With all the recent changes in the law, it can sometimes be difficult understanding the exact difference between government insurance and commercial insurance. In short, government insurance usually refers to a variety of different plans (including those that are regulated by the government in a kind of market, while commercial insurance refers to plans that are sold by for-profit companies that are free from such regulations.
Government Insurance
Depending on who you are, where you live, your status, and income, you may be eligible for government insurance. The Patient Protection and Affordable Care Act, commonly referred to as Obamacare, refers to a kind of regulated marketplace where insurance plans are sold to the general public. For most people today, insurance coverage is now mandatory, and the Obamacare plans are what people must choose if they are not otherwise covered by another plan.
The federal government also offers three other insurance-type plans for eligible people: Medicare, Medicaid, and CHIP.
Medicare has been around since 1966, and is a form of insurance offered to anyone over the age of 65. Although Medicare is administered through the government, the actual coverage is provided through a network of about 30 private companies. Medicare is further subdivided into four categories: A, B, C, and D, which refer to which kinds of healthcare are provided.
Medicaid is a form of government health insurance that is available for people with very low incomes, or who qualify due to other circumstances like disabilities or being a pregnant woman. Unlike Medicare, Medicaid is jointly administered and funded by both the federal government and the state government where the person resides.
CHIP (Children’s Health Insurance Plan) is a form of insurance coverage offered to otherwise uninsured children, and to families with otherwise uninsured children. Formerly administered at the state level, since 1997, CHIP is now a jointly operated federal and state program similar to Medicaid.
There are strict rules about when, and for how long, a person can enroll in or be eligible for government insurance plans.
Commercial Insurance
Any kind of insurance coverage not offered or administered by the government is a form of commercial insurance. Private, for-profit companies sell these plans to eligible customers for a monthly fee known as a premium. Generally speaking, most commercial insurance plans fall into the following categories:
- HMO – Healthcare is coordinated through a primary care physician, and treatment centers and providers are grouped into a network.
- PPO – The customer chooses where to get treatment, with treatment inside the network being significantly cheaper than treatment received outside the network.
- EPO – The customer chooses where to get treatment, but usually has to pay full price (out of pocket) for any treatment received outside the coverage network.
Most commercial insurance plans can be bought at any time, and a person can opt out of continuing coverage whenever they want.