Private Insurance: How Many Americans Are Enrolled?

Health insurance coverage is a critical issue in the United States, with a complex system that varies across states and demographics. As of 2022, the majority of Americans had private health insurance, with 65.6% of the population holding private coverage compared to 36.1% with public insurance. Private insurance includes employment-based plans, plans purchased directly from the marketplace, and TRICARE for military members.

The number of Americans with health insurance has been increasing, with 304 million people, or 92.1% of the population, covered in 2022. This is a slight increase from 2021, when 91.7% of the population had insurance. The increase in coverage is partly due to policies implemented during the COVID-19 pandemic, which expanded eligibility for public insurance programs like Medicaid and the Children's Health Insurance Program (CHIP).

However, it is important to note that the number of uninsured Americans remains significant, with 26 million people uninsured in 2022, or 7.9% of the population. This number has improved over the past decade, but it still represents a substantial portion of the population.

Employment-based insurance plans

The significance of employment-based insurance lies in its ability to provide financial protection and access to healthcare services for employees, helping them maintain their health and well-being. It reduces the financial burden of medical expenses, offering peace of mind and ensuring employees can seek necessary medical care without incurring excessive costs. For employers, providing health insurance is advantageous as it can attract and retain talented employees, boost morale and productivity, and offer tax incentives.

The cost structure of employment-based insurance plans varies. In some cases, employers cover the entire cost of the premium, providing full health insurance coverage to their employees without any direct contribution. In other instances, there is a cost-sharing model where both the employer and employees share the cost of the premium. Employers typically contribute a significant portion, while employees pay the remainder through payroll deductions. According to data from 2023, employees contribute about 17% of the premium for single coverage and 29% for family coverage.

The types of health insurance plans offered by employers vary and include Preferred Provider Organization (PPO) plans, High Deductible Health Plans with Savings Options (HDHP/SO), Health Maintenance Organization (HMO) plans, and Point-of-Service (POS) plans. The distribution of these plans among covered workers and firms varies, with PPO plans being the most common, offered by 47% of firms in 2023, and POS plans being the least common, offered by only 10% of firms in the same year.

Company size and industry also play a role in the availability and structure of employment-based insurance plans. Larger companies often have more negotiating power to secure comprehensive coverage with lower premiums, resulting in broader provider networks and lower out-of-pocket costs for employees. On the other hand, smaller companies may offer more basic plans with higher deductibles and copayments due to limited resources.

Medicare

Part A (Hospital Insurance)

Part A covers inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care.

Part B (Medical Insurance)

Part B covers services from doctors and other healthcare providers, durable medical equipment (e.g. wheelchairs, walkers), and many preventive services such as screenings, shots, vaccines, and yearly "Wellness" visits.

Part C (Medicare Advantage Plans)

Part C, also known as Medicare Advantage, is a private insurance option that covers hospital and medical costs. These "bundled" plans typically include Part A, Part B, and sometimes Part D. Medicare Advantage plans are offered by private companies and approved by Medicare. They often have different out-of-pocket costs than Original Medicare and may offer some extra benefits.

Part D (Drug Coverage)

Part D helps cover the cost of prescription drugs, including many recommended shots or vaccines. You can join a separate Medicare drug plan or get drug coverage through a Medicare Advantage Plan.

Medigap is extra insurance that can be purchased from a private company to help pay for out-of-pocket costs in Original Medicare. Policies are standardized and named by letters, like Plan G or Plan K, with the same benefits offered regardless of the insurance company.

Enrollment and Eligibility

There are specific times when you can sign up for Medicare, including an Initial Enrollment Period when you first become eligible. This period begins 3 months before you turn 65 and ends 3 months after your birthday month, for a total of 7 months. If you miss this period, you may have to pay a penalty.

If you are already receiving Social Security retirement benefits when you turn 65, you will be automatically enrolled in Medicare Parts A and B. If you are still working at 65 and not receiving Social Security benefits, you can apply online for Medicare only or wait until you retire and sign up during a special enrollment period.

If you are under 65 and receiving Social Security disability benefits, you will automatically begin receiving Medicare Parts A and B after 24 months. If you have ALS, you will receive Medicare Parts A and B immediately upon enrolling in Social Security disability benefits. For those with ESRD, separate coverage and enrollment rules apply.

Costs and Savings Programs

There are various Medicare Savings Programs that can help with Medicare expenses, including premiums, deductibles, coinsurance, and copayments. These programs have income and asset limits for eligibility. Additionally, there is a $2,000 cap on out-of-pocket costs for drugs covered by your Medicare plan as of 2025.

Medicaid

The program covers healthcare costs for people with low incomes, while Medicare is a universal program providing health coverage for the elderly. Medicaid offers elder care benefits not typically covered by Medicare, such as nursing home care and personal care services. There are also dual health plans for individuals who qualify for both programs.

The expansion of Medicaid under the ACA has had a significant impact on healthcare coverage in the US. As of August 2021, 38 states and the District of Columbia had chosen to expand their programs to adults with incomes not exceeding 138% of the federal poverty level. This expansion has contributed to a decrease in the number of uninsured individuals, with the uninsured rate reaching a record low of 7.9% in 2022.

However, not all states have expanded Medicaid, and this has created a coverage gap for individuals with incomes too high to qualify for Medicaid in those states but too low to afford private health insurance. Studies have shown that states that expanded Medicaid had lower uninsured rates and experienced reductions in mortality rates.

Direct-purchase coverage

DPI is sold without financial advice, meaning no commission is charged and premiums are lower. The features of DPI are broadly standardized, making it easier to compare products from different insurers. DPI products can be identified by the prefix "DIRECT" in their names.

The amount of coverage provided by DPI is limited. Term DPI provides coverage of up to $400,000 per insurer, and whole life DPI provides coverage of up to $200,000 per insurer. The maximum sum assured across all DPI policies is $400,000. These restrictions are in place because life insurance is a major financial commitment, and higher coverage amounts would result in higher premiums. By capping the maximum sum assured, premiums can be kept lower.

DPI may be a good option for those who know their insurance needs and do not require financial advice. However, for those who need coverage above $400,000 or are unsure about what type of insurance to buy, it is recommended to consult an FA representative.

In the United States, the number of people with private insurance and the overall uninsured rate have fluctuated over the years due to various factors such as policy changes and economic conditions. As of 2022, the uninsured rate was at a record low of 7.9%, with 26 million people uninsured. This decrease in the uninsured rate can be attributed to policy changes during the COVID-19 pandemic, such as the expansion of Medicaid eligibility and the establishment of health insurance marketplaces.

TRICARE

As of 2022, 26 million people in the US were uninsured, according to a report by the Census Bureau. This figure equates to 7.9% of the population. The uninsured rate in 2022 was the lowest since 2017.

Private insurance is defined by the Census Bureau as including employment-based insurance plans, plans purchased directly from a marketplace, and TRICARE, which serves members of the military.

Frequently asked questions