The Fineprint
Health Insurance Basics:
Types of Health Insurance
Choosing health insurance can feel overwhelming, especially when plans differ in coverage, cost, and consumer protections. This guide breaks down the major types of health insurance, including private and public plans, limited and short-term coverage, and employer-based plans that may be self-insured or fully-insured, to help you make informed decisions and avoid unexpected costs.
Table of Contents:
Private Insurance
Private insurance is coverage provided by non-government insurers. Most people in the U.S. with insurance fall into this category. These plans vary widely in cost, coverage, and provider networks, so comparing options carefully is important.
​
Employer-Sponsored Insurance
-
Offered through an employer or union
-
Often shared-cost: your employer pays part of the premium, and you pay the rest
-
Coverage usually includes medical, hospital, and preventive care
-
Costs and benefits vary by employer and plan
Plans Purchased Directly from an Insurer
-
Bought straight from a private insurance company
-
Often used by self-employed individuals or those without employer coverage
-
Can be more expensive since there’s no employer contribution
Health Insurance Marketplace Plans
-
Purchased through the federal or state Marketplace
-
Available to individuals and families without job-based coverage
-
Many people qualify for premium subsidies or cost-sharing reductions based on income
-
Plans are categorized by metal tiers (Bronze, Silver, Gold, Platinum), which affect monthly costs and out-of-pocket expenses
Public Insurance
Public insurance programs are run by the government and are designed to provide coverage to specific populations. They are often more affordable and include strong consumer protections, but eligibility is limited to certain groups.
​
Medicaid
-
Provides free or low-cost coverage to low-income individuals and families
-
Eligibility depends on income, household size, and state rules
-
Often covers doctor visits, hospital care, prescriptions, and preventive services
-
Many Medicaid plans have little to no monthly premium
Medicare
-
Primarily for individuals age 65 and older
-
Also available to some younger people with disabilities or specific medical conditions
-
Consists of different parts (hospital, medical, prescription drug coverage)
-
Costs and coverage depend on the parts you enroll in
Veterans Health Administration (VA)
-
Provides healthcare services to eligible military veterans
-
Coverage is based on service history, disability status, and income
-
Care is typically received through VA facilities
Limited & Short-Term Plans
Not all health plans offer full coverage.
​
Some plans may be:
-
Limited-benefit plans, such as vision-only, dental-only, or disease-specific coverage
-
Short-term limited-duration plans, designed to temporarily fill gaps in coverage
These plans often:
-
Cover fewer services
-
Exclude pre-existing conditions
-
Lack key consumer protections
-
Do not qualify as comprehensive health insurance
​
This means these plans may have lower monthly costs but can lead to higher out-of-pocket expenses if you need care.
Employer Plans: Self-Insured vs. Fully Insured
If you receive health insurance through your job, your employer typically uses one of two funding structures to provide coverage.
Self-Insured (Self-Funded) Employer Plans
In a self-insured plan, your employer — not an insurance company — pays for employees’ medical claims.
How it Works:
-
Employees and employers contribute money through payroll deductions
-
The employer uses these funds to pay medical claims directly
-
A third-party administrator (often an insurance company) may handle:
-
Enrollment
-
Claims processing
-
Provider networks
-
​
Important to Know:
-
These plans are usually offered by larger employers
-
They are regulated primarily by federal law, not state insurance laws
-
Some state-level consumer protections may not apply
What This Means for You:
-
Your insurance card may still show an insurance company’s name
-
Appeals, complaints, and protections may follow federal rules
-
Your employer may have more flexibility in plan design
Fully-Insured Employer Plans
In a fully-insured plan, your employer purchases health insurance from an insurance company.
How it Works:
-
The employer pays a premium to an insurance company
-
The insurance company is responsible for paying medical claims
-
The insurer manages coverage, networks, and claims
Important to Know:
-
These plans are regulated by state insurance laws
-
State consumer protections typically apply
What This Means for You:
-
The insurance company – not your employer – pays claims
-
Complaints and appeals may go through state insurance regulators
-
Benefits and protections may be more standardized
How to Find Out Which Plan You Have
-
Check your Summary of Benefits and Coverage (SBC)
-
Ask your employer’s HR or benefits department
-
Call the number on your insurance card and ask directly