How to get health insurance in America

Getting health insurance in America can be hugely complex for those who are new to the system (and to be honest even for those who aren’t). In order to help you sift through the chaos, here is a comprehensive overview of how health insurance in America works, how to choose the right provider, the costs, and a summary of the different types.

An overview on how to get health insurance in America

The most important thing to mention for newcomers is that there is no single payer healthcare system. This means that there is no government mandated, public health insurance that’s holistically funded by taxes (such as in Germany and the UK). Instead, you can choose whether or not to even have health insurance at all, as well as have full flexibility on the type you use.

Important health insurance vocabulary to keep in mind

To start off with the basics, some essential health insurance words and phrases particular to the American health care system are:

• Out of pocket expenses: the amount of percentage of costs that you cover in comparison with what your health insurance provider covers.
• Annual deductible: the total annual amount that you’re responsible for paying out of pocket before your health insurance provider covers the expenses.
• Copayment (copay): a (typically) fixed, upfront payment that you pay in certain contexts, such as $30 per doctor’s visit.
• Coinsurance: the percentage of the cost of medical care that you pay for yourself. For example, if an MRI costs $1000 and your insurance covers $800, then your coinsurance guidelines are that you pay $200 out of pocket.
• Annual out of pocket maximum: some insurances offer a limit to how much you pay yourself, which is set at a specific maximum amount.
• Covered benefit: a health service that is either 100% or partially paid for by your provider. 
• Monthly premium: the (typically) fixed price monthly amount that you pay for your health insurance separate from your deductible or out of pocket expenses.
• Pre-existing conditions: medical conditions you already have (and might need coverage for) prior to signing up for new health insurance.

Why do you need health insurance?

No one plans to have an accident or need medical help, but it is likely that you’ll need to go to the doctor at some point in your lifetime. But when you go to the doctor without insurance, that means you need to cover the costs yourself in entirety, which is no small sum. The US has some of the most expensive healthcare costs in the world: for example, if you need a heart valve replacement, that costs upwards of $170,000 for the procedure alone. Even if you need to call an ambulance to go to the hospital, the costs can also be in the thousands. So it’s better to take the safe route and get health insurance for you and your family.

If you are sick and need to visit the doctor, here are some helpful words and phrases you can use when speaking to your doctor and/or your provider. Please also note that in the US, the number for emergency help is “911”.

How much does health insurance cost in America?

According to the NCSL (National Conference of State Legislatures), the average cost of annual premiums for employees who receive health insurance from their employers in 2017 was $18,764 (about $1564 per month). However, due to the fact that there is no universal healthcare system, there are huge variations in the costs for healthcare per state, income level, number of people in your family, and their ages. 

For more information on your individual health insurance costs, take a look at the Health Insurance Marketplace Calculator as defined by the Affordable Care Act.

How does the Affordable Care Act work?

The Affordable Care Act (ACA), also referred to as “Obamacare,” was a healthcare form law that was put into place under President Obama in March 2010. In an effort to work towards a universal healthcare system, the ACA had 3 main goals:

• Expand health insurance cover to families whose income is between 100% and 400% below the federal poverty level.
• Enable Medicaid to cover adults with incomes below 138% of the federal poverty level.
• Generally reduce the costs of health insurance and health care, as well as support innovative health care methods.

With the transition of President Trump to President Biden, the Supreme Court is currently reviewing if and how the ACA will be amended. At this point in time (Dec 2020), it is unclear how the ACA will change in 2021.

Medicaid vs Medicare

There are two main programmes for health insurance that have been developed by the government:

• Medicaid: a health insurance programme for low income families, pregnant women, people aged 65+, children, and people with disabilities. You can check whether or not you are eligible here (please note there are variations in the programme name and conditions per state). 
• Medicare: a health insurance programme managed by the federal government that applies to those with disabilities, age 65+, and/or any who has end-stage renal disease (kidney failure). This still requires a premium, which you can calculate and determine eligibility here.

Other types of health insurance

In addition (or sometimes in combination with) Medicaid and Medicare, there are four main types of health insurance plans in the US:

• Exclusive Provider Organization (EPO): a health insurance programme where services are covered only for specific doctors, specialists, and hospitals within a network.
• Health Maintenance Organization (HMO): a health insurance programme that may limit coverage for services outside of doctors who have a contract with that HMO, unless there is an emergency. It may also limit covered services to a specific area or location. 
• Point of Service (POS): if you use the health insurance provider’s network of doctors and hospitals, you pay less for the coverage, but you may need to get a referral from your primary care doctor before seeing a specialist.
• Preferred Provider Organization (PPO): you have the option to visit doctors, specialists, and hospitals outside of the provider’s network, but when you stay within their network, the costs are reduced.

How to choose the right health insurance for you

The good thing about all the options listed in the two prior sections is that you can choose a health insurance programme that is highly specific to your situation. 

When choosing a provider, there are 5 steps you’ll need to take:

• Step 1: Determine your options for providers and plans in your area by clicking here. Depending on your income and employment status, you can determine your eligibility for a government managed programme, insurance coverage through an employer (if they offer it), or choose your own private insurance.
• Step 2: Understand what each provider offers in terms of the 4 metal categories (bronze, silver, gold, and platinum). These categories outline how you and your provider divide healthcare costs (note that they have nothing to do with quality of care).
• Step 3: Calculate your total health care costs, including your monthly premium, deductible, out of pocket expenses, and copay (if applicable). These depend entirely on the specific provider, so you’ll need to check with them on the breakdown.
• Step 4: Check out if your provider offers you an adequate medical network for you and your family’s estimated health needs.
• Step 5: Select your provider, choose your plan, and complete the application.

For more information on the quality of health plans according to other members, you can review the quality ratings listed after you complete Step 1.