In this guide we’ve detailed an overview of the United States’ healthcare and health insurance system. This is particularly important for you to understand if you are a new resident in the country.
How Does the Healthcare System Work in the United States?
The healthcare system in the United States is heavily privatized, and citizens and residents need to have private health insurance to pay for their medical costs and services. The government offers only a few healthcare programs for specific members of the population.
Most of the population (as of 2022, around 50%) is covered under employer insurance, which is offered as part of the benefits package, while the rest of the population either buys their own insurance, relies on government assistance, or remains uninsured. So, ultimately if you don’t have insurance, you pay for the medical costs alone, which in the US can be very expensive.
Expample: How Does the US Healthcare System Work?
Let’s take a look at how the US healthcare and health insurance system works by walking through a simple doctor’s visit:
- You have just gotten over the seasonal flu, but you have had a sore throat and a cough for a few days now, so you decide to make an appointment with a doctor.
- Even though you recently moved to the United States, you already have health insurance because your employer offers it.
- You make an appointment with a primary care physician covered by your insurance which was recommended by a coworker.
- You complete the visit and even though no additional tests were ordered, the doctor has prescribed you antibiotics.
- At the end of the visit, the doctor’s office takes your insurance information and, in most cases, bills the health insurance company directly for the services they cover.
- Depending on the type of your health insurance plan, at the end of the visit, you may have to pay some out-of-pocket costs, such as a deductible, before your insurance can pay the rest.
- You will also receive a final bill showing what your insurance pays and what out-of-pocket costs you owe to the clinic.
- The doctor’s office will also send the information about your antibiotics to the pharmacy, so you can pick up the medication.
- At the pharmacy, the pharmacist will verify with the insurance company that your antibiotics are covered, and whether there are any additional charges you have to pay for yourself. If you do, you must pay the extra charges and then take your antibiotics. This way, concluding a doctor’s visit as per the U.S healthcare system.
The example above is an oversimplified illustration; the reality is that navigating the US healthcare system can quickly become complicated. What if you visit a doctor who is not covered by your insurance? What if you need emergency care? What if you call an ambulance? What if you need additional tests and imaging?
The truth is you incur charges for all of these scenarios and depending on the type of health insurance plan you have, you might either get full coverage, a little coverage, or none at all. This is why it’s very important for you to understand exactly what your insurance covers in the US, and if you’re looking for a health insurance plan, spend some time doing research to find a policy that can cover you in most cases.
Does the United States Have Universal Healthcare?
No, in fact, the United States is one of the few developed countries in the world that does not offer universal healthcare.
However, it does offer a few government-run health insurance programs to help cover some vulnerable members of the population, such as senior citizens or low-income families.
What Is Medicaid?
Medicaid is a federal and state program that helps people with limited income and resources cover medical costs. It also extends coverage to pregnant women, and people with disabilities if they meet the eligibility criteria.
It is the largest source of funding for medical and health-related services for people with low income in the United States. Recent data shows that one in six adults between the ages of 19 and 64 are covered by Medicaid.
It’s important to remember that if you are a new resident of the United States, you must wait at least five years to qualify for Medicaid, and your income must fall below the poverty line—you can find out if your income qualifies for Medicaid here.
Note: Some states can waive the five-year waiting period for foreign residents in specific cases (e.g., pregnant women and children).
What Is Medicare?
Similar to Medicaid, Medicare is a government-run program that helps provide senior citizens with health insurance. It usually includes people over the age of 65 and above, but it can also cover people under the age of 65 if they have end-stage renal disease, ALS, or some other disabilities.
Data shows that as of 2023, around 65,748,297 people are enrolled in Medicare, or around 18% of the population. However, for foreigners to qualify for Medicare, they must have collected enough Social Security credits during their working years in the country. Usually, they must have worked in the country for a minimum of five years, but this can vary from state to state.
The Medicare program is divided into the following categories:
- Part A – which covers hospitals, skilled nursing and hospice services.
