What’s the difference between public vs private health insurance?

The ACA/Obamacare public marketplace is open to all, offering insurance plans that are income-based. Typically, these plans come with higher monthly premiums, unless you qualify for government subsidies. They tend to have an average deductible of $7,000 and often utilize HMO or EPO networks, which means your choice of doctors and hospitals is limited to those within your county or zip code. Additionally, these plans operate within a specific open enrollment period, from November 1st to December 15th, with coverage commencing January 1st. It's important to note that most of these plans follow a standard template, resulting in limited customization options.

Private health insurance plans are tailored for individuals in good health without major pre-existing conditions. These plans come with low monthly premiums, low deductibles, and the freedom to see any doctor or visit any hospital because you’ll be on a PPO network. There’s no enrollment period so you can enroll anytime and your plan can be customized to fit your unique health needs. Plus, potential tax deductions for self-employed individuals and business owners.

Are health insurance premiums tax deductible?

The answer to this depends on your unique situation, so it's a good idea to reach out to a CPA or a tax professional to understand how it applies to you personally. However, if you're using your hard-earned after-tax money to cover your insurance premiums, they usually qualify for tax deductions.

But here's the catch: If your employer is paying a percentage towards your premiums, or if you're receiving government subsidies through an ACA plan, that would not be a tax deduction. So, it truly depends on your specific circumstance. To put it simply, if you’re footing the bill with your own post-tax income, there’s a good chance those premiums could be a tax deduction.

How do I know if I’m paying too much for health insurance?

1. Did your jaw hit the floor when you saw the price tag for your health insurance? If so, that initial shock could be a sign that you’re overpaying. 

2. You feel like you’re pretty healthy and never really use your insurance. It feels like you’re just paying that monthly premium and not seeing any benefits. 

3. Now, think about the coverage your plan offers. Do you currently require specific types of coverage, like maternity, mental health services, psychiatric care, and drug or alcohol rehabilitation? If not, it’s worth noting that many plans, including those you find on the ACA marketplace, bundle these services by default, potentially driving up costs for individuals who don't actually need them. 

Can I decline my employer’s health coverage?

If you're employed by a large company with more than 50 employees, they are legally obligated to cover 50% of your monthly premium as an employee benefit. Typically, these corporate plans offer excellent coverage, boast low out-of-pocket expenses, and are often associated with a PPO network. However, there are situations where enrolling your family members may not be the most cost-effective choice. Employer plans tend to be cost-effective for individual employees but can become pricey when extending coverage to dependents such as children or a spouse. If you prioritize long-term stability and wish to avoid concerns about employer-sponsored health insurance costs when adding your family, private health plans may be a more suitable option for you!

How do I know if I qualify for government subsidies?

In most cases, if your household income falls within the range of 100% to 400% of the federal poverty level, you'll be eligible for a premium subsidy.

In 2023, the income limits for the ACA are: 

• Individual: $14,580–$50,320

• Family of four: $30,000–$100,000

• Parents of dependent children: $24,860

• Other adults: $14,580