Private Health Insurance (2024)

Do you need health insurance coverage? Private health insurance is available if you aren’t eligible for publicly-funded coverage. However, you may not need your own insurance plan if a parent’s or spouse’s plan can cover you.

Individuals under the age of 26 can retain health insurance coverage under a parent or guardian’s plan. If you’re married, your spouse can add you to their policy. This will raise their health insurance rates, but it will be much cheaper than buying an individual plan. 

Affordable rates aren’t impossible if you need to buy private health insurance. There are many ways to keep health insurance costs low, and our guide can help you find affordable health insurance quotes from the best companies in your area. 

Keep reading to learn more about private health insurance and the health insurance marketplace.

Private Health Insurance Defined

Private health insurance is any health insurance coverage not paid for by the state or federal government.

The definition of private health insurance includes employer-sponsored health insurance, direct-purchase health insurance, and TRICARE, which is only available to military members and their families.

Unlike public health insurance plans, policyholders make premium payments to the insurance company for their coverage. Your age and gender determine premium payments. Pre-existing health conditions can raise your health insurance rates but will not prevent you from getting coverage.

Private health insurance is considered minimum essential coverage. Therefore, it’s regulated at both the state and federal levels to protect policyholders. (For more information, read our “Is private health insurance tax-deductible?“).

For example, some private health insurance premiums are tax-deductible to alleviate the high costs. The federal government also requires employer-sponsored plans that cover 15 or more employees to offer maternity leave. Further, the Affordable Care Act prevents insurance companies from dropping policyholders with private health insurance for pre-existing conditions. 

Other types of private health insurance plans aren’t as regulated. These include dental and vision plans and any critical illness or short-term health insurance plans, as well as accident supplements.

Private Health Insurance vs. Public Health Insurance

While the policyholder pays for private health insurance, the government funds public health insurance. Public health insurance includes Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).

Medicare is a public program for adults aged 65 and over to cover healthcare and prescription medication costs. Read: Private Health Insurance vs. Medicare: Which is Better for You?

Medicaid is available to young children and low-income families, but eligibility varies by state. CHIP is designed for families who surpass the income requirements for Medicaid but are still unable to afford private health insurance.

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The Different Types of Private Health Insurance Plans

The four most common types of health insurance are:

• Preferred provider organization (PPO)
• Health savings account-qualified plan (HSA)
• Health maintenance organization (HMO)
• Indemnity plans

People generally choose PPO or HMO plans. Employer-sponsored private health insurance is often one of these two types as well. 

However, if you need an individual insurance plan, take the extra time to compare the different types of plans available in your area. You may find more affordable rates with different companies based on your needs.

For example, if you are in good health and don’t have a primary physician you see often, you could get cheaper rates by choosing an HMO plan.

But say you need specialist treatment, like chiropractic care or physical therapy. In that case, you may want to research private health insurance companies that offer PPO plans with your physical therapist in their network. This would help you lock in cheap health insurance rates without having to find a new doctor.

Preferred Provider Organizations (PPO)

PPOs offer the most flexibility when it comes to choosing your doctors and specialists. Policyholders can choose from any provider on the company’s preferred list. However, PPOs come with the most expensive premiums.

Health Savings Account-Qualified Plans (HSA)

To reduce premium costs, policyholders can opt for HSAs. HSAs are a type of PPO where policyholders create a bank account for medical expenses. Money is added to the account pre-taxed and can only be used for medical visits and some prescriptions. HSAs are recommended for those with high-deductible health insurance plans who don’t visit the doctor often, aside from annual exams and minor illnesses.

Health Maintenance Organizations (HMO)

On the other hand, HMOs are a more affordable option. They also often come with no or low deductibles. However, you’re strictly limited to the providers on the preferred list. If your primary physician isn’t in-network, you will be expected to pay out of pocket. If you need a specialist, HMO plans require that you get a referral from a primary physician for insurance coverage to apply.

Indemnity Plans

Finally, indemnity plans are for individuals who can afford to pay for the flexibility of choosing whichever doctor or specialist they choose. These plans come with the most expensive rates and are not available on the health insurance marketplace.

How Companies Determine Private Health Insurance Rates

How much does private health insurance cost? On average, health insurance premiums for a single individual are $450 per month or $5,400 per year.

