Types of health insurance plans | Insurance | Financial literacy | Khan Academy

- So there are three ways
that you might be able

to get yourself health insurance.

The first way is that
you just get it directly,

and that would be an individual plan.

You pay the premium,
you get the insurance.

The second way is many employers
will provide insurance.

They will pay all of the premium,

or a large chunk of the premium,

in certain cases, they might
even pay a large chunk,

or the full premium for family members,

and then the third way is the government.

You have programs like Medicare

for primarily senior citizens,

some other cases where other
folks might qualify as well.

You have Medicaid for low income folks.

You have also government
programs for say, veterans.

Now, as I just alluded to,

probably the biggest difference

is who actually makes the payment.

The government programs,

it's the government who's
making the premium payment.

In the employer case, it's the employer,

and they're doing that with
pre-tax money, which matters.

They're giving this to you as a benefit

and you do not pay taxes

on the money that they are
paying for your insurance.

Well, with an individual plan,
you pay that out of pocket.

You pay that yourself.

Now, if you meet certain
income guidelines,

and if you pay enough of a premium

above a certain percentage of your income,

some of that might be tax-deductible,

but it is not fully tax-deductible

the same way that when
your employer pays for it,

you don't have to pay any taxes

on that premium that they're
providing you at all.

Now, on the individual side,

because you are essentially
deciding what type

of insurance you want,

it would give you the maximum choice.

Now, in certain cases,
that choice is limited,

because when you're
getting an individual plan,

they're deciding what the premium is or

whether to even insure you
based on your situation,

whether you have pre-existing conditions,

your risk factor, et cetera,

while with a government
or with an employer plan,

they're not looking at your
individual circumstances.

With an employer, the insurance
company will say, okay,

what's the average risk
of all of the employees?

And if you're a higher risk employee,

the employer's going
to pay the same premium

for you as they're
paying for everyone else,

and so you get that same coverage.

One potential negative
of an employer plan is

that it might be a little
bit more limited in terms

of the coverage options,

but that's not always the case.

Finally, government, you are going to have

probably more limits on what type

of healthcare you might
get, but once again,

they are fully paying the premium there.

Last but not least, we could
talk about deductibles.

Generally speaking, the government plans

are going to have the lowest deductibles.

In some cases, they will
have no deductibles.

In the case of an employer-sponsored plan

or an individual plan,

it really depends on which
plan you actually get.

So for a lot of folks,

if you're not retired,
if you're not low income,

employer-sponsored plans are
probably where you wanna go,

but if your employer
doesn't offer those plans

or you're self-employed

and you need get that insurance yourself,

then of course, individual
plans is what you need to do.