- Part B – covers outpatient services, including some providers’ services while inpatient at a hospital, outpatient hospital charges
- Part C – is an alternative called Managed Medicare, which permits patients to select health plans with at least the same service coverage as Part A and B, often the benefits of Part D, and an annual out-of-pocket spending limit which A and B lack. To sign in this part, one must sign in Part A and B first.
- Part D – covers mostly self-administered prescription drugs.
Besides Medicaid and Medicare, the United States government offers other health insurance programs such as the Children’s Health Insurance Program (CHIP) and a veteran’s healthcare program, which cover children from low-income families, and US veterans, respectively.
How Can Foreigners Get Health Insurance in the US?
Foreigners essentially have the following options when it comes to health insurance in the US:
- Use health insurance provided by government-run programs (e.g., Medicare and Medicaid).
- Obtain health insurance from their employer.
- Buy health insurance directly from a health insurance company.
You can also get US health insurance visa online comparison marketplaces such as Insubuy. Insubuy allows you to compare different plans from accredited companies in the United States.
Government Health Insurance
You can look into government health insurance if the other health insurance options are not suitable for you. But, as mentioned above, to qualify for government health insurance programs, you must meet several eligibility criteria, such as being a legal resident of the country or having lived in the country for a few years.
These eligibility criteria may differ slightly depending on which US state you’re currently living in, so you’re highly encouraged to discuss this option with the Centers for Medicare & Medicaid Services.
Employer Health Insurance
As mentioned above, the majority of the United States population obtains health insurance from their employers. Similarly, if you moved to the US under a work visa, such as an H1B or similar visa, you will most likely obtain health insurance from your employer.
Your employer will help pay for some of the costs of your health insurance, and in some cases, they may fully pay for it, depending on the benefits you receive from your employment.
Individual Health Insurance
If your employer does not offer health insurance or you want to opt out of the plan offered by your employer, you can buy your own health insurance directly from a health insurance company.
Some of the best health insurance companies in the US include the following:
- Blue Cross Blue Shield.
- Kaiser Permanente.
- UnitedHealthcare.
- Oscar.
- Aetna.
Types of Health Insurance Plans in the United States
Regardless of how you obtain your health insurance, you will find the following most common types of health insurance plans in the US:
- Health Maintenance Organizations (HMOs). HMOs are the type of plans that operate within a network of providers and have certain guidelines. For example, with an HMO plan, you have to visit a primary physician first and get a referral from them to see a specialist. Plus, if you want to visit a healthcare provider outside of the network, your health insurance won’t cover the costs. They are usually more affordable than other plans but come with more limited benefits.
- Preferred Provider Organizations (PPOs). PPOs also have a network of providers, and you’re encouraged to visit healthcare providers within that network. But if you don’t, your health insurance still covers you somewhat. Additionally, you don’t need to visit a primary physician first to see a specialist, which gives you more flexibility in your healthcare. However, PPO plans are more expensive than HMOs.
- Point of Service (POS). A POS plan has characteristics of both an HMO and a PPO. This kind of plan allows you to visit other medical providers outside of your network and then be reimbursed by your insurance. However, you need a primary care physician to get a referral for a specialist.
- Exclusive Provider Organization (EPO). With an EPO plan you’ll have lower monthly premiums for the insurance plan itself but higher deductibles than compared to the other plans. While you are required to visit healthcare providers within the specific network, you don’t need a primary care physician to get a referral for a specialist.
- Traditional fee-for-service health insurance plans. With this type of plan, you or the health insurance company pay the medical provider for every medical service you receive, unlike with other plans that have bundled payments. These types of plans are usually the most expensive, but they also offer the most flexibility.
- High deductible health plans (HDHP). These kinds of plans allow you to pay a high deductible, i.e., a specific amount for the medical services you receive until your insurance kicks in. In exchange, you pay lower monthly premiums for your insurance. Overall, with an HDHP, you pay less on a monthly basis but more when you need medical care. We recommend this type of plan to only healthy and fit individuals who do not need medical care often.
