Health Insurance in the USA
For most Americans, having health insurance is essential for accessing necessary medical care and managing health costs. However, the US health insurance system is complex, with many different options, providers and regulations.
Here are the key facts about health insurance in the USA:
• Most Americans get their health insurance through their employers. In 2020, around 56% of people had employer-sponsored coverage.
• Many people also purchase individual policies directly from insurance companies. These plans are available on and off the Affordable Care Act (ACA) marketplaces.
• Medicaid provides coverage for low-income Americans. In 2020, around 19% of the population was covered by Medicaid.
• Medicare provides coverage for seniors aged 65+ and people with disabilities. Around 16% of Americans rely on Medicare.
• The ACA, also known as Obamacare, allows people to buy policies on state and federal marketplaces. Premium subsidies are provided to people with lower incomes.
• Major types of health insurance include:
- PPO (Preferred Provider Organization) plans – You can visit any doctor but pay less for in-network providers
- HMO (Health Maintenance Organization) plans – You must select an in-network primary care doctor to refer you to specialists
- HDHP (High-Deductible Health Plans) with HSAs – Lower premiums but higher deductibles, coupled with tax-advantaged Health Savings Accounts
• Health insurance policies typically cover major medical costs like hospital stays, doctor visits, prescription drugs, lab work, and preventive care. But they may not cover all costs.
• Health insurance premiums, deductibles, copays and coverage options can vary widely between plans and providers. Consumers should comparison shop to find the right plan for their needs and budget.
Provider Networks – Most health insurance plans have provider networks that limit which doctors, hospitals and other providers you can use. Plans with larger networks tend to cost more but give more flexibility.
• Out-of-Pocket Maximums – Plans have an annual limit on how much you have to pay in deductibles, copays and coinsurance. This provides financial protection from catastrophic costs.
• Cost-Sharing – In addition to premiums, most plans require cost-sharing in the form of deductibles (a set amount you pay before insurance covers anything), copays (a flat fee for services) and coinsurance (a percentage of charges you pay).
• Prescription Drug Coverage – Most plans provide coverage for prescription drugs, often split into tiers based on cost. You pay a copay or coinsurance for covered medications.
• No Surprises Act – New federal law taking effect in 2022 prohibits surprise medical bills and sets rules for consumer cost-sharing and transparency.
• Medigap Plans – These plans supplement Medicare by covering some costs that regular Medicare does not pay, like deductibles and copayments. Only available to people on Medicare.
• Short-Term Plans – These plans offer limited-duration health coverage at lower premiums but provide limited benefits and often have pre-existing condition exclusions.
• Health Reimbursement Accounts (HRA) – Employer-funded plans that reimburse employee medical expenses up to a set dollar amount. Funds roll over year to year.
• Flexible Spending Accounts (FSA) – Employee-funded accounts that allow employees to pay for certain medical costs with pre-tax dollars. Funds must be used within the plan year or are forfeited.
