Which Type of Health Insurance Is Purchased by Families?

Health insurance is a financial tool designed to help families manage the significant costs of medical care. It protects individuals and their dependents from unexpected and substantial healthcare expenses, from routine doctor visits to emergency surgeries. By pooling resources through premiums, families gain access to a network of providers and defined benefits, ensuring necessary services without facing the full financial burden. This coverage helps maintain physical well-being and financial stability for families.

Employer-Sponsored Health Coverage

Many families in the United States obtain health insurance coverage through an employer, which often presents a convenient and more affordable option. Employers frequently offer a selection of health plans, allowing employees to choose the one that best fits their family’s needs. Common plan types include Preferred Provider Organizations (PPOs), Health Maintenance Organizations (HMOs), Exclusive Provider Organizations (EPOs), and Point of Service (POS) plans, each structured differently regarding network access and cost-sharing.

PPO plans offer flexibility, allowing out-of-network providers at a higher cost, and do not require specialist referrals. HMOs require families to choose a primary care provider (PCP) within the network and obtain referrals for specialists, offering lower out-of-pocket costs in-network. EPO plans cover services only from in-network providers, except emergencies, but do not require specialist referrals. POS plans combine HMO and PPO features, requiring a PCP referral for in-network specialists but allowing out-of-network care at a higher cost.

Families enroll in these plans during specific enrollment periods or following certain life events. The primary window is “open enrollment,” occurring once a year, often in the fall. Outside of open enrollment, families may qualify for a “special enrollment period” if they experience a qualifying life event. These events include marriage, divorce, birth or adoption of a child, loss of other health coverage, or a significant change in income that affects eligibility for financial assistance.

When enrolling, employees choose coverage options extending to dependents, such as “employee + spouse,” “employee + children,” or “family coverage” (employee, spouse, and eligible dependent children). The employer subsidizes a portion of premium costs, making these plans more affordable than individual plans. The employer handles administrative aspects.

Individual and Marketplace Health Coverage

Families without employer-sponsored health insurance purchase coverage directly from an insurance company or through the Health Insurance Marketplace, established under the Affordable Care Act (ACA). This pathway is used by self-employed individuals, those working for small businesses without benefits, or those not employed. The Marketplace provides a platform for comparing and enrolling in health plans, ensuring coverage meets essential health benefits.

Enrollment in Marketplace plans primarily occurs during an annual “open enrollment period,” typically from November 1st to January 15th. Outside this period, families may be eligible for a “special enrollment period” if they experience a qualifying life event, similar to those for employer-sponsored plans.

The Marketplace offers financial assistance to make coverage more affordable. Families may qualify for premium tax credits, which reduce monthly premiums. Eligibility for credits is based on household income and family size relative to the federal poverty level, with larger credits for lower incomes. Some families may also be eligible for cost-sharing reductions, lowering out-of-pocket costs like deductibles, copayments, and coinsurance when enrolled in a Silver-level plan.

Marketplace plans are categorized into “metal tiers”—Bronze, Silver, Gold, and Platinum—indicating the percentage of healthcare costs the plan covers. Bronze plans have the lowest monthly premiums but the highest out-of-pocket costs, covering approximately 60% of average costs. Silver plans cover about 70% of costs and are the only tier eligible for cost-sharing reductions. Gold plans cover around 80% of costs with higher premiums but lower out-of-pocket expenses, while Platinum plans cover about 90% of costs, offering the highest premiums but the lowest out-of-pocket expenses.

Government-Assisted Health Programs

Several government-assisted health programs provide coverage for families, particularly those with limited financial resources or specific needs. The two most prominent programs for families are Medicaid and the Children’s Health Insurance Program (CHIP).

Medicaid provides comprehensive health coverage to eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities. Eligibility is based on household income and family size, with specific income thresholds varying by state and individual category. Many states have expanded Medicaid eligibility under the Affordable Care Act to cover adults with incomes up to 138% of the federal poverty level. Families apply for Medicaid through their state’s Medicaid agency or via the Health Insurance Marketplace.

The Children’s Health Insurance Program (CHIP) offers low-cost health coverage for children in families who earn too much for Medicaid but cannot afford private insurance. Some states also use CHIP funds to cover pregnant women. Eligibility for CHIP is determined by income and family size, with income limits higher than for Medicaid. CHIP provides benefits including routine check-ups, immunizations, doctor visits, prescriptions, and dental and vision care. Families apply for CHIP through their state’s Medicaid or CHIP agency, or the Health Insurance Marketplace.

These programs reduce the number of uninsured children and families, providing access to preventive care and medical treatments. Both Medicaid and CHIP are jointly funded by the federal government and states, with states having flexibility to design their programs within federal guidelines. The application process requires providing documentation of income, family size, and residency to verify eligibility.

Other Specific Family Coverage Options

Beyond common avenues, other specific health coverage options exist for families facing particular circumstances. These options serve as temporary or specialized solutions for maintaining health insurance. Two examples include COBRA and TRICARE, each addressing unique family situations.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows eligible individuals and their families to temporarily continue health coverage under their former employer’s group health plan. This option becomes available after qualifying events, such as job loss (voluntary or involuntary, except for gross misconduct), reduction in work hours, death of the covered employee, divorce or legal separation, or a child losing dependency status. While COBRA allows continuity of the same plan benefits, the family pays the full premium, including the employer’s portion, plus an administrative fee, often making it more expensive than active employee coverage. Coverage lasts for 18 or 36 months, depending on the qualifying event.

TRICARE is the healthcare program for uniformed service members, retirees, and their families worldwide, including those from various branches of the uniformed services. It offers various health plan options tailored to different beneficiaries, such as TRICARE Prime, TRICARE Select, and TRICARE For Life. TRICARE Prime is a managed care option requiring enrollment and a primary care manager, while TRICARE Select is a fee-for-service option allowing more provider choice. Eligibility extends to active duty service members, retirees, and certain National Guard and Reserve members and their families.