US Health Insurance for Different Types of Expats
Here are the types of expats in the United States, that should get health insurance coverage:
- Health insurance for international students in USA
- Health insurance for dependents of international students.
- Health insurance for J-1 visa holders
- Health insurance for foreign workers on an H-1B visa
- Health insurance for dependents on an H-4 visa holders
- Health insurance for Green Card Holders
- Health insurance for K1 visa holders
Can Illegal Immigrants Get Health Insurance?
Illegal Immigrants in the US can get health coverage only from private providers, as the US government-funded health insurance does not cover them.
Community centers can provide medical help to undocumented immigrants in the US, and if the healthcare seeker can participate in fee-for-service medical assistance, these centers are termed Safety Net Providers.
Do Visitors Need Health Insurance to Visit the United States?
If you’re only looking to visit the United States for a short period of time, then you can buy a visitor’s travel health insurance. This kind of insurance provides you with comprehensive benefits while you are in the country, so in case you need medical services, your insurance covers you instead of paying out of pocket for the costs.
The best place to find visitor’s health insurance is Insubuy, an online insurance broker that specializes in this kind of insurance for the United States.
How to Choose a Good US Health Insurance Plan?
When you’re looking for a health insurance plan in the US, make sure you ask yourself the following questions:
- Does that plan grant you the right to go to any doctor, hospital, clinic, or pharmacy you choose?
- Are specialists such as eye doctors and dentists covered?
- Does the plan cover special conditions or treatments such as pregnancy, psychiatric care, and physical therapy?
- Does the plan cover home care or nursing home care and medications a physician might prescribe?
- What are the deductibles?
- Are there any co-payments?
- What is the most you will have to pay out of your own pocket to cover expenses?
- What does the billing process look like? Do you have to pay for the services yourself and then file a claim, or does your insurance company pay for the medical services directly?
- Does your insurance cover any pre-existing conditions you have?
How Much Does Health Insurance Cost in the United States?
According to recent data, as of 2024, the average price for employee-based insurance was around $700 per month for individual plans. Those who opted for family insurance plans paid an average of around $1,000 per month.
If you’re buying your health insurance on your own, your personal costs increase since your employer will not be contributing to your health insurance premiums. For example, individuals in their twenties reported to have paid around $400 per month, while those over 50 were around $700.
Of course, the cost will depend on several factors, such as your age, your medical history, the benefits you choose, and so on, but you can always find some affordable options.
Pro Tip: How to Save Money on Health Insurance in the United States?
Here are a few practical tips to help you save money on health insurance in the U.S:
- Buy your insurance from the Marketplace at Healthcare.gov. There you can compare and contrast hundreds of health insurance plans, their costs, and their benefits which will help you find an affordable option. Additionally, you can get into programs that help lower your premiums, such as the “premium tax credit”.
- Buy your health insurance early. Although this may sound strange to some, it’s best to buy your insurance while you’re young. Some health insurance companies offer discounts and lower premiums for those who buy their insurance before 35 and continue to be covered by the same company.
- Check out the out-of-pocket costs. In addition to your premium (the monthly payment you pay for your insurance), you also have out-of-pocket costs you have to pay. This can be a deductible, a co-pay, and of pocket maximum, varying from the type of health insurance plan. Usually, the more you pay out of pocket, the lower the overall premium, but this way, you end up paying more by yourself for your medical care than your insurance. It might be better to pay a higher premium to lower the out-of-pocket costs.
- Stay within network providers whenever possible. Using the network providers according to your health insurance plan ensures lower medical care fees and that your health insurance actually covers those fees. If you visit a healthcare provider outside of your network, you either pay the full costs of the services yourself, or your insurance only covers some services; either way, you end up in financial loss.
- Use wellness programs. Many health insurance companies offer discounts and bonuses for participating in wellness programs, such as fitness or preventative care programs. This helps you reduce your premiums and out-of-pocket costs.
