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Private and Employer Health Insurance

Most people with private health insurance receive their coverage through their employer. People without access to employer-sponsored insurance may obtain health coverage on their own by purchasing an individual insurance policy. Health insurance also may be available to individuals through professional associations or similar arrangements.

Having health insurance protects people from the potentially extreme financial costs of medical care and enables people to receive medical care in a timely way. Health care providers generally know that when they treat people with health insurance, they are likely to be paid for their services within a reasonable time.

With health insurance, mental health care receives “parity.” This means that a health plan must provide the same benefits for certain mental health conditions that it provides for other medical conditions. Many, but not all, health insurance plans cover prescription drugs.

Health insurance generally does not cover dental or vision services. These services would be covered under separate dental and vision policies.

Private health insurance offers coverage through several types of health plans:

Health Maintenance Organizations (HMO)
In an HMO, the health plan coordinates health care for its members through a primary care provider. That provider gives the patient “referrals” for care that the provider cannot offer, such as specialty services, diagnostic tests and certain treatments. Patients pay a monthly premium and co-pays for office visits and prescriptions. If the patient has HMO coverage through an employer or through a government health insurance program, he or she may not be responsible for paying the premium.
Preferred Provider Organizations (PPO)
PPOs are networks of doctors and other health care providers who are under contract to provide services to people enrolled in the health insurance plan. Patients enrolled in the PPO may select providers from that network and do not need referrals to access specialty care. Generally, patients pay a co-pay for office visits and prescriptions and pay a share (usually ten to twenty percent) of the cost of medical treatments or hospitalizations.
Point-of-Service Plans (POS)
A POS plan is considered a hybrid plan because it mixes aspects of HMOs and PPOs. Each POS plan has different terms or rules. Patients can learn more about a particular POS plan by calling the plan.
High Deductible Health Plans (HDHP) combined with Health Savings Accounts (HSA)
Some patients open HSAs, which are tax-exempt accounts that can be used to pay for current or future medical expenses. Usually, a patient who does not anticipate high medical costs can save money in the HSA for office visits, prescriptions and other expenses and be reimbursed from the account later if they incur those expenses. Patients often also purchase an HDHP in case they encounter unexpected, high medical expenses. HDHPs usually have low premiums, but they offer limited coverage.
Health Reimbursement Accounts (HRA)
HRAs are tax-exempt accounts established through an employer that can be used to pay for current or future medical expenses. HRAs are often paired with HDHPs, but are not required to be.
Indemnity or Fee-for-Service Health Plans
In an indemnity health plan, members can choose their own health care provider. There are no in-plan doctors, specialists, or hospitals. These plans are expensive and are not widely available.

The following resources provide additional information about the private and employer-sponsored health insurance: