What is Private health insurance?

Private health insurance is health insurance provided by organizations other than the federal and state governments. According to the United States Census Bureau, the majority of American residents are privately insured, with 19 percent covered by Medicaid and 17 percent covered by Medicare. Employers frequently pay for their employees' medical premiums. If their employers do not provide health insurance, employees can obtain coverage from private insurance companies or the ACA marketplaces without the assistance of investors.

Public health insurance programs

The following public health insurance programs are available to American citizens:

1. Medicaid: Medicaid is a federally funded health insurance program for low-income adults.
2. Medicare: Medicare is a government-run health insurance program for people over the age of 65.

Public health insurance is only available to eligible citizens and legal permanent residents, whereas private health insurance is available to everyone. Public health plans have eligibility criteria based on age or income, whereas private health insurance does not.

ACA plans

Affordable Care Act (ACA) compliant coverage plans are health plans that adhere to the ACA's regulations. These healthcare plans are available through either a state-sponsored or a federally run healthcare marketplace. All federal plans are listed on the healthcare website. All plans sold in the marketplace must provide the following ten essential services outlined by the ACA:

1. Preventive, wellness services, chronic disease treatments
2. Hospitalization care
3. Emergency health care
4. Ambulatory patient care
5. Laboratory services
6. Pediatric services
7. Prescription drugs
8. Mental health treatment
9. Rehab services
10. Maternity and newborn health care

These health plans are available through open enrollment and must cover at least 80% of medical expenses (85% for large group plans). However, the plans must be mandatorily classified into metallic categories based on the coverages they provide, as follows:

1. Bronze-level plans: After deductibles are met, bronze-level plans cover up to 60% of medical expenses.
2. Silver level plans: Silver level plans cover 70% of medical expenses and co-pays for office visits.
3. Gold and Platinum level plans: Plans at the gold and platinum levels cover approximately 80% to 90% of medical expenses.

Deductibles are set by each type of plan and determine out-of-pocket expenses. These expenses must be met with funds other than insurance premiums for insurance companies to reimburse the insured for his or her expenses. Non-grandfathered plans (enacted before 2014 but not grandfathered after 2010) are not fully ACA compliant, but they are still in effect for 2020 and are expected to be extended until 2021.

Types of the private person insured

Several people are not eligible for government-run health plans, nor are they offered health insurance by their employers. Among them are:

Young dependents

Individuals under the age of 26 who are dependent on their parents or guardians are allowed to be covered under their parents'/guardians' health plans under the Affordable Care Act of 2010.

Jobless

Since several people were laid off as a result of the Covid-19 outbreak, the number of unemployed people has risen to 11%. However, the Consolidated Omnibus Budget Reconciliation Act allows them to continue their employer plans on their own for another 36 months (COBRA). Following the Covid-19 outbreak, American rescue plans provided 100 percent reimbursement under COBRA for employees who were laid off between 1 April 2020 and 30 September 2021.

Part-time/self-employed

Part-time employees are usually not provided with health insurance by their employers, so they must obtain coverage through a health plan. Self-employed people prefer to be covered by a health insurance plan as well.

Retired

Individuals who have retired and have remained uninsured under employer-sponsored health plans or who are covered by Medicare but would like to obtain a higher level of coverage.

Public option to single-payer

The recent downfall of CO-OP (Community Oriented and Operated Plans) served as a wake-up call for policymakers. Then-Vice President Joseph Biden and Senator Bernie Sanders proposed a reform to implement a comprehensive government plan to compete with private health plans, as well as to learn from the massive losses incurred by single-payer policies during the collapse. CMS would be in charge of this plan. Recently, it was proposed that a single-payer public option be implemented so that all private and public health insurances would be phased out and healthcare could be streamlined.

Consumer challenges

The ACA completely transformed the healthcare system in the United States. Obamacare increased Medicare's advantage and altered the national status quo by making employee insurance mandatory. However, the ACA had a significant impact on the insurance market, posing challenges for consumers.

Before the coronavirus pandemic, America's multipayer system had almost reached universal coverage. According to statistics, 9 out of 10 Americans had either public or private health insurance. However, the pandemic has had an impact on the general public and has revealed weaknesses in the current insurance markets. The unemployment rate in the United States was extremely high, causing employees to lose their health insurance. While many Americans were able to find new jobs, alternative plans such as Medicaid or federally subsidized private insurance were chosen.

Context and Applications

This topic is significant in general studies, professional exams, and also for both undergraduate courses and postgraduate courses and competitive exams, especially for

• Bachelors in Insurance Management
• Bachelors in Insurance and Risk Management
• Masters in Business Administration (Finance) 

Practice Problems

Question 1: Which public health insurance program secured the low-income individuals?

1. 1. Medicaid
   2. Medicare
   3. CMS
   4. None of the above

Answer: Option a

Explanation: Medicaid is a public health insurance program for low-income people because Medicaid plans are funded by the government. Medicaid helps people in funding their medical costs if the funds available to them are insufficient to meet the healthcare costs. 

Question 2: Which health plan has a cost-sharing ratio of up to 70%?

1. 1. Silver
   2. Gold
   3. Platinum
   4. Bronze

Answer: Option a

Explanation: Silver-level plans cover 70% of medical expenses and pay for office visits. It falls in the middle of the coverage of bronze plans that cover 60% of the medical costs, while the gold and platinum packages cover 80% and 90% of the medical costs. 

Question 3: What is the reason for the health coverage of people rendered jobless during Covid-19 to be covered by health insurance?

1. 1. American Rescue Plans
   2. Affordable Care Act
   3. Both of the above
   4. None of the above

Answer: Option a

Explanation: The American Rescue Plans provide health coverage to the jobless because the federal government has offered up to 100% assistance to employees who have been laid off as a result of the pandemic lockdown. This will help them in funding their healthcare costs in the absence of sufficient funds due to getting off the job.

Question 4: What is the option available to the residents who are not eligible under any government health plan?

1. 1. Private insurance
   2. Medicare
   3. Medicaid
   4. CHIP (Child Health Insurance Plan)

Answer: Option a

Explanation: Ineligible residents have the option of purchasing private insurance because Medicare and Medicaid are provided by the government to people with specific needs. Thus, private insurance is the only option for those who cannot purchase

Question 5: What will be the consequence if a child aged 10 non-insured needs medical support?

1. 1. Parents insurance policy will be utilized for the child as a beneficiary
   2. A separate insurance policy is required.
   3. Both of the above
   4. None of the above

Answer: Option a

Explanation: The child will be named as a beneficiary on the parents' insurance policy. Dependents under the age of 26 are eligible to be covered by their parent's health insurance.

Common Mistakes

It is frequently difficult for a student to comprehend the complexities of the United States' health insurance sector. It is therefore recommended that students thoroughly understand how public and private health insurance work. The ACA marketplace has benefited the insured, but private payer plans face stiff competition from Medicare and Medicaid plans because it is nearly impossible for an insurance company to compete with the benefits of Medicare and Medicaid. In addition, not all services are available to in-network participants, nor are all out-of-network policies covered.

Related Concepts

To gain a better understanding of private payer ACA plans, it is necessary to read the following topics:

• Other affordable care act plans
• Public health services
• Life insurance policies