Glossary
You can use the table below to search for terms related to health insurance that you need to have explained. Use the search bar to type the term, or go through the table:
| Term | Explanation |
|---|---|
| Add-ons | Any extra benefit you want to have included in your health insurance that is not a part of the main health insurance plan; for each added benefit, you pay extra. |
| Affordable Care Act | The Affordable Care Act (ACA) is a health insurance reform that aims to ensure health insurance affordability for every citizen and resident of the United States and expand access to healthcare and health insurance. |
| Allowable Charge | The maximum amount your health insurance will pay for a specific medical service. |
| Benefits | The benefits you get from your health insurance plan, i.e., what your health insurance plan covers. |
| Catastrophic Plan | This is a type of health insurance plan with a very high deductible but low premiums. Usually, only people under 30 or those with severe economic hardship are eligible for these plans. |
| Children’s Health Insurance Program (CHIP) | A government-run healthcare program designed to medically cover children from low-income families who did not qualify for Medicaid. |
| Claim | A legal request for payment that either you or your healthcare provider send to your health insurance company to pay for any medical services you received. |
| Comprehensive Coverage Plan | A type of health insurance plan that pays a percentage of a medical service or procedure up to a certain amount. Once that amount is reached, it pays for 100% of the rest of the costs. It’s usually more expensive to buy than those plans with fixed coverage. |
| Co-insurance | A fixed percentage of your medical bills you have to pay yourself, after paying the deductible. In most cases, the percentage is 80/20, with you paying 20%, and your insurance paying 80%. |
| Co-pay | A fixed amount you must pay at the time when you receive medical services. The amount is fixed so it doesn’t change according to the total amount of the medical costs. You pay your co-pay at the time of service regardless of whether you’ve met your deductible or not, unlike with co-insurance, which you need to pay after meeting your deductible. |
| Consolidated Omnibus Budget Reconciliation Act (COBRA) | The Consolidated Omnibus Budget Reconciliation Act, otherwise known as the Continuation of Health Coverage or just COBRA, is a legal reform under which you can continue an employment-based health insurance plan for a specific period even after you are no longer employed, usually for about a year and a half until you make arrangements with your new insurance. COBRA can also be used in specific life-qualifying events. For example, if your children have reached the age where they can no longer be covered by your insurance, they can be covered by COBRA until they get new insurance. |
| Coordination of Benefits | An agreement between your insurers if you are covered by more than one health insurance plan allowing them to coordinate payments and benefits so that no duplicate payments are made. |
| Cost Sharing Reductions | A reduction of out-of-pocket expenses if your income is below a certain level and you have a health insurance plan that allows you this discount. You can also qualify for this discount if you’re a member of a federally recognized tribe. |
| Coverage | The number of benefits your health insurance plan covers. Usually, the more coverage you have, the more you pay for your insurance premiums. |
| Deductible | A type of out-of-pocket expense you have to pay for your medical services until your insurance starts to cover you. Without reaching your deductible, your insurance won’t won’t cover your medical expenses. Once you reach your deductible for the year, you are no longer required to pay it, until the new year of coverage begins. |
| Dependent | A family member who is also included in your health insurance plan, for example partner and/or children. |
| Drug Formulary | A list of generic and non-generic drugs covered by your health insurance plan. Each health insurance plan has a different drug formulary, so to understand whether a specific medication is covered by your insurance, you need to contact your insurance provider to verify the drug formulary corresponding to your health insurance plan. |
| Effective Date of Coverage | The date from which your health insurance becomes active. You can buy your insurance earlier than the effective date of coverage. |
| Emergency Department | Hospital department equipped to deal with life threatening emergencies. |
| Exclusive Provider Organization (EPO) | A type of health insurance plan that has a specific network of doctors and healthcare providers that are covered by your insurance. If you visit a doctor or a hospital outside of the network, your insurance will most likely not cover you unless it’s an emergency. It also has a slightly larger network than a Health Maintenance Organization (HMO). |
| Exclusions | Exclusions are certain medical services or benefits your health insurance plan won’t cover. For example, they might not cover pre-existing conditions or specific treatments. Depending on your medical needs, you need to verify the exclusions of the health insurance plan you currently have or you’re considering buying. |
