How Does Healthcare in the US Work?
- Written by Nicci M.
- Last Updated August 25, 2020
- Read Time : 4 Minutes
The American healthcare system tends to get a lot of attention. As much as we hear about its cutting-edge technology and techniques, we also hear a lot of horror stories. Before taking the leap abroad, one of the most common questions is: how does healthcare in the US work? What are the real costs and how accessible is care?
Let’s break down the basics and look at what you can expect when visiting a doctor in the United States.
Public Healthcare in the US
While it is a privatised system, public healthcare does indeed exist in the United States. The two programs funded by the government are the Children’s Health Insurance Program (CHIP), Medicare, and Medicaid. These types of publicly funded healthcare are designated for what are considered to be vulnerable populations.
These three publicly healthcare options cover about 30 per cent of the population. The state-based Children’s Health Insurance Program covers children and teens up to the age of 19. It is not a standard option for kids but rather a needs-based option. While it depends on the state, the typical requirement is that families can earn to 300 per cent of the Federal Poverty Level (FPL) and still qualify for help on children’s healthcare.
Medicare is an option that covers seniors over the age of 65 and occasionally younger people with certain disabilities. Meanwhile, the Medicaid program covers one in five Americans. It is geared at those who can’t afford private healthcare, either due to their income or the extraordinary financial burden of certain illnesses.
Private Healthcare in the US
In total, there are nearly 6,000 health insurance companies in the United States. There is an option to buy healthcare with a so-called “group-based” option, which typically means a corporate plan or you can buy it individually. Around 60% of people in the US receive healthcare through their employer. Just under ten per cent of Americans purchase health insurance directly from the provider.
Employer-provided health insurance coverage is common for those working full-time. Across the country, 75 per cent of those working full-time receive healthcare benefits. Meanwhile, only approximately 20 per cent of those working fewer than 40 hours per week get healthcare benefits.
If you are moving to the United States for work, having a clear picture of your employer’s healthcare contribution is as important as understanding your salary.
How Do Hospital Visits Work in the United States Work?
One common misconception about the US healthcare system is that sometimes inaccessible. While certain treatments can be expensive, access to medical care is a standard right and hospitals simply will not turn away patients in need of medical treatment.
Treatment bills, however, can be expensive. In fact, medical bills are the leading cost of bankruptcy. That is why it is truly crucial to have insurance and fully understand the specifics of the billing.
How Much Does Health Insurance Cost in the US?
How Much Does Health Insurance Cost in the US?
What Is a Copay?
A copay (or copayment) is the amount that is going to come out of your pocket. You will pay this directly on the spot at the doctor or pharmacist.
Copays vary considerably. Some health insurance plans have a high copay, which often relates to a lower monthly cost. Meanwhile, insurance plans with a higher monthly cost, often have a lower co-pay.
Furthermore, some services, especially preventative care, often have no co-pay or out of pocket expense.
What Is a Deductible?
Deductibles are another factor that will affect how much money you personally pay. This works on a yearly basis. It is common to have a $2,000 deductible, for example. Having this $2,000 deductible means that you will need to pay $2,000, typically without any reimbursement from the health insurance company. After you pay this $2,000, your costs will then be covered by the health insurance company.
It is important to realise that after you reach your deductible amount, the percentage of the cost covered by your insurance company will vary. The percentage covered by the health insurance company depends on the type of medical service as well as your covered.
What Is Coinsurance?
After you have reached your deductible amount, you will be looking at coinsurance percentages. Coinsurance is the amount you will pay. For example, if your coinsurance amount is 30 per cent, then you will pay 30 per cent of the total cost of your medical services after the deductible. Your health insurance company will then cover the other 70 per cent.
Of course, this can still leave you with some extremely high costs. This is where an out-of-pocket maximum comes into play.
What Is an Out-of-Pocket Maximum?
As the name implies, your out-of-pocket maximum is the most you could possibly pay in a year. Since it is entirely possible for a minor accident or chronic disease to leave you with a hospital bill of six figures, an out-of-pocket maximum creates a level of protection. If your out-of-pocket maximum is $4000, then you simply know you will never pay more than this amount.
Interested in learning more about living in the United States? You need our Moving to the USA guide, with everything you need to know, from visas, taxes, schooling, cost of living and much more.
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