Private, State and Federal Insurance
Health insurance coverage comes from either private companies, or federal or state governments, depending on your financial background, employment status, age, and health or disability status. All U.S. citizens are eligible to buy private health insurance, and many people have private health insurance plans through their school or job. Federal insurance plans are in place to help people with low incomes, including seniors and those with disabilities, pay their medical bills. There are also state health insurance options that often cover individuals with pre-existing medical conditions.
The kind of health insurance plan you have sometimes impacts which doctors you can see and your out-of-pocket expenses, or the costs you have to pay on your own.
If you have employer-sponsored health insurance, you bought an individual plan directly from an insurance company, or you acquired insurance through the health insurance marketplaces established by the Patient Protection and Affordable Care Act (ACA), you have private health insurance. The first step to navigating your health insurance is to know the type of coverage you have. The types of private insurance are:
- Health Maintenance Organization (HMO)
An HMO usually limits your choice of in network healthcare providers, primary care doctors and medical specialists who have a relationship with the insurance company.
If you use an out of network provider, it is likely that your insurance carrier will not pay for the services or will only pay a small percentage of the overall cost.
Many HMOs require your primary care provider (PCP), or general doctor, to give you a referral to see another in-network specialist or go to a specific healthcare facility in order for your costs to be covered.
You will likely have to pay a co-pay, a part of the cost of your consultation, testing, or treatment.
Your carrier’s website will have a list of in-network providers you should use to keep your out-of-pocket expenses low.
- Point-of-Service Plan (POS)
A POS is a type of HMO with more flexibility that allows you to see out-of-network providers without having to pay the total cost of your treatment.
If you see an out-of-network provider, you will still pay some out-of-pocket expenses, but less than you would with an HMO.
Your primary care provider will usually be required to give you a referral to see other doctors in the plan network.
- Preferred Provider Organization (PPO)
A PPO supplies a list of preferred providers you may use to lower your out-of-pocket costs.
Generally, you do not need a referral to see a specialist.
- Fee-For-Service (FFS)
With a FFS plan, you can choose any doctor, change doctors at any time, and go to any hospital in the United States.
You will pay a premium, or periodic payment, to keep the plan, and also a deductible, a minimum cost you cover out-of-pocket before your insurance company will pay.
You will often pay for service and then submit a claim to your insurance company for reimbursement. Keep receipts for medical costs and track your medical expenses.
- State Health Insurance Marketplaces/Exchanges
Through the Affordable Care Act, if you are uninsured or underinsured, you are able to buy private insurance through your state's Health Insurance Marketplace/Exchange. Trained navigators are available to help you find the best plan for you and your family. They can also help you determine if you are eligible for any financial assistance, such as premium tax credits or cost-sharing grants, for example. Visit healthcare.gov to learn more.
Your state government may offer health insurance plans tailored to your individual needs. Some states offer coverage based on your occupation – for example, to public school teachers or government employees – or on your income or health status. You may also be able to find programs to extend your health coverage and help lower the cost of prescription medicines.
In addition to these, the 2010 ACA made new options available. The legality of federal insurance exchanges created by under the ACA was upheld by the U.S. Supreme Court in June 2015, ensuring that individuals who buy health plans through these exchanges will be eligible for federal tax credits.
You may be eligible for Medicare if you are age 65 or older, under 65 and have certain disabilities, have permanent kidney failure requiring dialysis or a kidney transplant, or have Lou Gehrig’s disease (Amyotrophic Lateral Sclerosis, or ALS).
With basic coverage, Medicare will either pay your healthcare providers directly, or reimburse you after you’ve paid your providers. Medicare plans have deductibles and co-insurance that you will have to pay.
Medicare, like private insurance, has several kinds of coverage that offer different benefits. For all plans, you must make sure your healthcare provider is a Medicare provider.
- Part A (Hospital Insurance) helps cover your hospital care, nursing facility care and home health care. Most people do not pay a monthly premium for Part A because they paid Medicare taxes while working. If you receive Social Security or Railroad Retirement Board benefits, you will automatically be enrolled in Parts A and B when you turn 65, or after getting Social Security Disability Insurance for 2 years at any age.
- Part B (Medical Insurance) helps you cover necessary medical services such as doctor’s appointments, outpatient care, medical equipment, home health services and some preventive care. Part B is voluntary and requires payment of a monthly premium that is determined by your income. You can opt out of Part B when you first receive your Medicare card, but may pay a penalty if you decide to enroll later. You can also apply for assistance if you want Part B but can’t pay the premium.
- Medicare Supplement Insurance (Medigap) policies are sold by private insurance companies to help pay for healthcare costs that Parts A and B don’t cover. Medigap policies vary by state. Try to purchase a plan as soon as you qualify for Medicare. The protections provided by the ACA don’t apply to Medigap plans, so if you wait, Medigap plans can deny coverage or charge more if you have a pre-existing condition
- Part C (Medicare Advantage) plans are offered by private insurance companies approved by Medicare and are used instead of Parts A and B. Part C covers all of the expenses A and B cover, as well as other services like vision, hearing and dental. Most individuals with Part C plans also include Medicare prescription coverage (Part D). If you choose a Medicare Advantage plan, you will choose between HMO, PPO, FFS or Special Needs plans, and pay a premium and other out-of-pocket expenses. There may be other Medicare Advantage plans available to you.
- Part D (Medicare Prescription Drug Coverage) is available to everyone with Medicare who has a plan run by an insurance or other private company, or can be joined by paying a monthly premium to supplement Parts A and B. Typically, you should consider enrolling in a Part D plan during your initial eligibility period at age 65 unless you have prescription coverage from elsewhere. Part D has an annual enrollment period for individuals who decline initial enrollment, though you may have to pay a penalty if you select this option. Open enrollment currently takes plan in the fall.
Under the Medicare Part D Coverage Gap, the cost of your medicines is shared by you and your prescription drug plan until the total amount spent reaches a preset dollar amount per year ($2,960 in 2015 and $3,310 in 2016). Once that limit has been reached, you enter the “coverage gap” (also called the “donut hole”).
While in the coverage gap, you are responsible for paying a percentage of the cost for covered brand-name medicines (As of 2015, you pay 45 percent but this percent is subject to change). Although you only pay a percent of the cost of the brand-name medicine, what you pay combined with the manufacturer’s discount payment (the remainder of the cost not covered by your insurance) count as out-of-pocket costs, which will eventually help you leave the coverage gap once you’ve reached the out-of-pocket limit.
After you leave the coverage gap, you are only required to pay a small amount for covered medicines. This part of Medicare Part D is known as the “catastrophic coverage” stage. Your prescription plan pays the remainder of the cost of your medicines for the rest of the year.
You may be eligible for Medicaid if you have a low income and no, or not enough, medical insurance, or do not qualify as low income but have high medical costs because of significant medical needs. A Medicaid eligibility expansion went into effect as part of the ACA on January 1, 2014.
Medicaid is managed individually by each state, so your eligibility and benefits will vary depending on where you live. With all Medicaid coverage, be sure your providers are Medicaid providers to keep your costs low. In some states, you may have to pay a co-pay for services.
With Medicaid, your healthcare providers submit paperwork to get reimbursed for the cost of treatments and medical services, and Medicaid pays them directly.
Contact your state Medicaid agency, local Department of Social Services, or the Centers for Medicare and Medicaid Services for more information.