Is private health insurance legit?
Fair question, and I hear it every week. If nobody ever told you private plans exist, a plan that fits for less than you pay now can sound too good to be true. When people pass on a plan that would have worked for them, it almost always comes down to one of three things: they don't trust the agent, they don't trust the plan, or they don't trust the insurance company. So this page covers all three, and how to check each one yourself before you pay a cent.
Is private health insurance legit?
Yes. Private under-65 plans are real insurance from companies licensed by state insurance departments, sold through licensed agents. Many are medically underwritten, so approval isn't automatic and some may limit pre-existing conditions, which is part of why they can be priced differently than ACA plans. Before you pay anything, you can check the agent's license, the plan's documents and the insurance company's state license and complaint history yourself. Ryan Michalek at Michalek Health Solutions, an independent brokerage in Tampa, Florida (licensed in 31 states, NPN 21043091), walks people through all three checks, at no cost to you.
If someone sent you this after talking to me: good. You weren't on the call, so you should get to check everything yourself. Every step below works without taking my word for it, and if you'd rather hear it straight from me, I'm happy to do a short follow-up call with both of you.
Why you've probably never heard of these plans
Most of what people hear about buying their own coverage points to the ACA marketplace. That's the version with the government website, the open enrollment ads and the news coverage, so it's the only one most people know about. Private under-65 plans don't get that kind of airtime. They're sold through licensed agents and brokers, one conversation at a time, so unless a friend or an agent walked you through one, there's no reason you'd know they exist. Not having heard of something doesn't make it shady. It just means nobody explained it to you yet.
Why a private plan can be priced differently, and what you give up
An ACA plan has to take everyone at the same price for their age and area, healthy or not, and cover a full list of required benefits. That's a real protection, and it's built into the premium. Many private plans work differently. They're medically underwritten, which means the insurance company asks health questions and decides whether to accept you and at what rate. When it's priced on your own health instead of everyone's, a healthy person can often see a lower number.
That's also the catch, and I'd rather you hear it from me up front. Approval isn't automatic. Some plans may limit or exclude pre-existing conditions. Some pay set amounts toward care instead of working like a traditional deductible plan, and some have limits an ACA plan wouldn't. None of that makes the plan a scam. It makes it a different kind of plan, one that fits some people well and others not at all. If your health history makes it a poor fit, the marketplace is still there, and I'll tell you so.
"Isn't that junk insurance?"
You may have heard private plans called junk insurance. That label usually gets pinned on short-term plans, which are built as a temporary bridge, and on health-sharing programs, which aren't insurance at all. A medically underwritten plan is a different product from either one. I won't tell you the label is never fair, though. Some plans do have real limits, and that's exactly why the plan checks below matter. A plan earns trust by what its document says, not by what it's called, so read the document and judge it on that.
For the details on each type, see short-term vs. ACA and health-sharing ministries.
Check 1: Check me
You shouldn't have to take my word for who I am. Here's what you can look up yourself:
- My license. My NPN (national producer number) is 21043091, and I'm licensed in 31 states. You can look me up on the NAIC license lookup or, in Florida, the Florida DFS licensee search.
- What other people say. Read my Google reviews and my BBB profile. These are real clients, in their own words.
- How I'm paid. You don't pay me a fee, and the full answer is on how we're paid.
- Who picks up. I answer my own phone. Call (813) 833-7448 and you get me, not a call center, and your number doesn't get passed around to a dozen other agents.
Check 2: Check the plan
Before you pay anything, you should know exactly what kind of plan you're looking at and what it does and doesn't do. Here's how I'd check any plan, mine or anyone else's:
- Know what type it is. Ask straight out: is this ACA-compliant major medical, a medically underwritten plan, a plan that pays set amounts toward care, or a health-sharing program? A health-sharing ministry isn't insurance at all, so you should know if that's what's on the table.
- Get the plan document before you pay. Ask for the outline of coverage or the plan brochure in writing. Anyone who won't send it to you before you pay is a red flag.
- Read the three parts that matter most. How it handles pre-existing conditions, what limits it has, and what's excluded. If any of that is unclear, ask until it isn't.
