One of the most important decisions facing individuals and families alike in today's world is knowing the correct type of health insurance plan to sign up for. The rapid increase in healthcare costs is quickly making health insurance one of the biggest expenses facing households every year, sometimes even surpassing monthly mortgage payments. Selecting the appropriate health insurance plan will provide an effective financial safety net against routine doctor visits and a safeguard against unexpected health problems.

Is Health Insurance a Requirement?

Health insurance is no longer a requirement on the federal level. When the Affordable Care Act was signed into law in 2010, all Americans were required to purchase some form of health insurance or face a tax penalty. In January of 2019, the tax penalty for Americans who didn't purchase some form of health insurance was eliminated. It is important to note that certain states currently require their residents to purchase some form of health insurance or face a similar tax penalty to the one originally implemented by the Affordable Care Act.

Is Health Insurance Important?

Yes. While the federal government and most states do not require their residents to purchase health insurance, it is always a good idea to have at least some form of health insurance. While health insurance is very costly, the monthly premiums are often exceeded by out-of-pocket medical expenses for even routine doctor's visits. Also, even a person in perfect health could easily get into a car accident and have to go to the emergency room, facing a massive medical bill that could bankrupt them.

What Form of Health Insurance Is Better, Private or Governmental?

The merits of choosing between a private or governmental plan depend on a person's financial and employment situation. Governmental plans typically have lower premiums and sometimes even pay for all the medical costs of individuals. However, most of the more favorable governmental plans are only available to individuals who have low incomes, are disabled, or are 65 years of age and older. It is also important to note that increasing amounts of doctors are choosing not to participate in governmental insurance programs, so this could limit coverage options. Most private health insurance plans are provided by employers to their employees, and most of these plans have many of the same benefits and options as governmental plans, albeit more expensive.

What Are Medicaid and Medicare?

Medicaid and Medicare are 2 of the 3 major governmental healthcare programs in the United States. Medicaid is a healthcare program that is jointly funded by the federal and state governments and administered by state governments with the help of private insurance companies. Its primary purpose is to assist lower-income individuals and families in paying for their healthcare coverage. Medicare is a federally funded health insurance program for qualified individuals who are 65 years of age and older and disabled individuals of any age. Certain Medicare plans known as Medicare Advantage Plans are administered through a private health insurance company.

When Can Individuals and Families Purchase Health Insurance?

Most health insurance plans can only be purchased during an open enrollment period, typically near the end of the year. However, an individual may qualify for a special enrollment period apart from the normal open enrollment timeframe if they experience a certain life event like losing healthcare coverage, getting married or divorced, or moving. Medicaid, on the other hand, can be purchased year-round by eligible individuals or families without the need for an open or special enrollment period.