Health Insurance

Cost of Private Health Insurance [Explained]

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What is the average cost of private health insurance? Before we answer this question, let’s have a look at what is private health insurance and how it works?

When it comes to health insurance or any kind of insurance, there are a lot of terms that might confuse you. Before you make a decision, you should have knowledge about these terms and how they apply to you?

Before we move to the cost of private health insurance, you should know the basics so you understand what you’re getting for your money.

Let’s dive into the details!

What is Private Health Insurance?

In simple words, private health insurance (PMI) is health insurance that is not offered by the federal government or state. It can be acquired by private entities like your employer, a licensed broker or a private insurance company.

While on another hand, public health insurance is offered by the state or the federal government. In fact, a private health insurance plan can be a little more expensive, because you’re paying the entire cost.

Health insurance is a necessary part of your financial life because it covers most of your medical expenses.

Check Out: What is Health Insurance? How does it work?

When Do I need Private Health Insurance?

Here are a few scenarios when you need private health insurance plan.

  1. When You Turn 26:
    Under the ACA (Affordable Care Act), you can continue using your parents’ health insurance. But when you turn 26, you’re required to get your own health insurance policy.
  2. Part-Time Worker:
    If you’re a part-time worker, you should apply for your own health insurance policy.
  3. Unemployed or Lost the Job:
    If you’ve lost your job, you can still continue using your employer’s health insurance policy. But in this case, you’ll be paying the full cost that makes it more expensive. In this case, you should get your own private health insurance policy.
  4. When You’re Retired:
    When you retire, you’re no longer eligible for your employer’s health insurance policy. In this case, you need to get your own private health insurance policy only if you’re under 65 and not disabled.

Types of Private Health Insurance

There are 4 types of private health insurance plans.

  1. Individual Health Insurance:
    This type of private health insurance plan covers only one person’s medical expenses.
  2. Family Health Insurance:
    This insurance plan covers the entire family including your partner and children.
  3. Joint Health Insurance:
    This plan covers only two persons, like you and your partner.
  4. Children Health Insurance:
    Through this health insurance plan, your children can have their own private health insurance policy. Children can also keep enjoying parent’s health insurance until they turn 26.

How Does Private Health Insurance Work?

Private health insurance works in the same way as other insurance policies. You pay premiums monthly or annually for your health insurance policy. The cost of this premium may vary depending upon the type of insurance policy you have.

Each insurance policy has certain limits like how much claims you can make in a year.

Once you file a claim for your private health insurance, the insurer verifies the claim. If your claim is valid, you’re paid. In the case of health insurance, your insurer pays a certain percentage of overall medical service expenses.

There are a few terms associated with an insurance policy that you must understand before you buy a health insurance plan.

  • Premium:
    The amount you pay each year for your health insurance policy.
  • Deductible:
    The amount you pay before your medical insurance policy pays for your expenses.
  • Copay:
    The fixed amount you pay each time you get a medical service.
  • Coinsurance:
    Coinsurance is the percentage of total medical service expenses. You need to pay this amount.

Check out the detailed explanation for these terms here.

What Does Private Health Insurance Cover?

When it comes to health insurance policy coverage, there are a few limits on the types of conditions and treatments. These limits may vary depending upon the type of policy you have.

Medical insurance policies cover only acute conditions, usually chronic conditions are not covered by the medical insurance policy.

  1. Acute Conditions:
    These conditions are only for a temporary period of time. Acute conditions may include hip pain or joint pain etc.
  2. Chronic Conditions:
    Chronic conditions are those conditions that are permanent. These conditions can’t be treated, they are only managed like asthma or diabetes, etc.

Inpatient Cover Vs Outpatient Cover

Usually, private health insurnace covers the only inpatient treatments like a hospital stay overnight, hospital bed, etc.

Typically, outpatient is not covered by PMI. Outpatient expenses may include blood tests, x-rays, etc. Outpatient expenses can also be added to your private health insurance policy with extra cost.

Cost of Private Health Insurance

The cost of PMI is not straight forward, it depends upon many factors like

  • Age
  • Lifestyle
  • Medical History
  • The type of coverage you want
  • Whether you choose a high or low deductible
  • Whether you’re buying insurance for yourself only or for the entire family

On average, Americans pay $321 monthly health insurance premiums for a single person and $833 premium for family plans.

Conclusion:

Getting private health insurance is not as easy as getting public health insurance. However, once you know the complete detail of private health insurance (PMI), it’s not that tough. Cost of Private Health Insurance varies depending upon different factors like your age, medical history, etc. You can choose a health insurance plan that fits your needs and budget.

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Picture Credit: Pixabay

References:

https://www.cbo.gov/topics/health-care/private-health-insurance
https://www.investopedia.com/articles/pf/08/private-health-insurance.asp
https://www.insure.com/health-insurance/individual-health-coverage.html

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Insurance Trail is a blog with the aim to provide all the information that you might be searching for. We make sure you get the answer to your questions, and solutions to your problems related to any type of insurance.

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