Health insurance broadly falls under two categories: private and public. How do you know which one is right for you? Your income level and health needs affect which type you qualify for. In this guide, we’ll explore the difference between private vs public health insurance in terms of coverage, eligibility, and benefits.
What Is Public Health Insurance?
Programs like Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) are paid for by the government and given to people in financial need. These are forms of public health insurance that cost nothing to the person they cover. To qualify for public health insurance, you need a lower than average income. Each state sets its own requirements.
Eligibility Criteria
In Florida, a one-person household must earn no more than $19,392 before taxes to qualify for Medicaid. People who are especially vulnerable, such as children, the elderly, and individuals with disabilities that impact their ability to work, are the most eligible for coverage. Additional qualifying criteria may include being pregnant, over age 65, being blind, or having a permanent disability.
Coverage Details
Public health insurance pays for a person’s medical bills. Patients are responsible for finding providers who accept their coverage. As with private health insurance, public programs like Medicaid do not pay for elective or cosmetic procedures. This means you cannot use it to pay for plastic surgery, non-preventive care, or procedures that you qualify for but are not considered medically necessary.
Cost Considerations
Since income is the determining factor when it comes to public health insurance, you will have to check your state’s guidelines to see if you qualify for coverage. Florida residents can visit https://www.benefits.gov for more information. Residents outside of Florida can visit https://www.medicaid.gov/.
Public health insurance does not have premiums, but it can have a deductible or copay/coinsurance. While many services are free or low-cost, not every provider accepts public health insurance. You may still have to pay out-of-pocket for certain services.
What Is Private Health Insurance?
When you buy health insurance on the Marketplace, through a company, or when you work with a health insurance broker. Private insurance requires you to pay a monthly payment called a premium to keep coverage. You must also pay out-of-pocket for medical costs until you reach a certain amount of money called a deductible. Then, your insurance provider will pay for all or a portion of your medical expenses.
If you buy your own health insurance, you are responsible for all of its costs. If you enroll in an employer-sponsored plan at work, then your employer will pay for a percentage of the costs. This can help you get access to greater coverage for a lower price.
Eligibility Criteria
There are many types of private health insurance plans available, and the eligibility requirements vary. Some patients with preexisting health conditions that are considered high-risk may not qualify for some plans and have to seek out providers who offer coverage tailored to their needs. In general, you must be at least 18-years-old to buy your own health insurance, though young adults can stay on their parents’ plan until age 26.
Coverage Details
There are several types of health insurance plans to choose from. The main types are health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-service (POS) organizations. There are also options to get employer-sponsored health insurance if your company offers it as part of their benefits package.
In most cases, private health insurance offers free preventive care and an annual physical. You will have to pay for other services. Exact coverage details vary greatly by provider and plan, so it’s important to carefully weigh all your options before committing to one.
Cost Considerations
Luckily, private health insurance comes at a variety of price points. You can find plans that have higher premiums and lower deductibles or vice-versa. Generally, adults can expect to pay $170 to $350 on average for individual coverage. Family plans cost more due to the fact they cover multiple people under a single policy.
When it comes to finding affordable health insurance, you have to strike a balance between costs and coverage. How much can you afford and how much care do you need?
Benefits and Drawbacks
Not everyone qualifies for public health insurance, which means they need to take additional care to find private coverage that works for their needs and budget. To do that, they must carefully consider not only their financial state but their own health risks and treatment they may require in the future.
The type of health insurance you have affects how easily you can receive care, the types of doctors you can see, and how much you have to pay both before and after you meet your deductible.
Pros and Cons of Individual Health Insurance
Individual health insurance is straightforward — you pay a provider a premium each month to provide coverage, then pay out-of-pocket for medical services until you meet your deductible. This type of health insurance is the most common, and there are many options to choose from. However, individual health insurance can be expensive, and depending on the type of plan you have, you may not have all the services you need covered.
Pros and Cons of Family Health Insurance
Family health insurance allows you to protect your loved ones by paying a monthly premium to cover their medical expenses. The ability to pay for your spouse or children’s healthcare can bring you peace of mind. However, family health insurance costs more to maintain, may have a higher deductible, and often has individual deductibles that need to be met as well.
Choosing Between Public and Private Insurance
The biggest consideration between public and private health insurance is cost. If you earn more than your state’s income threshold for public coverage, you will have to look into private insurance. On the other hand, some qualifying individuals may still decide to look for their own coverage. There are a few reasons why it’s beneficial to do this.
Personal and Family Healthcare Needs
While public health insurance gives you free medical care, it is often limited in terms of providers and the level of services you can access. There are often wait times for people on Medicaid, which can make it harder for them to access the medical treatment they need.
For children, Medicaid plans can be quite comprehensive, and they may actually provide better coverage than you could afford through a private plan. If you qualify for CHIP, then it is a good idea to compare the coverage you could get through the state vs paying for your own plan.
Employer-sponsored Options and Individual Choices
Employer-sponsored health insurance is a good option for those whose companies offer flexible plans and pay a good percentage of their premiums. Keep in mind that your employer chooses the health plan and insurance provider, so you cannot change to another company or adjust your plan if that is not part of your benefits package.
Individual health insurance, on the other hand, can be purchased privately. You can choose your provider and determine what type of health insurance structure works best for you.
Budget Considerations
There are several major financial considerations when choosing health insurance:
- Premiums: How much money you have to pay per month to keep your plan.
- Deductible: The amount of money you have to pay in medical bills before your insurance provider will cover all or some of the costs.
- Copay/coinsurance: The amount of money you have to pay for all or some services after meeting your deductible.
- Out-of-pocket expenses: The cost of medical treatments and services that you may have before you meet your deductible. These typically cost less for individuals with insurance than those who are uninsured.
These costs will vary by provider and state, and they are still common for people with Medicaid and other government-sponsored programs.
How to Enroll in Public or Private Insurance
Public insurance may be best for those who are currently uninsured and unable to afford their own health insurance policy. Some people find that public health insurance offers greater coverage for their needs than a private plan they would have to pay for on their own.
For individuals with children, CHIP and Medicaid are two public programs that often offer extensive coverage for minors under 18.
Private insurance can be purchased for just yourself or your family. These plans come in a wide variety of policies and at all price points. Those with tight budgets will need to carefully consider the cost of a policy with their health needs. Namely, it is important to make sure your out-of-pocket expenses remain affordable while paying your premiums and working toward your deductible.
Making the Decision
Reviewing your state’s public health insurance programs to learn more about eligibility requirements in your state. You can also explore your state’s health insurance marketplace by visiting https://www.healthcare.gov/.
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