Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Apr 3, 2022

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The lowdown...

  • Health insurance started in the 1920s in the U.S.
  • It was created for the purpose of covering most of the cost of expensive health care.
  • If you do not qualify for government help, you will need to shop for a private insurance company to cover your costs.

Health insurance was created in the early 1920s to solve the need for help in paying medical and health care costs. Health insurance is defined as anything that is used to cover health treatment, prescriptions, and doctor’s visits that you would normally have to pay out-of-pocket.

The original idea of insurance started with inventor and statesman, Ben Franklin. Franklin felt that it was not fair for someone to have the burden of paying for their costs in the event of a loss (such as fire or theft) when it was someone else’s fault. Enter your zip code in our FREE tool above to compare health rates now!

He was more connected to the creation of car insurance than health insurance. But his early emphasis and push for fire insurance and theft insurance long ago caused insurance to become a priority in the minds of people and companies to provide it.

Rising Health Care Costs


The rising cost of health care, coupled with the competition of competing pharmaceutical companies, has caused people to need health insurance even more. But the problem is that getting good health insurance is not as easy as it seems.

Younger people can usually find a health care insurance provider that will offer them a health insurance policy that is not too expensive. But older people with health issues or pre-existing conditions may find it more difficult to find affordable insurance.

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What is Obamacare?

The Affordable Care Act, enacted by President Obama and Congress in 2010, allowed for a standardized type of health insurance solution that proposed to help everyone in America have affordable health care. This was introduced after a federal law was passed that required individuals to carry health insurance or face stiff penalties.

As of January 2016, all Americans were required to have health insurance to avoid having to pay fines. People who do not have health coverage now have a percentage taken out of their federal tax refund.

Options for Older Citizens

There are some government programs for older citizens that help cover the cost of care when a person is 65 or older. Medicare is a federally-funded program that pays for medical and health care needs of Americans 65 or older.

The only requirement to receive Medicare is to have worked in a job that paid into the system for at least ten years.

Some people may be eligible to receive Medicare before their 65th birthday, but these cases are rare. You will need to check on the Medicare site to see if you qualify under certain conditions outside of age.

About Medicare and HSAs

Medicare does not require that you prove a lack of pre-existing conditions to receive benefits. If you are 64 or younger, you may use an HSA (health savings account) to pay for any out-of-pocket expenses once you are on Medicare.

There should not be too many out-of-pocket expenses on Medicare, but you may experience some gap in coverage on your prescription drugs when you are in the “gap period.”

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Health savings accounts can help with out-of-pocket expenses when your insurance is not quite enough to cover specific medical expenses or prescription drugs. Prescription drugs are one of the most expensive aspects of health care and prices continue to rise in light of the restructuring of government health care system and individual doctors charging higher rates for service.

What is the gap period?

For anyone under the Medicare program that reaches drug expenditures over $3310, you will have to pay for your medications until you are out of the gap period. The gap period or “donut hole,” as it is sometimes referred to, serves the purpose of helping the federal government recoup for claims paid out on prescription medications during the time that you reach this amount until you reach the end of the year.

The good news is that, while you are on Medicare, you will only pay up to 45% of the total cost of the drugs, while you will be credited for the full amount. This offers some relief of the burden of having to pay the entire cost. However, it can still run into quite a bill for those who take multiple high-priced medications on a monthly basis.

Medicaid vs. Medicare

Medicaid is another federal program but it is much different than Medicare. While Medicare is for the older citizens, Medicaid is for those in the lower income bracket. The cutoff for qualifying for Medicaid is generally around $14,000 for a single person and up to $47,000 for a family with children. This will vary according to state and federal regulations.

There are forms to read and fill out on the Medicaid website where you can see if you qualify for it. If you have a disability or disabled children, you may qualify for Medicaid assistance during the time you are in that tax bracket.

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Types of Insurance Models

In addition to the government programs, you have the option of finding private insurance plans. Most people like private insurance plans because they feel they can choose more of the options regarding their health care.

If you choose private insurance, there are four major delivery models you can choose from:

  • HMOs– HMOs (health management organizations) operate with a “network system” model that includes many different health care specialists who have agreed to offer their services within the network. If you have few health issues and get a wellness checkup at least once per year, an HMO may be a good option for you. However, you cannot go outside the network of doctors of you will have to pay for the entire cost yourself. Also, you will have to have a primary care physician to refer you if you need the services of a specialist.
  • PPOs– PPOs (also known as preferred provider organizations), focus on allowing people to choose their providers while allowing them to save money through a network of doctors, specialists, and medical professionals. Unlike an HMO, PPO systems do allow you to go outside of network, but you will pay more if you do. They also do not require a primary care physician as HMOs do.
  • EPOs– EPOs are not required to have a primary care physician for referrals but they must use the doctors within the network, or they will not be covered by the insurance.
  • POS– A POS or “point of service” system is a type of managed care plan that is a mix between HMO and PPO plans. You must choose an in-network physician for the primary care provider, but patients are allowed to go outside the network.

Do I need private insurance if I already have Medicare?

One question that some people ask is whether they need additional health insurance if they already receive Medicare. You may want to consider obtaining a supplemental insurance policy for purposes of covering prescription drugs when you are in the “gap period” for prescription drugs or if you experience a specific illness such as heart attack or cancer.

By having a supplement private insurance policy in addition to Medicare, you may be able to leverage any extra and unexpected out-of-pocket expense that might come up in the future.

No one wants to think about such possibilities, but policies such as critical illness insurance and cancer insurance had often paid a huge amount of money to patients when they were diagnosed with these types of health issues that saved their financial situation. Catastrophic illness such as cancer, stroke, or heart attack can literally drain someone’s finances overnight.

Something to Think About

Health insurance was meant to cover the high cost of health care when people are ill or need medical help when they cannot afford it on their own. Because the cost of health care is so great, the idea behind health insurance is for those who are healthy to pay monthly premiums to the insurance company so that the money will be there when someone becomes ill and has to use the coverage.

This is the way any insurance works as well, including home insurance, fire, and car insurance.

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Tips on Finding the Best Health Coverage


When shopping for health insurance, consider the following tips to find the kind of coverage you need.

  • Consider the amount of prescription drugs that you need on a monthly basis.
  • Think about how often you go to the doctor or need continued care.
  • Consider how important it is that you can choose your doctors and health professionals.

There are other considerations you may want to ask your agent before signing up for health coverage. Look at all of the options and ask questions before you purchase.

Compare health insurance rates now by using our FREE tool below!