medicare coverage entirely with a private Medicare Advantage plan.
7. Dropped By Your Existing Insurer
The Affordable Care Act prevents insurers from canceling or refusing your coverage due to a pre-existing condition or an error on your application. But there are other circumstances in which your coverage may be canceled. It’s also possible that your insurance could grow so expensive that you won’t be able to afford it.
The Bottom Line
Getting your own health insurance coverage is not as simple as signing in an employer’s plan. But at least you have a choice over the plan you receive. Your research will become easier if you have decided what you require and are familiar with the language used to describe health insurance policies. With so many options available, you should be able to choose a plan that meets your needs—and your budget.