| Explanation of Benefits (EOB) | You receive an explanation of benefits after a claim has been processed by your insurance provider. In an EOB, you’ll find detailed accounts of what benefits were covered, how much was covered by your insurance, discounts, reasons for denying a claim, and so on. |
| Federal Poverty Line | The Federal Poverty Line is a measurement of income that determines which families or individuals are eligible for certain benefits, such as Medicare and Medicaid. The line is determined each year by the Department of Health and Human Services and adjusted accordingly for inflation. |
| Fixed Coverage Plan | A type of health insurance plan which covers only a fixed amount related to medical services. For example, if the fixed coverage amount is $1,000, it will only cover $1,000 for a specific medical procedure regardless of how much the actual procedure was. To illustrate, if a treatment costs $5,000, the insurance will only cover $1,000 of that $5,000, which means you have to pay for the rest out-of-pocket. |
| Flexible Spending Account (FSA) | A flexible spending account is a type of health saving account that allows you to set money aside from your salary before it’s taxed so you can use it to pay for out-of-pocket expenses, such as your deductible and co-pays, or specific medication. To have an FSA, you need your employer to help you set it up, and sometimes they can contribute to your FSA, although it’s not an obligation. Usually, you and your employer arrange the limit of the amount you want to put in your FSA. At the end of the year, if there is money left over, your employer can give you one of the following options: Use the money in the next two and a half months. Transfer up to $640 (2024 limit) for next year’s spending. |
| Group Plan | A type of health inusrance plan that covers a group of people as opposed to an individual; for example, employees of a specific company or organization covered under the same health insurance plan. |
| Health Insurance | An agreement between an individual or a company with a health insurance provider in which you get coverage for some medical services in exchange for a monthly payment, also known as a premium. |
| Health Insurance Provider | A health insurance provider or a health insurance company is the entity or organization that sells you a health insurance plan. You then use your health insurance plan to pay for your medical costs, and your provider ensures the coverage is administered correctly. |
| Health Savings Account (HSA) | A type of health saving account that allows you to set money aside, so you can pay for qualified medical expenses. These expenses are out-of-pocket payments such as deductibles, and co-payments. You can only have an HSA if you have a high-deductible health plan (HDHP). |
| Health Maintenance Organization (HMO) | A type of health insurance plan that has a specific network of doctors and hospitals that are covered by your health insurance. Your insurance won’t cover you if you visit a doctor or a hospital outside of your network. It also does not allow you to visit a specialist without getting a referral first from your primary physician. These are the most common types of health insurance plans in the US. |
| Health Reimbursement Arrangement (HRA) | Another type of health savings account which your employer sets out for you and only they can contribute to it. You can use the money in your HRA to reimburse yourself for specific medical expenses that are not covered by your health insurance plan. Your employer is the one who decides which medical services you can reimburse and the amount allowed. |
| High Deductible Health Plan (HDPH) | A type of health insurance plan that has a higher deductible than compared to traditional plans, but has lower premiums. It still has lower deductibles than a catastrophic plan and is available to everyone. But, essentially, you pay more for out-of-pocket expenses than what your insurance pays. |
| Individual Plan | A type of health insurance plan covering only one person as opposed to a group of people, for example, employees of a company. |
| Insurance Broker | A third party selling health insurance plans from the health insurance provider to you. |
| Marketplace | A government-run online site to help US residents and citizens find and purchase health insurance plans. |
| Medicaid | A health insurance program run by the US government to help low-income families pay for their healthcare and health insurance. |
| Medical Group | A group of doctors or healthcare providers who work in one clinic and contract a health plan to help deliver healthcare to their members. |
| Medicare | A health insurance program run by the US government to help cover the medical expenses of senior citizens over 65. In specific circumstances, even those under 65 can get coverage, for example, if they are under Social Security Disability Insurance (SSDI) or are diagnosed with End-Stage Renal Disease (ESRD). |
| Medical Saving Account (MSA) | This is another type of health savings account, very similar to an HSA, but it’s only available to you if you have ann HDPH and you’re on Medicare. |