- Compare the whole year, both ways. Add twelve months of premium plus the most you could owe in a bad year, for this plan and for the ACA or employer plan you have now. That's a fair comparison, and it's the one I'll walk through with you.
- Ask when your first payment comes out. You should know exactly when you'd be charged, and for what, before you give any payment details.
Check 3: Check the insurance company
On this site I don't name the insurance companies I work with. On a call, I'll tell you exactly who the plan is with, and you can check them the same day:
- Is it licensed in your state? Every state has an insurance department that licenses the companies allowed to sell there. The NAIC keeps a directory of state insurance departments, so you can find yours in a minute.
- What's its track record? The NAIC's free Consumer Insurance Search lets you look up an insurance company and pull reports on it, including complaint history.
- Is it financially strong? Independent rating agencies, AM Best is the name you'll see most often, grade companies on their ability to pay claims. Ask for the rating and look it up.
- How do claims get paid? Ask who you call with a claim question and how doctors get paid. A real company has a clear answer.
Switching without the risk
A lot of people stay put because they're afraid of ending up with nothing. You don't have to take that risk:
- Keep your current plan until the new one is in effect. Don't cancel anything until your new plan is approved and you know its start date. If the new one doesn't come through, you haven't lost a thing.
- Check your doctors first. Before you decide, look up the doctors and hospitals you care about in the plan's network. I'll do it with you on the call.
- Know your way back. A private plan now doesn't lock you out of the ACA marketplace later. You can move to a marketplace plan at open enrollment or when a qualifying life event opens a special window. If you're on a marketplace plan now, ask about timing before you cancel it, since getting back in mid-year usually takes one of those events.
About the health questions
Answering health questions for someone you just met can feel like a lot. Here's why they're asked: a medically underwritten plan uses your answers to decide whether to accept you and at what rate. Your answers go to the insurance company for that review. Answer them fully and honestly, because a wrong or missing answer can put your coverage at risk later, right when you need it. I go through the application with you on the phone, so you're never guessing at a question, and you'll know exactly when and how much you'd be charged before you give any payment details.
Red flags, from anyone
- Pressure to sign today or the price goes away.
- No license number, or one that doesn't check out.
- No plan document before you pay.
- Payment asked for by wire, gift card or any way other than the insurance company's own billing.
- Promises that sound like a guarantee about your coverage or your rate.
If you see any of those, walk away, whoever it is. That goes for me too.
Common questions
Are private health insurance plans regulated?
Yes. Insurance companies have to be licensed by a state insurance department to sell policies there, and agents have to be licensed in each state they work in. Private plans don't follow every ACA rule, which is why they can ask health questions, but they're still insurance, sold by licensed companies and agents who answer to state regulators.
Why can a private plan be priced lower than an ACA plan?
Mainly because many private plans are medically underwritten, so the price is based on your own health instead of everyone's. A healthy person can often see a lower number. The trade-off is that approval isn't automatic and some plans may limit pre-existing conditions or have limits an ACA plan wouldn't, so it's worth comparing both before you choose.
Should I cancel my current plan before I apply for a private plan?
No. Keep your current plan until the new one is approved and you know its start date. If the new plan doesn't come through, you still have your coverage. If you're on an ACA marketplace plan, ask about timing before you cancel, since getting back in mid-year usually takes a qualifying life event.
How do I know an insurance company is real?
Check that it's licensed in your state through your state insurance department, look it up on the NAIC's Consumer Insurance Search, and ask for its financial strength rating. A legitimate company and agent will also send you the plan document before you pay anything.
Keep reading
- Private vs. ACA, how the two paths compare side by side.
- What private health insurance costs, and what drives the price.
- Do I need a health insurance broker?, plus straight answers to the pushback I hear most.
- How we're paid, the honest version.
- About Ryan Michalek, the person behind the practice.
Still not sure? Ask me anything.
Bring your questions, your current plan and your doubts. I'll show you who the plan is with, how to check them, and how it compares to what you have, then you decide. What day and time works best for you?