Take a look at the table below to see how private health insurance companies sort individuals by risk and determine premiums:

Health Insurance Classifications

Class	Personal Health	Family History
Preferred	Nonsmokers in great health with a minor condition	Minor health conditions in family history
Preferred Select	Nonsmokers in great health	No family history of health conditions
Preferred Smoker	Smokers in great health	No family history of medical conditions
Standard	Nonsmokers with average health	Some medical problems in family history
Standard Plus	Nonsmokers in good health with a few minor health conditions	Minor conditions in family history
Standard Smoker	Smokers in good health	Some medical conditions in family history
Table Rating	Poor health	Medical conditions in family history

Where you live and work will also impact your rates. If you’re shopping for private health insurance, check if coverage is provided through your employer first. Private health insurance through an employer is much cheaper than direct-purchase plans for two main reasons:

• Companies can stretch risk across a larger number of people, basing premium costs on the group rather than the single individual.
• On average, employers cover 73% of insurance costs for their employees.

If you’re self-employed or otherwise can’t qualify for employer-sponsored plans, don’t worry — you can still find affordable private health insurance rates by shopping around. Compare health insurance companies online and use the Health Insurance Marketplace to find out if you qualify for government subsidies that can reduce your healthcare costs.

Some health insurance companies offer incentives or discounts for gym memberships and healthy living that can reduce your rates. Local gyms and fitness clubs can even partner with health insurance carriers to encourage and incentivize healthy choices for policyholders. 

The Best Private Health Insurance Companies

The largest health insurance companies by market share are:

• UnitedHealth Group
• Anthem (BlueCross/BlueShield)
• Centene
• Kaiser Permanente
• Humana

However, being the largest healthcare provider doesn’t make it the best. These companies’ employer-sponsored plans are much more affordable than their individual plans. So, if you need an individual healthcare plan, these might not be the best companies for you. 

To find the best private health insurance company for you, consider your medical record, lifestyle, and budget. Start comparison shopping online with multiple companies to see what’s available in your state. Local providers will offer more flexible coverage options and networks that might better fit your health needs.

Also, investigate an insurance company’s financial and customer complaint record. The National Association of Insurance Commissioners (NAIC) is an excellent resource where you can search by company to find complaint reports and financial overviews.

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How To Buy Private Health Insurance

If you aren’t eligible for an employer-sponsored program, you can use the health insurance marketplace to find local insurance companies. But before you do, shop around and compare health insurance companies first. Consider your health, lifestyle, and the types of health insurance plans available in your state before you buy.

Don’t limit yourself to the biggest health insurance companies in the market, either. Smaller insurers can sometimes offer more competitive rates, and you can save the most money by comparing quotes across multiple companies. 

Start comparing private health insurance quotes today with our free quote tool. Just enter your ZIP code below to get free quotes from insurance companies today.

Case Studies: Exploring Private Health Insurance Scenarios

Case Study 1: John’s Affordable Private Health Insurance

John, a 28-year-old individual, was not eligible for publicly-funded health insurance and needed to purchase private health insurance. He wanted to find an affordable plan that would suit his needs.

After comparing quotes from multiple companies, John found a private health insurance plan with a health maintenance organization (HMO) that offered low premiums and no deductibles.

This plan allowed him to receive coverage from in-network providers and saved him money compared to other options. John was able to secure affordable private health insurance that provided the coverage he needed without breaking the bank.

Case Study 2: Sarah’s Flexible Private Health Insurance

Sarah, a 35-year-old self-employed individual, needed a private health insurance plan that offered flexibility and a wide choice of doctors and specialists. She opted for a preferred provider organization (PPO) plan, which allowed her to choose any healthcare provider she preferred.

This flexibility was crucial for Sarah as she had specific healthcare needs and wanted the freedom to select the best doctors for her conditions. Although PPO plans generally come with higher premiums, Sarah valued the ability to have a broad network of healthcare professionals at her disposal.

Case Study 3: Mark’s Health Savings Account-Qualified Plan

Mark, a 40-year-old individual with a high-deductible health insurance plan, wanted to reduce his premium costs while still having coverage for essential medical expenses. He decided to enroll in a health savings account-qualified (HSA) plan. With an HSA plan, Mark could create a bank account specifically for medical expenses.

He contributed pre-taxed money to the account and used it for medical visits and some prescriptions. This arrangement allowed him to save on premiums while having funds set aside for necessary healthcare expenses.

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