| Network Provider | The group of doctors, hospitals, and other healthcare providers that your health insurance company has contracted to provide you with care according to your health insurance plan. |
| Obamacare | Obamacare is another term to refer to the Affordable Care Act (ACA). |
| Open Enrollment Period | The time of the year (November 1 to January 15) when you can change your health insurance plan, provider and/or buy new insurance in the Marketplace. You cannot buy insurance from the Marketplace outside of this period unless you’re going through a major life change. If you obtain health insurance from your employer, then they have a different open enrollment period. |
| Out-of-network Coverage | Coverage that your health insurance plan may offer if you visit a doctor or a hospital outside of your network. Not all health insurance plans offer out-of-network coverage. |
| Out-of-network Provider | A health care provider outside of the network contracted by your health insurance company and plan. |
| Out-pocket Maximum | The maximum amount of out-of-pocket costs you have to pay for a year. After you reach this maximum limit with your deductible, co-payments, and co-insurance, then your insurance pays 100% of your medical costs for the rest of the year. |
| Pre-existing Conditions | Chronic health conditions are present at the time when you buy your health insurance plan as opposed to developing them later on. For example, diabetes, or heart conditions can be considered pre-existing conditions. Some health insurance plans may have specific coverage requirements for these kinds of conditions and some basic plans may not even offer coverage for what they consider pre-existing conditions. |
| Policy | A policy or a plan is a health insurance document that details what benefits are offered by that specific plan, what it covers, what it doesn’t cover, how much it covers, what kind of out-of-pocket expenses it has, and so on. |
| Policyholder | A policyholder is a person, or individual, which in this case it can be you, who holds a specific health insurance plan or policy, which then you can use to cover your medical expenses. A policyholder can also be an entity or organization. |
| Preferred Provider Organization (PPO) | A type of health insurance plan that has contracted a network of doctors, hospitals, and other healthcare providers for which you pay less if you stay within the network. Unlike with an HMO, with a PPO plan, you can get coverage for visits out of network, but you have to pay more for the service. |
| Premium | A monthly amount you pay for your health insurance plan. If you don’t pay your premiums, then your insurance is not valid. |
| Premium Tax Credit | A tax credit that helps lower the monthly costs of your insurance, i.e., your premiums when you buy your health insurance at the Marketplace. Your qualification for the tax credit is determined by your income estate and household information you provided during your Marketplace application. |
| Primary Physician | A medical doctor (M.D.) who serves as the first point of contact for you whenever you need healthcare services. Some health insurance plans require you to always go through a primary physician before any other exams, consultations, or specialist visits can happen. |
| Qualifying Life Events (QLE) | An event in your life that comes with drastic changes that affects your need to change your current health insurance. This could be getting married, so now you add your spouse to your health insurance, a new birth in the family, a death in the family, moving to a new state or even losing your job. A QLE allows you to buy health insurance from Marketplace outside of the opening enrollment period. |
| Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) | An arrangement between you and your employer to help you pay for your health insurance if they don’t offer employment-based insurance. |
| Referral | A written order from your primary care physician for you to get care from a specialist specific tests, or specific treatments. Many health insurance plans, such as an HMO, won’t cover you for services you get without obtaining a referral from your primary physician first. |
| Reimbursement | The amount of money your health insurance company reimburses you or your healthcare provider for medical services depending on what kind of billing options you have. |
| Special Enrollment Period | A specific time outside of the usual open enrollment period when you can buy or change your health insurance. You can use a special enrollment period if you’re going through a qualifying life event. |
| Specialty Drug | Type of medication used to treat specific healthcare conditions that are usually not readily available in retail pharmacies, or need special care and storage conditions. |
| Specialist | A physician or doctor that specializes in a specific area of medicine, for example a surgeon, an endocrine specialist, a pediatrician, etc. |
| Urgent Care | A medical department where you can get treatment for non-life-threatening emergencies. These are usually conditions that need treatment immediately but are not urgent enough for the emergency room. |